Building a business is no easy task with several factors needing to be taken into consideration. Pria Masson shares her ‘cheat sheet’ for evaluating your business and making it worthwhile.
Over the last couple of weeks I have had some very interesting conversations around business ideas and what sort of businesses opportunities exist. While, it often seems like the best ideas come out of ‘aha’ moments, in reality, the best execution comes out of detailed research and painstaking work.
This month, I thought I would give you a sort of ‘cheat sheet’ into identifying an area of opportunity. Just follow the steps below!
Find a core aim
A business idea has to either solve a problem, make a process easier, eliminate a process or create a need no one knew they had. To explain, Google solves a problem of not having instant answers; Netflix makes the process of entertainment simpler, a cloud kitchen eliminates real estate needs and cryptocurrency created a new need altogether. If you have an idea, it must have a core aim.
Understand the economics of the country
Every country has its core economic sectors. For instance, Bahrain has oil and gas as its core sector. The other prominent sectors are banking, real estate, hospitality and trade. In addition to these, the core sectors that feed every economy are education and healthcare. Why is this relevant? Because the size of the economic sector explains the market available. Any product or service that feeds into a core sector has the potential to grow. The exception is very high margin products – these can make money even if sales volume is not high.
Study the boring stuff – demographics and market size
Demographics is the profile of a population – when you read that, it suddenly becomes clear why it is so critical. Learn the process of breaking down demographics. So, if you have a product that is catering to learning technologies, you need to know how many school-going children are there, how many of those learn in the language of your tool, and, how many of those have an income level that allows them to pay for your product. Blend that knowledge into your pricing strategy to find out a minimum sales level needed to break even.
Find out who you are speaking to
“If you speak to everyone, you speak to no one”. I read this somewhere and it has stuck with me. Every product and every service has a specific audience – know who that audience is. Then, do the maths and see if the demographics and market size balance out the investment you would need to make. Because not all investments make enough money in the correct span of time. Time also has value, and, in the case of money, the longer the time, the lesser its value.
Business strategy is all about numbers. How much you spend has to be balanced by how much you earn in a reasonable amount of time. For many, that’s not a pleasant experience. However, if your idea cannot earn you the required income in a reasonable time frame, it’s not a business – it’s likely a charity where your suppliers are the beneficiaries. The idea or business will give you a sense of purpose for sure, but, eventually, when the pockets that fund it dry up, picking up the pieces is messy.
Do the messy work before you invest, that’s probably the biggest ‘cheat code’ of them all.