Starting and growing a business entails hard work, but the joy and satisfaction derived from seeing it come to life as a result of your hard work makes it all worthwhile. The freedom to do things your way knowing that you’re solely responsible for the outcome yields a sense of unparalleled contentment. Most entrepreneurs revel in the hard work they expend starting and growing their businesses. They say the contentment and pleasure derived from working for themselves far outweighs the long hours of “drudgery”, sometimes six or seven days a week. They say that working for themselves gives them a sense of accomplishment and independence that truly bolsters their sense of self-worth.
If you’re an entrepreneur, all it takes to get started is a good business idea. But just what is a good business idea? To start, a good business idea is one that generates more in revenues than it does in costs. But meeting this condition alone does not define what makes a good business idea. Would you want a business that generates $100,000 more in revenues than costs if you had to invest $10,000,000 to reach that point? That’s just a 1% return on your investment. You’d make more putting your money in a bank.
A good business idea is one that provides a decent rate of return on your invested capital. To determine the potential return a business idea may generate you have to develop an analysis that estimates market size and potential, assesses the competitive profile, and calculates the costs to open the doors (start-up costs) and the costs to keep the door open (operating costs). This information lets you estimate the return the business idea yields.
And just because a business idea generates a decent return doesn’t mean it’s a go. Other factors have to be considered, like do you have or can you obtain the skills necessary to execute your plan? Or can you raise the capital to get started? These are all factors you have to consider when evaluating a business idea.
If you have a business idea we can help you evaluate it to determine whether it’s a good idea by helping you formulate your business plan. We can teach you how to assess the market opportunity, including determining your market potential and target market. We can teach you how to develop a competitive profile and develop a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. We can teach you how to pull all this information together into a well-thought out business plan.
