Choosing The Right Industry For Your Startup
A startup is an idea that develops from interest of the founder into a service that is of interest to the public.
1. Choosing a profitable product or service
There is no such thing as a sure thing; you have to take your chances using your intelligence and smartness. Passion alone does not suffice. It is not necessary that things that give us pleasure also give us profit. To sustain the test of time, profit and competition in market, the product or the service being sold by your startup needs to be of the nature that it is desired by the public. Hence, the question- what product is suitable? A product, which is not sold on common e-commerce platforms, can be adequately sold above the purchase price, is something which needs to be brought frequently, can be easily shipped and does not violate trademark rights of anyone, should be selected. Further, don’t get overwhelmed by too many products. Narrow down your product to not more than in singular quantity.
2. Do your research
Knowing your competitors is more important than merely sweating profusely over your product. The first step to that is narrowing down the case studies into those related to your product. Then select the target market. The best way to approach with the research is a SWOT (Strength- Weakness- Opportunity- Threat) Analysis. This can further be done using quantitative and qualitative study. Quantitative study includes conducting surveys while personal interviews form part of qualitative study. The questions must be about supply and demand factors. But these all are ancient methods. To stand the competition in the modern times, it would be better to hire a strategist to get well acknowledged with the market trends, profit- loss ratios between the competitors and success factors of the budding businesses.
3. Selection test for business idea
After a successful conduct of research, you would narrow down some business models which would seem suitable for your product. But still, to select one of them would require a test of determination. Here is a ten point analysis for this purpose:
i. How unique is your idea i.e. to what extent is it being followed by others?
ii. What is the success rate of that idea?
iii. Who all would possibly benefit from your product?
iv. For what all possible reasons would the customers consider buying your product over other products which are similar in nature to yours?
v. Do you have an adviser who would assist you with upgrading your idea?
vi. Does the idea stand in co-operation with its backup plan?
vii. Do you have proper access to the resources required to bring your idea to its full form?
viii. How long would your idea last in the market?
ix. Is your idea strong enough to stand against unpredictable market circumstances?
x. Factors of investment in your idea to attract potential investors.
4. Risk Evaluation
Evaluation of finance, technology and team shall form the basis of your risk mitigation scheme. While you may have developed some techniques for the evaluation, it would be plausible to hire an advisor or an assistant who would help you with the task.
i. To calculate the possible amount of risk, it is a requisite to calculate the probability of the idea failing. After all, pooling all your capital into the idea beforehand would make you look like a gambler. And then it would drive away the interested investors who are also looking for all the possible risks involved.
ii. Technology used for the purpose of business should not be complicated. Plus, it should stand tough with time and its failure should not jeopardize the operations of your startup.
iii. Hiring the right members for your team is very important. They should have same ambitions and must be loyal. No matter how successful a business is, insider trading always hurts.
5. Judgment Day
After all the tests and evaluations requisite for the startup, the last test would be for you- the founder. Ask yourself these questions and you are good to go:
i. Are you mentally prepared to deal with the risks involved as they will affect your financial decisions and mental state forever?
ii. Are you willing to spare the time required to work towards the building of the startup since the founding years require the most struggle?
iii. Is your mind at ease with delegating important tasks to your team? Nobody likes a person with narcissistic behavior.
iv. Are you perfectly okay with the idea and the product? It’s never too late to change the plan before making investments.