Is Your New Business Idea Really Worth Pursuing?
Cara Squires, writer
Published at 05/06/2021, Updated on 04/05/2022 , Reading time: 6 min
Starting a new business can be a difficult process. When you’re building up a brand from scratch, you don’t have an established business model to fall back on, and you don’t have the support of an expert franchisor. All the risk that you take on is yours alone. That’s why you need to be certain that your new business idea is viable.
Owning your own business is a huge responsibility, and a lot of work. Yes, you’ll have the total flexibility of choice that wouldn’t be available to you as a franchisee, but you’ll also be taking on all of the risks without a safety net. Prepare yourself by asking the right questions and ensuring your new business idea is a good one.
Things to consider when you’re starting a new business
1. Is your idea original?
Arguably, no idea is completely original, but if you’re planning on pursuing a business idea which offers nothing new to consumers, it’s unlikely that you’ll get it off the ground. As an entrepreneur, you should be innovating, and finding gaps within the market. To figure out whether your idea is original, you can:
Do your research - Find out how original your idea really is, and be aware of competitors in your intended industry.
Discuss the idea with trusted friends - This will be especially useful if they fit your business idea’s target demographic.
Seek advice from other professionals - What do other people who have been through the process of starting a business think of your idea?
Just because you have a brilliant idea does not mean other people haven't also had the same idea. If you can't offer something better and/or cheaper than your competitors, you might want to rethink starting a business in that area. —Ian Wright, British Business Energy
2. Have you got a business plan?
Creating a business plan can be both daunting and arduous, but having a business plan is extremely important, not only for potential loan applications, but for nailing down how you’ll manage your business moving forwards. Map out your finances, determine your target audience, and create detailed steps leading up to the successful launch and continued growth of your new business. These are the key components of any good business plan:
A mission statement
A description of your business
A list of products/services that you will offer
A detailed analysis of the current market and opportunities
Mention of anyone who will be involved in business decision-making processes
A financial plan
Whether you’re starting a small business or exploring ways to expand an existing one, a business plan is an important tool to help guide your decisions. Think of it as a roadmap to success, providing greater clarity on all aspects of your business, from marketing and finance to operations and product/service details. —Nationwide
>> Read more:
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- The 8 Primary Roles and Responsibilities of a Franchisor
- Franchisor Tips: 10 Traits That Make a Good Franchisor
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3. Have you tested out your idea?
Testing out your new business idea will help you to determine whether or not it’s truly viable. This is a crucial stage, and shouldn’t be overlooked, as blindly assuming that an idea will work comes with a lot of risks. Creating a business plan will help to give you a sense of your demographic, but there’s nothing more revealing than testing your idea out on potential consumers. Do this by:
Preparing products/services to be tested
Presenting products/services to a test group of potential consumers
Tweaking products/services according to feedback and advice received
Having a business idea which has been tried and tested by your target audience of consumers will give you the confidence you need, as you’ll know your business has a solid chance of success.
>> Read more:
- 5 Qualities of a Successful Franchisor
- 4 Things Franchisees Never Have Time for But Are Essential for Running a Successful Business
- How to Launch a Franchise and Get Noticed
- 4 Elements of a Successful Franchise
- How to Start a New Business on a Shoe-String Budget
- The Ultimate Guide to Franchising Success
4. Are you considering all the risks?
There are many different risks involved with business ownership. 20% of startup businesses fail within the first year, and 60% within the first three [Fundsquire]. But why are these businesses failing? According to statistics [CB Insights]:
42% fail as there’s no need in the market for their services/products
29% fail as they run out of money
23% fail as the right team isn’t running the business
19% fail as they’re outcompeted
18% fail due to pricing and cost issues
17% fail due to poor product offerings
17% fail due to the lack of a good business model
14% fail due to poor marketing
14% fail as they ignore customers
5. Do you have the experience and skills that you need?
Running a business successfully, and taking charge of all areas of operation, takes a very particular skill set. If your business idea is brilliant on paper, but you don’t have the business acumen to see it through, you’re not likely to succeed. Before you get going with any new business idea, identify your skills and gauge your likelihood of success. Some crucial skills for business owners are:
Financial management
Marketing
Sales
Customer interaction and networking
Leadership
Planning
Project and time management
Problem solving
Running a franchise versus running your own business
So, what about running a franchise? What’s the difference, really, between going it alone and investing with a franchisor? One of the key differences - and one of the key reasons why franchising might be a better option for you - can be explained via the red and blue ocean concept.
A red ocean is an existing market space, in which you’ll have to compete more fiercely to succeed. Other companies already fill the ocean, and you’ll need to stand out to survive. Conversely, a blue ocean is an uncontested niche or market space that you create for yourself, in which you don’t have to compete, but can instead capture new demand.
If your new business idea exists in the red ocean, as most do, you’re taking a huge leap of faith by diving into already-crowded waters. With a franchise investment, you could operate in the same area with the safety net of an established, proven business model and expert franchisor support at your fingertips. Let’s briefly readdress those questions we discussed from the perspective of a franchisee…
Is your idea original? - As a franchisee, your idea doesn’t need to be original. You’re joining up with an established business, with a proven track record of success and profitability. Obviously, the idea is working.
Have you got a business plan? - As a franchisee, you might need to create a business plan to receive a bank loan, or to talk through with your franchisor, but it won’t need to be as thorough and detailed, and it won’t be so key to your success. You’ll already be following your franchisor’s proven business model.
Have you tested it? - Again, no need. The idea has already proven itself to be successful.
Are you considering the risks? - The risks of doing business are far lower in franchising. In fact, fewer than 1% of franchises close per year due to commercial failure [British Franchise Association].
Do you have the experience and skillset? - Most franchisors will offer their franchisees a programme of extensive training and support upon investment.
Become a franchisee and benefit from a proven track record of business success
Hopefully, you’ve been able to figure out by now whether or not your new business idea is really worth pursuing. If you’re not sure it is, and franchising appeals, explore Point Franchise’s UK franchise directory to find suitable investment opportunities for you.
Cara Squires, writer