You come up with a great idea for an enterprise that you think has the potential to be successful, but you also have a full-time job…now what? The most important thing to keep in mind when deciding whether to pursue an idea or not (especially if it involves lots of work while you are already employed full time) is validating your idea and seeing whether it has the potential for short- or long-term success.
Business ideas that only have the capacity to be successful short term, shouldn’t be enterprises that require extreme amounts of time and effort, shouldn’t be too risky, and also shouldn’t jeopardize your current full-time job or career plans. Ideas that are validated to be successful in the long term, require more sacrifice and risk-taking but have a larger payout in the bigger scheme of things.
What is the difference between short-term and long-term businesses?
Not all enterprise ideas need to be long term in order to be viable. Having an idea for a short-term business is just as valid, as long as you realise this and plan accordingly.
The only issue with a short-term idea versus a long-term idea is when you don’t identify beforehand that your idea is only feasible short term and use long term business plans for a business idea that won’t be able to sustain its success.
Short term businesses
Short term businesses usually have the following attributes:
- Capitalise on a trend
- Quick to start/implement
- Small investment
- Fast profit turnaround
- A set goal/requirement for when to stop
Long term businesses
Long term businesses usually have the following attributes:
- Fulfill a consistent need/gap in the market
- Require lots of upfront planning
- Profit is slower but more consistent
- Large time and monetary investment is usually required
- Constantly needs to grow and change to keep up with the market
- Thorough business plans are vital
How to validate your business idea?
Once you have an idea for a business, you should follow the below process to determine if your idea is viable and also whether it is viable for the short or long term. Once this is determined, you can then accurately plan as you will have a better idea of what to expect.
Do your initial planning
Before you can start validating your idea for the short or long term, you first need to get all of your ducks in a row. Start by writing down and answering the following questions:
- What is my idea? (You do not have to go into too much detail, a general overview will work)
- Who is my target audience, i.e., who will be using or buying my product/service?
- What problem am I solving or what gap in the market am I filling?
- How does my product or service benefit the customer?
- What are the key features of my product/service?
Do your research!
Now that you know what your product or service is, what need or gap in the market you are satisfying and who your potential customer is, you need to find out whether you are correct.
Verify your planning above by answering the following questions with a bit of research:
1. Is your product or service innovative?
Jump on Google and search for your product or service. Are there lots of people already doing this or something similar?
2. Is my target audience interested in this product or service?
Find people in your target market and interview them about your idea. Ask for feedback, suggestions and whether they would be in the market for this product or service. You can find people to interview by reaching out to family and friends in your chosen demographic, going on Facebook groups, searching on LinkedIn, or even going old school and standing at a mall or area where your target audience would be and asking them questions.
3. Does my product or service have a unique selling point (USP)?
A unique selling point can be ‘make or break’ when it comes to starting a new business, especially if there is already a lot of competition. A unique selling point is something unique about your product or service that will make it stand out from competitors and will add extra value to your customer. Figure out what yours is.
If you answered “No” to any of the three questions above, you may want to re-think your idea and go back to the initial planning phase.
Deep dive into the viability
Now that you have streamlined your ideas and verified your initial assumptions, you need to deep dive into whether your idea is actually viable and achievable. Below are some brief explanations on what to look into, but in order to be as thorough as possible, we recommend that you research further into how to properly execute each of these steps.
What are your strengths and weaknesses relating to launching this enterprise?
You should make a list of what would be needed to get your business started (i.e. a website, a manufacturer, tools, etc.) and whether this is something you can handle or something you have no experience in and should rather be outsourced. Be 100% honest with yourself when creating this list as it will determine how much extra help you will need to bring on board.
What is the market size?
You now know who your target audience is, but how many of them are there? Is there enough people to generate sufficient income in your business? One of the easiest ways to do this is by signing up for a free Google Ads account. Nowadays, if people are looking for something, they search for it on Google. By using the ‘Keyword Planner’ in your Google Ads account, you will be able to input a keyword that you assume people would use to try and find your product/service, and then it will show you how many people are actually searching for that keyword under the ‘Impressions’ column. We recommend trying multiple different keywords relating to your product or service.
Work out the costs
Define a basic budget and how much you could potentially make. Be very conservative with sales estimates and very liberal with expense estimates.
- How much will the product/service cost to create?
- What are my initial startup costs?
- How much will marketing cost?
- How much will outsourcing/employees cost?
- How much will I spend on running costs (i.e., electricity, website, internet, etc.)?
- How much will I make from each sale?
- What will my markup be?
- How much do I expect to sell?
- What is my monthly/weekly income minus expenses?
- How long will it take me to cover my initial start-up costs?
- How will my business be taxed?
- What will my earnings be like after tax?
Decide if your business is a short or long term idea
Based on all of the previous information, you now have to decide…is this enterprise idea valid for the long term or only the short term? Check the boxes that apply in the table below to find out.
If most of your ticks fall into the short-term column, your idea is likely to only be viable for the short term, whereas if your ticks fall mostly into the long-term column (and you have less than 4 ticks in the short term column), it is likely that your idea is viable for the long term.
Although this article should give you a good idea of whether your enterprise idea has short- or long-term validity, nothing is ever black and white. Short- and long-term ideas have lots of overlap and there is always the possibility that something you planned to only be short term has long term viability and vice versa. The best thing to do is plan according to your initial instincts but stay adaptive as you progress.