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How to determine the potential of a business idea

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Before investing in any business the idea is important to determine its potential and market prospects.

For this, it is necessary to take into account a number of important parameters and criteria.

Why it is necessary to determine the potential of a business idea

Opening any new business, or expandingSphere of activity of the acting, should begin with an estimation of potential of business idea. Doing this is necessary not only to provide a business plan to a bank or a potential investor, but, first of all, for yourself. After all, competent planning and forecasting is one of the keys to a successful business.

The potential of a business idea is a predictable estimate of the maximum production and consumer capabilities of the market.

Often at stake are a lot of money, and in order,In order not only not to lose, but also to increase its capital, it is important to comprehensively determine the potential of the business idea. And if the case is opened for credit or borrowed money, the burden of liability is even greater, because with an unsuccessful investment the business will have to be closed urgently, and the debt will remain.

Criteria for assessing the potential of a business idea

It may well be that the emerging ideaIt seems to you quite interesting and promising, but in fact will not enjoy wide demand among consumers. Therefore, any beginning entrepreneur should look at his idea from the side to answer a number of important questions:
- what problem will solve your product, who is the target consumer, is this problem really important for them and there is a market need for your offer-
- what is the demand for the products you are going to offer and whether it has points for potential growth-
- whether the production of your product is economically viable and whether it will yield significant revenue.

The potential of a business idea is a predictable estimate of the maximum production and consumer capabilities of the market.

If the answers to these questions are not difficult, you can go more closely to assessing the business idea.
Of course, the main criterion for assessing the potentialThe idea is its profitability. Therefore, it is important to assess its parameters such as sales volume, projected profitability, payback period. To estimate the potential income, it is necessary to understand the actual aggregate volume of the market and its dynamics (sales grow or contract), and also try to forecast its own market share based on the production capacity or the competitive advantages of this product (service). If this idea is innovative for Russia, you can try to assess its prospects based on analysis of the world market.
To assess the prospects for the market is to compare the actual volume of consumption and its potential capacity.

The market potential differs from real consumption (market volume), this is the upper limit of sales, which is achieved under favorable conditions.

It is also important to understand your ownRelative to similar products and competitors. You need to make a unique product offer that briefly will formulate competitive positions, distinctive features of the product and its uniqueness in the eyes of consumers. Optimal choice of unsaturated market niches.
Finally, it is necessary to determine the forecasted consumption indicators, taking into account a complex of influencing factors. This can be done either on the basis of previous dynamics or using expert estimates.

How to determine the potential of a business idea Was last modified: June 21st, 2017 By Bagqeowd
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