If you've found yourself on the precipice of innovation, harboring a brilliant idea for a new startup can be a thrilling journey – but only if the idea is sound and viable. By asking the right questions, you can be assured your idea isn't just a fleeting spark, but a sustainable blaze that can withstand the challenges of nascent businesses.
Rather than trying to expand to global heights right from the jump, determining the viability of your startup by assessing factors like problem-solution fit, scalability and adaptability is a good place to start. If your idea is well-developed, strategized, and ultimately viable, you won't have to be as worried about it failing. To ensure your idea for a startup is, in fact possible, here are the right questions to ask so you can know that your venture will be viable.
The market: does your idea fill a gap?
The real heartbeat of any marketable – and eventually profitable – startup idea is the market demand. If there is a genuine need or problem that people are facing which needs to be fulfilled, filling this gap in the market with a solid and upstanding business venture will instantly connect with a set audience. The people most in need will celebrate your idea from the jump, guaranteeing a following and user base who champion your product or service.
After figuring out how to form an LLC and get your startup off the ground, you’re ready to prove the viability of your idea by seeking out your target market. A study by Bond Collective studies claims that most startups will be able to access between one and five per cent of their target market at the beginning. While this is low, targeting consumers who have the greatest need for your product or service will save you time and keep your projections realistic.
The USP: what makes your offer unique?
A unique selling point, or USP, defines your startup idea’s distinctive position in the wider market, underscoring what’s at the heart of your business. You can have several USPs, so long as they all have a focused value offer and solve a specific problem. Statistics back the importance of USPs, with Hubspot reporting 53% of brands with a well-defined USP are more likely to be seen as market leaders by consumers.
Coming up with compelling USPs is akin to giving your startup idea a one-of-a-kind voice in a crowded market. What aspects of your offering make it irresistible? Ensuring this is communicated from the earliest days of your company will make the idea more viable over time. With 70% of customers willing to spend more on a product or service that offers a unique benefit, nailing down your USPs and communicating them through branding and marketing is essential to attracting a loyal customer base.
The competition: who are you up against?
No startup exists in isolation. If your idea is similar to another product or service offering that already controls a market, it probably doesn’t make sense to go up against this type of domineering competition. While you might be able to capture a small percentage of their audience, over time it’s likely that their brand reputation will overtake your startup’s ability to remain viable. Roughly 20% of startups fail due to competition, so this is an important element to keep in mind as you assess your idea’s viability.
Understanding your competitive landscape is critical to the sustainability of your startup. Not only will this insight help you to differentiate your offering, but it also allows you to anticipate potential challenges and risks. Whether you’re aiming to be a cost leader, provide premium solutions, or focus on innovation, knowing where your competitors stand will make it easier to carve out your own unique and defensible position.
The numbers: what is your monetization strategy?
While passion and purpose propel entrepreneurship forward, a viable startup idea must also be financially sound. Like any business, a startup’s survival depends on its ability to generate income. If you don’t have a clear plan for monetization in place from the onset, it will be incredibly difficult to decide how to focus efforts, allocate budgets, and maximize returns.
A viable monetization strategy ensures that there will be a steady stream of income to cover operational costs, and employee salaries, and to fund further development. The choice of a specific strategy ultimately depends on the nature of your idea, the target audiences, and the overall business model. Some of the common types of startup monetization strategies include subscription models (customers pay a recurring fee), freemium models (customers are charged for premium functionality but can access a basic version), one-time purchase, pay-per-use models, and licensing or franchising, which allows other companies to use your intellectual property, brand, or business model in exchange for a fee.
In a landscape where one in five startups fail within the first year, viability is paramount. Market demand forms the core of a practical and viable startup, with success hinging on addressing a genuine need.