How to Start a Business: Feasibility of Business Ideas

If you've ever thought about starting a business or starting a small business while avoiding some of the most common mistakes made by most entrepreneurs or new business owners, then this is the most important information you will ever need on how to start your own business - starting your own business that will explode your profits.

Did you know that a majority of new businesses fail in less than two years? Less than one percent of business plans submitted to investors become successful in raising the capital.

Many business start up fail for opportunity related reasons. The reasons are:

(i) Market Reasons - perhaps the target market simply won't buy.
(ii) Industry Reasons - it's too easy for competition to steal your emerging market.
(iii) Entrepreneurial Reasons - the team may lack what it takes to execute critical success factors to the pursued opportunity.

Industry, market and the people that make up a team are the three most important elements that make up a successful entrepreneurship. The industry - comprises of the sellers. It is vital to understand the dynamics of competition within the industry of your choice.

The market - these are buyers. You have to know by facts whether the target market will buy the product or service.

The team - these are the people who will translate the idea into a business. Can they execute the critical success factors?

An average business entrepreneur if not most entrepreneurs, never test the feasibility of their new business ideas. Good business ideas are not necessarily profitable business ideas - and the reason is that, ideas are not the same as opportunities.

Most entrepreneurs starting a business quickly jump into writing a business plan without verifying the feasibility of their business ideas. Money making ideas and good business ideas always pass the stringent test for viability. New business ideas have to undergo the process to become successful business ideas.

There are seven domains of attractive opportunities. And these are:

(i) Attractiveness of the market
(ii) Attractiveness of an industry
(iii) Target market
(iv) Sustainable advantage
(v) Ability to execute on critical success factors
(vi) Connectedness across the value chain
(vii) Mission, aspiration and the propensity for risk

Attractiveness of the market - the size of the market is very crucial. This is the number of potential customers willing to buy your products, goods or services to satisfy their needs. Is the market fast growing? And if it is, at what rate?

Attractiveness of an industry - how easy it is to enter into the industry? The lower the threat of entry, the lesser the competition. Are there any substitutes or alternatives to your product, goods or service? The lesser the substitutes, the more attractive the industry. How intense is rivalry or competition? The less intense the competition, the more attractive the industry. Are there any strategic alliances amongst your competitors?

Target market - which segment of customers are you targeting? How large is the segment and how fast is it growing?

Sustainable advantage - how sustainable is the advantage that the industry brings to its customers? Is it a continuous opportunity? If so, are the future demands likely to grow or decline?

Ability to execute on critical success factors - does your team have a clearly defined vision and goals for the business? Do they have the skills and the know-how to deliver what they intend?

Sun Tzu said, "The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations before hand. This can never be further from the truth.

Now that your business idea has gone through the test, the next step is writing a business plan. How to do a business plan or how to start a business plan is a topic that cannot be covered in this material due to the limitations on the size of the article. There are various business plan templates.

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