Before You Take the Plunge: Here Is How to Identify Bad Business Ideas
It is said that nearly 2/3 of starts-up fold up within the first 5 years. That is depressive enough for the young people bristling with fresh energy. But it is possible to be among some of the last quarters that build businesses that survive a harsh economy, a mature market, overflooded channels, fierce competitive environments, and consumers negligence. The caveat is to track the trends that have undone great businesses. Those trends are often located in business ideas or models that do not align with the overall market reality.
The business ideas that are likely to fail exhibit one of these features:
a. Focus on Solutions Instead of Customers – Many business ideas are great, but unfortunately the consumers don’t need them, or can’t afford them; or the ideas’ relevance lie somewhere in the future. Some ideas might have even pass their time. Therefore, any business idea that will succeed need not only be brilliant but have a direct impact on the immediate needs and desire of the consumers. For instance, the blockchain industry may have its relevance in the future but for now nothing is wrong with paper currency, and that is why so many people don’t care to know how it works.
b. Undifferentiated – ‘Me-too’ businesses or products are always choked and eaten off by the sharks in the blue-ocean. For a business idea to have a chance of survival in a fiercely contested market, it must offer something that others do not offer. Better still, it can offer some features better than what competitors are offering. For Uber to beat normal taxi, it offered convenience, comfort, security, and affordability. Apple iPhones offer services that other phone makers do not offer. Some restaurants offer home delivery service; and more. If your business idea does not offer something unique in addition to what is already obtainable in the market, customers will find it hard to come to you. Alas, they won’t even remember you exist.
c. Economically Unsustainable – Selling a high priced product or services in a low cost environment or depressing economy is a ‘no-no’. That product or business will soon fold up. Good business ideas must take into consideration economic realities and the status of target consumers. The idea of a luxury watch or nicely decorated eateries in a local setting is scary. A lounge in a suburb can get out of business sooner. That is why category-killers such as discount outlets have made headway across the globe as consumers face economy crunch and savings go on the decline. So watch it – can your target afford your offering?
d. Nice to Have But Not Necessarily Needed – What is good about an expensive fashion school that offers free afternoon meal when students basic need are the knowledge to be had and an affordable fees? Samsung is considering its business models these days since there are many low cost android phones that do better than the pricey Korea-made brand. So a business idea that will sell quickly must build its core functionality and appeal around the basic needs of the people.
e. Focus on Trends Only – As the internet went mainstream, many blogs cropped up here and there without defining their audience, or choosing a peculiar niche. That is why most of them couldn’t beat CNN, nor Forbes, nor Punch, or Guardian. It is not enough for a business idea to pursue a trend, it needs to identify a niche and stand there. Kudos to LindaIkeji, a blogger who chose social gists and stayed there. She is prominent now.
However, if you discover that your business idea titters towards any of the listed features, you don’t have to quit. You can pivot, and rework the existing business model to become a success.