3 Tips for Evaluating the Commercial Potential of Your New Startup Idea

Posted by Daniel Mark on October 3rd, 2019

Entrepreneurs have a keen eye for innovation, but that's not always translated as a gift for market research. As a result, many startups suffer from baseless assumptions about their business potential. 70 to 80% of companies that do not meet the expected return on investment eventually fail, resulting in many entrepreneurs only realizing after being burned through capital and time.

This disconnection is usually the result of the intimacy of the invention. It can be easy to be blind when it comes to your idea of being the creator of a service or product. You are so focused on what you have discovered and how profitable it is that the design is no longer able to see or is it capable of entering the market.

To avoid these pitfalls and ensure that your company is positioned for success, here are three ways to evaluate your concept's business potential:

1. Apply objective feedback

Having a third-party opinion in your search is an important way to protect yourself from the harm and loss of information. Family, friends, and even team members may not see things as silly or simple as they are, but from an outside perspective, one can uncover blind spots that people very familiar with the product may miss. Avoiding fresh eyes in the plan can help identify any product features that can be repaired without worrying about injuries.

Perhaps a feature that you thought would be a great differentiator already exists in another product An objective third party opinion can tell you if this is true and your product is unique. Searching for flaws in your invention can save you thousands of dollars in wasted material and man-time. If you are an enthusiastic inventor, it can be very difficult for you to hear negative news, but it is incredibly important to learn about your product's flaws before going to market.

Identifying and correcting errors can make all the difference even when you are looking for investors. Before you make your pitch, you want to make sure that all products work outside of your product.

2. Accomplish a SWOT analysis

SWOT analysis is a valuable exercise for determining the potential of a new small business. There are four factors that your business must complete: your strengths and weaknesses (internal factors) and any opportunities and threats (external factors).

You need to take a serious look inside your activity to identify your strengths and weaknesses, as well as to determine what makes it so great, as well as to search for any weak points. For example, your company may make a proprietary piece of software (a strength) but are struggling to find a leader who can drive the software's success (weakness).

Likewise, it is important to identify opportunities and threats that can affect the success of your business. If you have learned from an internet search that there are only 500 people in the world who have a problem that you want to solve, how can your organization have so few customers that remain? If not, is there a way to change your product to be sustainable?

By focusing on the pros and cons and forcing you to look at the weaknesses and threats facing your business, you will be more prepared to compete in your market. Once you have seen the reality of the challenges ahead of you, you will have more realistic expectations of the search results.

3. Understand the full potential of your concept

Just as entrepreneurs are blind to the development of their ideas, they can also be blind to the expectations of their products. For example, many applications can be used for many capabilities, such as the wrapper, which was originally designed as a type of packaging and has become very popular.

Discussing your discovery with an external review team can reveal a different, unrelated application that can take it from small to large. It can even prevent you from launching your market in the wrong market or at the wrong time.

Entrepreneurial businesses are often caught up in the excitement of developing their product or service that makes it difficult for them to step back and truly evaluate the business situation. Planning beyond the first few years, however, can help you better understand the future of your business and build realistic goals that you and your investors can invest in.