The Complete List of Things to Evaluate Before Opening or Investing in a New Business

Website design By BotEap.comDo you have an innovative idea that you want to market? Thinking of opening a new business? Are you investing in someone else’s idea?

Website design By BotEap.comIf you answered “yes” to any of these questions, don’t do it yet!

Website design By BotEap.comStarting or investing in a new business can be an emotional process filled with anticipation and excitement. You must keep a cool head and treat the process with the utmost objectivity.

Website design By BotEap.comTo help with that, I’ve put together a comprehensive list of questions you MUST answer before you even think about putting together a business plan. This will help you make sure that no overlooked variables are advancing you incorrectly or not. Make sure you don’t skip any part of the process and end the exercise with a very honest yes or no decision based on the answers.

Website design By BotEap.comYou will find it difficult, if not impossible, to answer some of the questions. It is very important to understand the security of each answer and the risk involved in each unanswered question. Manage this risk by analyzing scenarios with the different possible responses.

Website design By BotEap.comWrite a simple comment for each question, this formalizes your analysis. You can also think of each question in a SWOT analysis context by identifying each as a Strength, Weakness, Opportunity, or Threat.

Website design By BotEap.comDo’s and Don’ts:

Website design By BotEap.comdo this all the time

  • Be methodical, analyze completely. Understand the need, the competition, and the constraints, then adapt and differentiate.
  • Keep an eye out all the time for the fatal flaw that will cause this to fail.
  • Many questions cannot be answered or are too vague, check the risk of not knowing them.
Website design By do not do this

  • Don’t follow the classic idea method: “I have an idea, let me figure out how to get it to the channel or the customer.”
  • Don’t focus on product features, focus on the need you’re trying to fill.
  • Don’t be tempted to skip a full scan.
  • The most common mistake is thinking that everyone in the market is like you. If you like the product, everyone else will like it.
  • It is common to confuse a good idea with a good business opportunity, they are not the same.
  • Thinking “We have no competition” is only for naive entrepreneurs.
  • Don’t get hung up on first mover advantage, most of the time funds prefer second movers because the idea is already validated.
Website design By The questions you need to answer:

Website design By BotEap.comproduct or service

  • Can you describe the business idea in 25 words or less?
  • Is the idea scalable? Are you limited on your time or something else?
  • Can your offer change/adapt later?
  • Risk of not being able to develop/manufacture the product?
Website design By Market or Client

  • Can a formal or only informal market analysis be done? (Interviews, observations, focus groups, surveys, market experiments, etc.)
  • Who is the client? How precisely can it be defined? Location, profile, etc.?
  • What problem are you solving? Why would the customer buy? He wants?
  • Commercial risk, not wanting to buy?
  • How big is the market? Increasing or decreasing?
  • How penetrated is the market by the industry? What part can you get fast? Later?
  • What price are you willing to pay? Based on what? How important is it?
  • How price conscious is your customer?
  • Risk of change in consumer behavior?
  • Can the target market be changed later? Can other levels in the value chain be attacked later?
Website design By Industry

  • Can a formal analysis be done or only informal?
  • He is driving? contraction?
  • Do providers have power? Supply shortage risk? Change of price?
  • Barriers to entry:
  • . Contractual? Patent or trademark?
  • . Delivery time in technological development? Innovation?
  • . Management? People?
  • . To lease?
  • . Regulations and government?
  • . Other barriers?
  • Can the barriers change easily?
  • Do you have relationships on the spot?
  • . Customers?
  • . Suppliers?
  • . partners? Talent? investors?
  • Industry experience? Yours? Other management?
  • Risk of changes or regulatory interventions or others related to the government?
  • Technological risk of obsolescence?
Website design By Competition

  • Is it possible to do a formal analysis of the competition? If not, what informal analysis can you do? Alright?
  • Who else is attacking the market? How? Successfully?
  • What is your competition’s pricing strategy?
  • What is the closest thing in the target market to your product? Are you a first mover? Second? More than that?
  • Strategic advantages / differentiators. Clearly visible to consumers or just in their minds? Sustainable? True, important and provable?
  • . Function? Design? Quality? Uniqueness? Innovation?
  • . Delivery? Channel? Availability? To lease?
  • . Cost? Marketing? Dirty?
  • . Ignorance of buyers?
  • . Customer service?
  • . Other?
  • Are you taking advantage of a certain opportunity, situation or advantage?
  • How fast can the competition catch up?
Website design By Channel

  • What options do you have?
  • What is the ideal? Why?
  • If the first option doesn’t work, does it make sense to try others?
  • Which channels does your target market prefer?
  • Which ones are your competitors using?
  • How much integration do the channels have?
  • Will the channel change with customer habits or technology?
  • Risk of not accessing the correct channel or consumer?
Website design By Sales and Advertising

  • How will you get clients?
  • How are you going to retain customers? It is important?
  • Describe the sales force needed.
  • Can a seller of ordinary skills sell it?
  • Do you need advertising? What type? How much? It is important?
Website design By Economic Sciences

  • How clearly can you model the basic economics of the idea? (Costs, sales, margins, required capital, ROI, etc.)
  • Will there be economies of scale? Are important?
  • Accounts receivable? Can it become a problem?
  • How will it be financed initially? Later?
Website design By management

  • Do you have or can you get the necessary management team?
  • Do management/leadership/organization skills make a difference? How big is the difference?
  • What is the value of intellectual property?
  • Does it make sense to do this solo? Normally it doesn’t.
Website design By other

  • Validation:
  • . How quickly can you know if the business can work or not?
  • . Can you define the variables to find out? How fast can data flow?
  • . Do you need product development to find out? Dangerous!
  • . Do you need a long sales process or many tries to find out? Dangerous!
  • Can you diversify? It’s not easy in startups, but can it be done?
  • Give me the biggest drawback/risk (fatal flaw) of the idea? The one that will make it fail?
  • List the seemingly fatal flaws that can be corrected.
  • Does the idea fit your life goals? Workload?
  • Are you passionate about the idea? Nice? Do you do it just for the money?
  • Give me the best case?
  • Give me the downside/worst case?

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