In our daily life, we pass through some challenges or difficulties to perform our duties, which make us frustrated and unhappy. Some of these challenges are severe and painful, which may cause stopping us from doing some of our important jobs. Giant businesses have emerged from disruptive ideas that, solve intractable problems customers face. Ultimately, only customers decide the fate and success of any business ideas. In this article, I highlight issues for creating and testing a business idea in the marketplace.
What is a business idea?
A business idea is a documented concept that provides information on a tested solution of a pressing problem and involves understanding the problem and crafting a solution. Successful businesses begin with disruptive ideas that solve pressing issues people face to perform duties. Understanding the problem is the first step to create a business idea and shows the challenge that a group of customers face when performing tasks, and an entrepreneur creates the values by fixing such a problem. For example, people may face problems in finding a wanted product in the market, or it is very expensive, or it comes with low quality. A problem becomes significant, if it is severe, affecting a large segment of customers and requiring a quick fixing. An entrepreneur develops a business concept by crafting a unique solution to the depicted problem and testing it with customers in the marketplace. Such a solution is valuable, and customers want it if it carries some value propositions such as benefits and features. A value proposition must be unique and innovative to win the approval of customers. For example, the value proposition of Google Search is free, and for WhatsApp, it offers free calls. After developing the problem-solution concept, it is then tested with customers in the marketplace to ensure its desirability.
What are the sources of business ideas?
There are many sources for generating business ideas including, self-assessment, customer mapping, value analysis and influences evaluation. In self-assessment, it assesses someone’s passion, experience and skills, and concludes ideas, and customer mapping involves identifying and prioritizing challenges that customers face. The value-chain analysis focuses on checking the existing values or products and identifying areas for improvement. Interviewing stakeholders can also lead to gathering information about the severe challenges and pains that face them and can be subjects of the business ideas. Testing business influences include studying the market, economy, social and technological forces. In assessing the market forces, it includes studying the existing products, suppliers, prices, channels, competition, customers’ needs and concluding ideas for bridging any gaps. In assessing the economy, it involves checking the interest rates, exchange rates, resources, foreign trade, employment and more to list potential ideas. Assessing technology forces involve studying the technology used for production, managing services and digital to conclude ideas for improvement. And assessing social and community forces involve studying changes in demography, migration, urbanization and lifestyle of people. It also looks at how to solve social challenges and foster human wellbeing. Besides, macro statistics, publications and studies can be a valuable source of ideas.
What are the criteria for approving a business idea?
The approved business idea must successfully pass the tests of desirability, feasibility and viability. Desirability test ensures the ability of the new business to meet customer needs. It aims at answering the central question- does the business concept provide any value for the customer or not, and how? The feasibility test ensures the ability of a business to create, deliver and capture values to customers. It aims at answering the question- is it a doable concept or not, and how? And the viability test explains the ability of the business to sell value and make a profit. It aims at answering the question- does the underlying business model support the profitability of the business or not, and how?
Next step- testing the product-market fit
The product-market fit involves testing a product’s offer in the market. It ensures whether this product offer is a sellable one in the market or not, and it is proven successful if customers confirm purchasing it. The product’s offer usually comprises information on the product description, value propositions, selling prices and distribution channels. A product-market fit describes the level of customer acceptance of the product offer in the market. If the product offer does not create sufficient demand, this means that there is something wrong either with the product, price, distribution channels, or all these factors. Testing a product’s offer involves preparing and testing a product offer with potential customers in the market.
This article is extracted from my new book- Mastering Enterprise Skills for Potential Entrepreneurs, which can be found on www.amazon.co.uk. If you want to receive more information about the book and our activities, you can register in our newsletter by using this link.
Prepared by Munther Al Dawood
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