With many Australians considering launching a small business each year, it's important that they give their business idea a once over before embarking on their entrepreneurial journey.
"In other words", says Anna Pino CEO of Lighthouse Business Innovation Centre, "the 8,868 new businesses launched in Australia between the 2010/11 and 2011/12 financial years, should have asked themselves three important questions before deciding to go ahead".
1. Does the business idea satisfy a compelling unserved need?
Finding an idea worth pursuing is about working out who wants what you're offering so badly that they'll buy it even if it's an early version made by a startup without a proven track record. Identifying the intensity of the need and the inability of your potential market to solve the problem gives you an idea of the likely demand there will be for your offering. But before you print those business cards, you still need to consider how many people this is important to and work out whether there are enough of them to build a business around.
2. What is the risk of failure?
Sometimes even with a compelling need, the risks outweigh the opportunities and an idea is best shelved until the market is more receptive to it. It's important to look at things like changing trends, the impact of socio-economic and regulatory factors as well as dependence on outside resources before deciding to proceed. Very often these risks can be managed, but it's better to understand what they are from the outset rather than hit an iceberg a couple of months in.
3. How will the business make money?
Having a business model that makes sense often takes a lot of thought and planning. You need to have a good understanding of the resources you will need to operate the business as well as the profitability of your products and services. Many companies have to re-visit their business model a few times before getting it right.
When you launch a new business you're putting a lot on the line – your money, your time, your reputation and very often your relationships, so it's important to give yourself the best chance of success. Investing the time upfront to refine your idea and improve areas of weakness can save you a lot of heartache down the track.
If you need some help evaluating your business idea, Lighthouse has developed an online tool that draws on extensive research and input from business facilitators, researchers and subject experts as well as the hundreds of startups who work with Lighthouse to commercialise their ideas.
About Lighthouse Business Innovation Centre
Lighthouse has a strong track record of supporting entrepreneurs, researchers and inventers on the path from concept to commercialisation. Since July 2008, Lighthouse has worked with over 990 distinct enterprises and provided group and peer based services to over 3400 enterprises and individuals. For over five years Lighthouse has successfully delivered business advice, education, mentorship and networking opportunities to help these businesses commercialise their ideas and grow their companies. Lighthouse also delivers programs such as the ACT Microcredit Program for the ACT Government. Visit www.lighthouseinnovation.com.au for more information.
Photo: "Look out! Potential!!" by Miles Goodhew
