At UKBF, we love entrepreneurs with big ideas - that’s why we built this community to support people like you. But how do you know whether your business idea is a good one, and more importantly, if it’s likely to be a success?
There are a few steps you can take to sanity check your new business idea and establish whether you’re making a sensible move before starting up. You need to ask the right questions upfront if you want to avoid investing in something that just doesn’t have legs. So, how do you know when to cut your losses and when to forge ahead?
Here we explore some of the best ways to assess whether your venture is viable – and whether you have what it takes to make it happen – with a little help from UKBF members in the small business community.
There are several reasons why you shouldn’t skip this stage, not least because starting a business is a huge investment. If you go in all guns blazing without doing your due diligence, you might come to regret it.
But it’s not just about checking whether your business idea is solid. You also need to make sure you understand what’s involved in starting your own business and that you’re prepared to take that on. It takes a certain kind of person to start something and turn it into a truly successful enterprise, so be honest with yourself about whether you have what it takes.
There’s a big difference between having an idea and making it reality. There’s an even bigger difference if you want it to be successful. So how can you be sure your idea is worth pursuing?
Not sure how to set goals? Check out our guide on how founders can set achievable goals.
You need to understand your audience and their pain points. This is a sure-fire way to discover whether there is a need for your product or service, and how likely it is that you’ll be able to make any money from it. If you haven’t experienced the problem first-hand, how can you be sure that what you’re offering can solve it?
A good example of this comes from one of our discussion threads on the forum, where Kayleigh86 asked fellow UKBF members for their thoughts on setting up a baby retail store. They explain that competitors have closed down and there are now limited options for the local community.
Whilst on the surface this may seem like the perfect opportunity, experienced members including finleydesign and Paul Kelly warn against falling into this trap.
They reiterate the importance of doing some detailed market research, finding out more about customer demographics and understanding potential demand. Only then should you move ahead to the next phase of your plans.
Other members make similar suggestions in another forum, including IsabelaMarga who advises “researching competitors and pricing strategies”.
It’s vital you sense-check your idea against the current market so you can plan how you might differentiate yourself from the competition. Think about how you’ll stand out from the crowd and offer added value to your customers.
Before investing anything, you should pull together a comprehensive business plan and some financials too. This should include everything from how much you’ll need to invest upfront, to how you plan to produce your product or market your business.
You also need to think about how you’ll engage investors, manage cash flow and how you actually plan to make money. Do more research to establish how much customers will be willing to pay and build a financial model to make sure your idea is actually a viable business venture.
One final thought on finances: the biggest reality check will come by asking yourself honestly, ‘can I afford it?’.
Of course, there are certain things that you can’t predict – a global pandemic for example. However, you can prepare and safeguard your business against challenging times, and asking yourself how you might fare is a good way to sanity check your idea.
Speak to other founders to get an honest perspective on what it’s like to start and run a company. They’ll be able to tell you what the climate is like and share any knowledge on how other startups are coping.
You can have the best idea in the world, but ultimately, it takes the right person to turn it into a successful enterprise. Perhaps the best way to sanity check your idea is not to look at the idea, but whether you (rather than anyone else) can turn it into a reality.
For more advice from experienced business owners, why not upgrade to a Business Membership? Make the most of exclusive benefits including premium forums, partner offers and member-only content. You could save your firm up to £400 a year by upgrading your account today.
Upgrade now
There are a few steps you can take to sanity check your new business idea and establish whether you’re making a sensible move before starting up. You need to ask the right questions upfront if you want to avoid investing in something that just doesn’t have legs. So, how do you know when to cut your losses and when to forge ahead?
Here we explore some of the best ways to assess whether your venture is viable – and whether you have what it takes to make it happen – with a little help from UKBF members in the small business community.
Why should I sanity check my business idea?
Perhaps an obvious question, but it can be easy to get caught up in the excitement of your new business venture. However, don’t skip the part where you step back and ask yourself whether it’s actually a good idea.There are several reasons why you shouldn’t skip this stage, not least because starting a business is a huge investment. If you go in all guns blazing without doing your due diligence, you might come to regret it.
But it’s not just about checking whether your business idea is solid. You also need to make sure you understand what’s involved in starting your own business and that you’re prepared to take that on. It takes a certain kind of person to start something and turn it into a truly successful enterprise, so be honest with yourself about whether you have what it takes.
There’s a big difference between having an idea and making it reality. There’s an even bigger difference if you want it to be successful. So how can you be sure your idea is worth pursuing?
How do I know if my business idea is viable?
You’re an aspiring entrepreneur with a great idea and now you want to turn it into something tangible. Here are some of the questions you should be asking, plus a few other things to consider, before you press the big red button.1. Look to the future
What’s your vision for this venture? Do you have any long-term goals or objectives, or are you only thinking about the here and now? Think about what the market or even the world might look like in five years time, and consider how your business fits into that. Without knowing where you’re headed, you’ll struggle to get going.Not sure how to set goals? Check out our guide on how founders can set achievable goals.
2. Know your audience
Just because you have an idea, doesn’t mean there’s a market need. A great way to sanity check your business proposition is to do some market research. Speak to potential customers and understand whether you can provide them with the solution they need now and in the future.You need to understand your audience and their pain points. This is a sure-fire way to discover whether there is a need for your product or service, and how likely it is that you’ll be able to make any money from it. If you haven’t experienced the problem first-hand, how can you be sure that what you’re offering can solve it?
3. Read the room
You’ll also need to research the market you’re looking to get into. If you’ve seen a gap in the market or your local area, ask yourself why that gap exists. Do some digging, speak to others in the space, and understand whether there’s anything you’re missing. The last thing you want to do is start something where there simply isn’t the demand.A good example of this comes from one of our discussion threads on the forum, where Kayleigh86 asked fellow UKBF members for their thoughts on setting up a baby retail store. They explain that competitors have closed down and there are now limited options for the local community.
Whilst on the surface this may seem like the perfect opportunity, experienced members including finleydesign and Paul Kelly warn against falling into this trap.
They reiterate the importance of doing some detailed market research, finding out more about customer demographics and understanding potential demand. Only then should you move ahead to the next phase of your plans.
4. Scope out the competition
Looking at other companies already offering the same or a similar product/service can be a great way to sanity check your idea. NickGrogan points out in another of our forums that if there’s a market there, “that’s good news as what you’re offering exists and seems to sell.” However, he goes on to ask budding entrepreneurs, “what are you going to do differently?”Other members make similar suggestions in another forum, including IsabelaMarga who advises “researching competitors and pricing strategies”.
It’s vital you sense-check your idea against the current market so you can plan how you might differentiate yourself from the competition. Think about how you’ll stand out from the crowd and offer added value to your customers.
5. Do the sums
Starting a company requires some serious investment – both in terms of time and money. One of the best ways to sanity check your idea is to work out how much it’s all going to cost and what return on investment you’re likely to get.Before investing anything, you should pull together a comprehensive business plan and some financials too. This should include everything from how much you’ll need to invest upfront, to how you plan to produce your product or market your business.
You also need to think about how you’ll engage investors, manage cash flow and how you actually plan to make money. Do more research to establish how much customers will be willing to pay and build a financial model to make sure your idea is actually a viable business venture.
One final thought on finances: the biggest reality check will come by asking yourself honestly, ‘can I afford it?’.
6. Timing is everything
This one feels particularly pertinent in early 2023, when the UK is facing its worst financial crisis for decades. If you do your homework, you’ll likely learn pretty quickly whether or not your business is likely to take off. What’s harder to determine is whether it will survive.Of course, there are certain things that you can’t predict – a global pandemic for example. However, you can prepare and safeguard your business against challenging times, and asking yourself how you might fare is a good way to sanity check your idea.
Speak to other founders to get an honest perspective on what it’s like to start and run a company. They’ll be able to tell you what the climate is like and share any knowledge on how other startups are coping.
7. Do you have what it takes?
Finally, you need to ask yourself whether you are the right person to turn this idea into a fully-fledged business. Think carefully about why you want to start a business – what are your motivations?You can have the best idea in the world, but ultimately, it takes the right person to turn it into a successful enterprise. Perhaps the best way to sanity check your idea is not to look at the idea, but whether you (rather than anyone else) can turn it into a reality.
Final thoughts
If you’ve read through all the steps above and still want to pursue your idea, why not check out our six-step guide on how to launch a business in the UK?For more advice from experienced business owners, why not upgrade to a Business Membership? Make the most of exclusive benefits including premium forums, partner offers and member-only content. You could save your firm up to £400 a year by upgrading your account today.
Upgrade now
