Validating Your Idea
Are you pondering starting a new business, or are you looking to add a product or service to your existing business model? You have a great idea that the world will fall head over heels. But how many others have pondered the idea of starting a business of the same type or adding the same product or service? An impressive rate of more than 540,000 new businesses is beginning each month. So, what will your competition rate be for your better mouse trap?
Approximately 543,000 new businesses get started each month (but more employer businesses shut down than start up each month)
Seven out of ten new employer firms survive at least two years, half at least five years, a third at least ten years and a quarter stay in business for fifteen years or more.
Source: U.S. Census Bureau, SUSB, CPS; International Trade Administration; Bureau of Labor Statistics, BED; Advocacy-funded research, Small Business GDP: Update 2002- 2010, www.sba.gov/advocacy/7540/42371. In 2010, there were 27.9 million small businesses and 18,500 firms with 500 employees or more. (U.S. Census)
This number grows continuously yearly and is offset by businesses closing their doors for various reasons.
Here are some beginning steps to validate your idea.
- Who cares after one year? Many products are linked to fades and trends and have a lifetime of an earthquake. They shake things up, but their sticking power in the market is short-lived. And the time it takes to clean up the failure rate is staggering.
- Take the time and do a deep market analysis of who your competitors are.
- How similar is these products or service?
- What is the market saturation, i.e., how many other companies are selling this same product or service?
- How is yours different, and what attributes set you apart from your competitors?
- Do you have the skills and education to run a business? Just because you worked for an organization that does something similar doesn’t mean being mad at your old boss will make your business successful.
- Have an accurate set of objectives, which will set the goals for yourself and the company.