Whether you have many years of experience in the field you chose for your business, or quite the contrary, you should do your best to verify that your business concept is consistency with the dynamics of the local market and current demand. Moreover, it will be much easier and less expensive when you exclude certain business concepts during planning stage instead of doing so after launching your business project and signing contracts and agreements.

For help, following this manual which provides a step by step guide to evaluate the business concept you have chosen and its suitability for the market you plan to operate in.

Evaluate the business concept Yourself

Before you launch your own business, earn some experience in the industry or profession you are interested even you have to work for free! Learn about all work aspects and after few months, you will have sufficient experience qualifying you to launch your project.

Speaking with Entrepreneurs in the Same Field

If you are not familiar with the business you want to launch and unable to find the suitable project, you can speak with the entrepreneurs who provide products or services of interest to you. In order to maximize your chance of obtaining reliable answers for all your questions, you could speak with entrepreneurs operating in areas other than the region where you are planning to launch your business.

You will also find that owners of small enterprises, are often ready to exchange expertise and knowledge as soon as they become aware you are not competing with them.

Properly Evaluate the business concept

Ask yourself if the business concept is entertaining and whether you can succeed in the future. If your answer is “no”, then look for another concept, as it will be very difficult to achieve success in a business that you do not like. It is also unlikely that you will enjoy managing a business in a field where you lack any skills.

When you feel that you enjoy the business concept you have chosen and you think you are quite skilled in the field, you can go proceed to the next step.

Evaluating Your Ability to Handle the concept

Try to evaluate your ability and desire to handling each work aspect. In case you find that you do not want to handle specific work aspects or are unable to fulfill specific tasks when required, whether when it comes to the product manufacturing process or dealing with customers for instance, you have to reconsider before you launch such a business.

Evaluating whether your business concept can generate Potential Profit

You have to determine whether your business concept has the potential to generate profits in future. You can assess this after working in the field for a few months, as you will have a good idea whether the business concept will generate potential profits. To be sure, you need to analyze the labor market and execute a breakeven analysis, which is an initial financial analysis to determine the revenues you need to generate to cover your expenses (Such amount is called your break-even point. This point is the sales volume at which overall revenues balance with overall costs). When you earn further revenues, exceeding your break-even point, you will be able to generate profits.

Evaluating Business Risks

You should be able to evaluate the potential risks for some businesses, as the best plans may fail in case you choose a risky venture.

For instance, the following businesses have above average failure rates:

– Computer Shops

– Laundries and Drycleaners

– Flowers Shops

 – Used-Cars Agencies

– Gas Stations

– Trucking Companies

– Restaurants

– Infants & Children Clothes Shops

– Bakeries

– Groceries and Butcher Shops

However, if your business falls under the aforementioned list, you should not necessarily give up on your idea, but you will have to be more accurate and cautious when it comes to the financial information used in preparing your action plan.