As one gets in the habit of looking out for business opportunities you may find that you have more than one or two ideas that look attractive to you. One of the main concerns of such first-time entrepreneurs after coming up with and continuously seeking the next big thing, they eventually cannot really decide which business to pick and run with. Some feel that having a business idea is a reason to get accolades and makes them a good entrepreneur. However, as indicated earlier business, ideas are common property and great business ideas are still common estate until they are implemented.
There are various business idea evaluation methods that you could employ. However, unless you are investing in another entrepreneur’s business or you have gone into a lot of detail in implementing two businesses and are looking to invest further, basic evaluation methods will suffice in evaluating which business idea to pursue as a start-up entrepreneur. In this guide, we discuss basic business evaluation methods and go further into business evaluation methods for investors in Volume 11 (African Entrepreneur Guide – Growth Guide).
In no special order, the following are some of the aspects you should consider when choosing which business to pursue.
i) Choose a business you understand. The easiest way to pick a business is to get into the sector that you best understand from a technical perspective. Going into a business, you know inside out ensures you are able to see shortcomings in the product, process, and gaps in the sector than you would otherwise not be able to see if you did not have the technical know-how or were just passionate about the business. The cost of setting up such a business is also much lower because you do not have to hire experts at the onset to help you in the execution of your business idea. If you do not understand the business sector but have the money there is the possibility of partnering or hiring someone who understands the business really well. However, your leadership skills will still be required to ensure the team works well together. For example, you may need a chemist to develop a new product but you still will need to coordinate the different business processes.
ii) Should meet your personal and business objectives. As a first time entrepreneur, you may have a range of objectives whether they are financial or social. Sometimes you are not passionate about business but the impact it has on your community. Such social or financial objectives can sustain one through the different phases of start-up difficulties as much as a passion for a business idea. This is especially true if you are passionate about eradicating poverty and realize that a social business may be your key to addressing sustainability issues. This is especially true for inclusive businesses.
iii) Choose a business where you have a shot at being a top player. Being amongst the top players in an industry or geography has numerous advantages. You reap the most profit from your efforts and can dictate how the game is played, to your advantage. Being a top player is made more likely if you create a disruptive business model in an existing industry because this allows you to change the rules of the game thus making it difficult for other businesses to compete directly with you.
iv) Choose a business you are passionate about. Often entrepreneurs want to get into businesses they are passionate about. This is not always possible but if you have a business idea that is in-line with your passions then this should be the business you choose.
v) Choose a business that is scalable. A scalable business idea is much better than one that is not. It provides an opportunity for your business to grow as you grow as an entrepreneur.
vi) Choose a business in a rapidly growing market. A rapidly growing market means there always will be unmet demand and opportunity for growth and innovation.
vii) Choose a simple business idea. A business model that is simple and clearly shows how the money is made is more likely to be successful than one that is not clear and has too many components to be managed before the money is made. It is also easier to measure and conceive for investors and other stakeholders you may want to partner with
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