What are the ingredients of a successful business idea?

Business ideas can emerge at any time, however credible. Calculating as to whether one has the potential to be a long term success is an altogether different proposition. Ensuring a business idea is commercially viable and profitable is certainly an important first step for any enterprise.

There are numerous different types of business idea. You may have identified a clear gap in the market that you could sufficiently fill. You may even have the plans and credentials to develop a new product, service or invention. If you can solve an everyday problem of thousands of people then you are surely onto a winner.

Many entrepreneurs also successfully monetise the skills they have utilised throughout their career or hobby – the upshot is there are many routes into business, you just have to make sure that you’re taking the right path. Here are a few tips to help you measure an idea’s potential success.

Research your market

In order to ensure your business idea is receptive to investors you need to ensure that there is sufficient demand to enable short and long term growth. Market research is therefore essential to ensure there is interest in your product or service. The last thing you want is to have such a niche product that no-one is really interested in it. On the other hand you don’t want to be dipping your toe into an already saturated market – these are fine margins.

Is it profitable?

Although business ideas may sound good in discussion it is important that it is profitable on paper. It is crucial to do the necessary sums to find out how much it will cost to make and sell your product or service. You should also factor in other day-to-day costs such as salaries, expenses and raw materials required. Discuss with seasoned businessmen and women who may be able to help you prepare a credible business plan.

Is there long term value for customers?

Let’s face it, unless customers and clients see long term value in your product or service they are unlikely to buy from you or become returning customers. Unless it is easy to prove to customers that your product or service clearly solves an issue and is more effective than anything supplied by competitors you may have a hard time making money!

Put simply, a successful business idea is one that gives a business the freedom to expand. It needs to be more than a one-trick pony and able to distinguish itself from the competition.

More business advice for SMEs

Three ways investors can help you move forward
Five benefits of regular staff training
What attributes do you need to start a business?