This is the great, and terrifying, thing about becoming an entrepreneur, that you really don’t know how the venture is going to turn out. Certainly Bill Gates had no idea when he dropped out of Harvard to start Microsoft that he would become as successful as he did. By the same token, the florist who has to file bankruptcy also never envisioned that this would be his fate. Being an entrepreneur takes several qualities, not the least of which is risk tolerance.
That said, there are some ways to reduce the risk. The key to that is to properly evaluate your idea. Doing so is a two-step process. The first step is taking a cold, hard look at the idea itself. What kind of business do you want to start? You must, I repeat, must look at this idea objectively and answer the following sorts of questions:
- Are you fulfilling a market need by creating this business? If not, you won’t pass Go, and you won’t collect $200.
- Who will buy your product or service? Can they afford it? Do they want it? Where do they get it now? Why will they switch to you?
- What can go wrong as you bring your idea to life, and if it does go wrong (remember Murphy!), what will it cost you? Can you afford that?
- What is the competition like? How formidable are they and how will you compete against them?
- How long will it take you to take the idea from development to implementation? What will that likely cost? Can you afford that? What if it takes longer?
- Is your idea new or used? If new, is there a demand for it? If not, is the market over-saturated?
- What unique perspective and experience do you have that will allow you to fulfill this dream? Can you learn what you don’t know?
- Is demand for this product or service likely to grow? If not, what will you do?
Once you have done this, having been brutally honest, and you have concluded that the idea is viable, that there is a market for it, and that you will be able to bring your vision to fruition, then you still need to do some market research to make sure that you are correct.
Go to the library and pull a book called “Encyclopedia of Associations” by Gale Research. It lists every trade association in the country. Writing to the ones in your field can yield a gold mine of data. “Bacon’s Publicity Checker” will list all trade publications for your industry. Subscribe to them. Learn about this industry.
Finally, get some original feedback on your idea. Talk to friends about it. Take a poll downtown one day and see what people who don’t know you have to say. Hire a telemarketing firm to poll people.
If, after all that, you conclude that the idea still makes sense, then it is safer (notice I didn’t say safe) to jump in.
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