Will my business idea work? Ask yourself these questions to find out

Alas, humans don’t tend to be very good at knowing what will or will not turn out to be a great idea in the “real world”. It’s no different for Kiwi who are trying to launch a business. 

So, should you throw up your hands and give up? Maybe it’s just a matter of luck whether a business idea will crash and burn or go on to be a barnstorming success. 

We don’t believe you should settle for that. Instead, we’ve suggested some steps you can take to put a method to the madness. 

Below are a few techniques to help you assess how workable your business idea is. Arm yourself with these assessment tools, and you can soon be on your way. 

You might have noticed that the first two of those letters refer to internal factors in a business’s success or failure — its own strengths and weaknesses. 

The latter two letters, meanwhile, are about external factors — the opportunities and threats facing the business. 

Take information from all four sources to assess your business idea based on fact-based analysis and a range of perspectives. It will save you from having to depend on a “hunch” or “pot luck” to determine what will and won’t work. 

Of course, SWOT analysis can’t guarantee that a particular business idea will work. It is, however, a proven way to assess a business’s performance, competition, risk, and potential. In other words, it can help boost your chances of entrepreneurial success.

So, let’s take you through all four categories that make up a SWOT analysis. 

Strengths

Meaning

This category refers to what is strong about your business idea. It’s all about what would separate your business from the competition. 

Naturally, you will want to build on your business idea’s strengths. 

Questions to ask yourself

• What competitive advantage would this business idea have? 
• Does your business idea draw upon unique technology, for example? 
• Could this competitive advantage be increased or expanded to a broader target customer base? 
• Is there a capability you have that is particularly strong and can contribute to your success?

Weaknesses 

Meaning

This category refers to what is weak about your business idea. A weakness, after all, could prevent your business from performing well.  

You will obviously want to minimise the weaknesses of your business idea. 

Questions to ask yourself

• Are there any weaknesses in your business model? If so, could you change one or two elements of your business idea to make it likelier to succeed?
• Does your business have a unique selling point (USP)? 
• Is it obvious how your business idea would generate enough revenue? 
• Do you know who your market is? How to access it? 

Opportunities 

Meaning

This category refers to the opportunities your business idea could explore and take advantage of. Such opportunities could help you build a competitive advantage and power your business’s survival and growth. 

You will want to capitalise on the opportunities your business idea serves up. 

Questions to ask yourself

• Does your business idea present innovation opportunities to help you carve out a competitive advantage?
• Are there upcoming changes that could help make your business idea more successful? Examples could include technological advances or new regulations. 
• Is your business idea eligible for specific grants or tenders? 

Threats 

Meaning

This category refers to the threats that your business idea could face. By this, we’re referring to the factors that could harm your business and make your business idea less successful. 

You will want to counteract any threats to your business, to help make it more resilient.

Questions to ask yourself

• What are the external factors, potentially beyond your control, that could imperil your business’s survival or growth? These might encompass political, environmental, social, and technological (PEST) factors. 
• What is the scope for new competitors to enter your company’s industry? If so, what impact could this have on your business? How could you adapt to such a threat? 
• How exposed is your business idea to risks such as natural disasters, pandemics, supply chain disruption, political disruption, or war? 
• Is demand for your products or services in decline?

Compile your thoughts and data from the SWOT analysis into a table covering these four categories. Voila! You now have an excellent resource to reflect upon. 

Still trying to figure out the viability of your business idea? Give this checklist a go 

As we have established, determining the workability of your business idea can be an inexact science. Asking yourself the following questions can help give you a better sense of your business idea’s viability: 

Is there a market for your business idea? 

You should consider who your business’s potential customers are, how many of them there are in your targeted geographical area(s), and what prices you will need to charge. Think about potential competitors and their own unique selling points.  

Does your business idea have a unique selling point?

Your USP will encourage customers to purchase from you. Will your business be priced lower than alternatives? Or maybe your business idea will emphasise locally sourced ingredients, environmental friendliness, or health benefits.

Are the numbers workable? 

When assessing your business idea’s viability, you should know how much it will likely cost to make the goods or provide the service. Consider this alongside the likely selling price and the level of demand you expect for your products or services at that price.

Will your funds last you until your business starts turning a profit? 

Starting up and then steering a business through those delicate first few weeks and months can be expensive. 

You will need to be confident that you have enough funds to cover this period until your business finally breaks even or generates a profit. That might be quite a few months away! So, make sure you really have accounted for every probable cost.