Nowadays, it is often extremely difficult for younger people to start a new business. It is essential to take the time to research and analyze your idea as objectively as possible, and determine if the business model itself is as solid as your enthusiasm.
The Kabada project fits into this problem by proposing the creation of a digital tool for the evaluation of business ideas that will be developed as an artificial intelligence (AI) prototype and will be implemented with an approach that can be introduced into entrepreneurship education in any discipline to provide students, researchers, staff and educators with the knowledge, skills and motivation to engage in entrepreneurial activities.
The innovative approach lies in the fact that the system will be based on AI and machine learning, the digital system for evaluating the business ideas of new entrepreneurs is new and different from other tools (e.g. business simulation games) that will not only evaluate the business idea but will give initial suggestions for improvements and next steps.
Going into more detail, the major challenges that the youngsters are facing and the Kabada project wants to solve can be considered the following:
Identify a Target Market
The first step in validating your business model is determining who the target market is for purchasing your product or service. You won’t be able to accurately quantify your model’s potential until you have a clear understanding of your audience, their size, and their spending habits, among many other variables. As such, you should construct a profile of your ideal customer based upon your personal observations and analysis, third-party market research, and any feedback you’ve received from mentors, colleagues, and test users.
The more accurately you can define and anticipate your ideal customer, the more potential your business has of anticipating and serving their needs. Consider the following demographic factors of your ideal customer: Age; Location; Income; Gender; Occupation; Education; Marital Status; Ethnicity; Number of Children.
Once an audience has been established, you need to conduct market analysis to determine how big the market is, how saturated it is with competitors, and if there’s room for your product or service.
It’s helpful to create a test segment of your target market and conduct a focus group or a survey to discover more about who they are and what they want. This can help you decide if it makes sense to test launch your business within a smaller, niche segment of your intended market.
Research the Competition
During your initial research, you will likely discover that other businesses are offering similar products or services within your target market, but this doesn’t mean your business model is doomed to fail. Being faced with competition underscores the importance of reinforcing the value of your product or service, and identifying why a competitors’ offering can’t match your own.
Just as you need to identify and connect with your ideal audience before launching your small business, you need to know who else is in the market is competing for their attention.
Conduct a Financial Feasibility Analysis
The next step in validating your business model is financial analysis. This means developing answers to the following questions:
- What will it cost to get your business off the ground?
- Where will the startup capital come from?
- What are the initial and ongoing expenses of your small business?
- What is the earning potential of the business once it’s operational?
- How will you bridge the financial gap between the startup process and sustained profitability?
Searching for detailed answers to these questions will help you establish financial data on your market, and will force you to consider the potential sources for earning, investment, and credit available to your business.
While it’s disappointing to discover your business model is risky or infeasible under the conditions of a given market, this discovery can help you avoid wasting time and money on unproven intuition, or from facing the greater despair of financial failure.
If the model for your small business has a clearly identifiable audience, limited competition, and a solid financial foundation, you have an advantage during the next step of the business development journey, the creation of a business plan.
Source: How to Evaluate a Business Idea Before Taking the Plunge
