The biggest challenge of converting an idea into business model is the right direction of execution to avoid failure in short as well as long run. Though learning through failures is considered as the best source of your development, but in the highly competitive market where same business models are getting enhanced by entrepreneurs, it’s better to minimize the scope of failure at initial stage itself. If you are able to minimize the risk associated with your business, it would not only help you to save the valuable time but also the resources like money, manpower and efforts.

“The strategy is to first know what you don’t know, the tactic is to grind, and the value is to remember: there are plenty of places to innovate.”  –David Friedberg

So here is the small guidebook of 13 essential analyses to start your own business to minimize the probability of future failure –

[1] Problem Analysis – The very first requirement of starting your own business / startup is to analyze the problem that is being controlled by your startup. Problem shall be analyzed in terms of the number of people facing it, their age groups, gender, occupation, affordability limits or any other related parameters that helps in deciding the gravity of problem.

Important part is to understand the difference between problem and convenience. A solution solving the genuine problem of mass gets consumer attention at an exponential rate while a solution providing convenience attracts only limited market volume.

So analyzing the problem from consumer point of view gives the estimate of market potential for your concept. A solution affecting large volume has high chance of success in terms of long term expansion.

13 Essential Analyses to Start your own Business

[2] Solution Analysis – Next step is to analyze the solution that you are providing for the problem. Solution must be analyzed against all the existing solutions on pros and cons of each. Why do people prefer some particular solution? Why would people get shifted to your solution? What are you providing that others are missing? Answers to all such questions give the acceptance limits of your concept.

The positives or features of existing solutions attract the consumers, so the same shall be incorporated in your solution as well along with the unique features.

Analysis of existing and new solutions gives the estimated of necessary features / facilities for your solution. Also, it gives an indication of the market competition that your product / service is going to face during execution.

[3] Market Volume Analysis – Next step is to analyze the market volume for your concept. Combination of people facing the problem, targeted market, penetration rate gives the estimate of market volume for your concept.

Though the estimated market volume for your concept might be huge, but based on the parameters like affordability limits, consumer loyalty etc, the actual volume that you are going to target wil be limited. So, the essential thing while studying the market volume is to know the actual mass who will be interested in your concept.

Based on the above limitations, the further improvements of business model can also be decoded to capture the maximum volume.

[4] Market Competition Analysis – Next step is to analyze the market competition that your product or service is going to face. Direct as well as indirect competition shall be evaluated at initial stage.

Direct competitors are those which share any of the following with your business model – product or service, distribution channel, geographical area, key concept. Indirect competitors are those which are either working in some other geographical area or are having altogether another product to serve the same need (which is being served by your product or service).

Small players of same domain with limited funds can easily be handled by providing better consumer service and expending the business model in related verticals as well. Biggies with huge funds (either working in same domain or getting diverse) can be targeted by developing the business model in the areas out of their reach but of their interest.

[5] Revenue Model Analysis – The ultimate aim of starting any business is to get the more cash inflow than outflow to ensure the profitability. So it’s necessary to analyze all the possible ways of making money through your business model.

Direct as well as indirect ways of earning money shall be analyzed prior to execution. Direct methods are the profit / commission per sale / use of product / service while indirect ways includes the additional services, tools that you can provide to concerned consumers.

Better tactic to list down all the cash out-flow verticals and cash in-flow ways. So, you can easily estimate the minimum sales required to achieve the desired breakeven.

[6] Marketing Strategies – The essential step for success of any business is to reach the potential market volume, convenience them to use your product / service and make them a loyal consumer so that they become brand ambassador of your business model. Marketing plays an important role to achieve this target.

Marketing tactics must be strong enough to convince consumers to get attracted towards new startup concept / product. Most of the people have habit of comparing the available solutions. So the marketing campaigns must include the benefits of new concept/product over the existing ones. Finally the marketing campaign should be strong enough to convert unaware users or users of other players into your consumers.

Press media, social media, television ads, door to door marketing, canopy marketing, cash burn tactics etc are some of the marketing base that can be selected based on the type of your consumers.

[7] Legal Requirements – Legal requirements is again a major area that requires attention of startups. Law changes as per your business model, so it’s good practice to know and define the legal terms and contracts to avoid issues in future.

Founders and stakeholders agreement, payment contracts with vendors, registration process and taxation issues, legal requirements of your business are some of the areas that should be analyzed at initial stage itself.

[8] Scalability Analysis – The business model needs to be expended in future to become one stop solution for consumers, handle the market competition and earn maximum amount.

So the scalability of the concept shall be analyzed in terms of geographical extension, introduction of business verticals and related services, and getting diverse in long run. Though the scalability parameters might get changed during execution based on the market response, but it’s good to have a plan at starting stage itself.

[9] Long Term Target Analysis – Entrepreneurs have two major objectives for their business models, either to become the biggest player of market and acquire the small startups or the expert of some domain and getting acquired by big players. The target should be clear from the very first day, so that all the strategies could be developed and tracked as per the desirable success target and rate.

If you are planning to become the market leader, focus should be on achieving operational excellence, maximum business verticals and profitability. If the target is to get acquired by some biggie, the focus should be on developing business model around the biggie by analyzing the acquisition pattern.

[10] Skillsets Mapping and Team Selection– Next step is to select the team or distribute the work among the available members to execute your business idea.

The best way is to first map the work that needs to be done and the skill set required against each, and then choosing the team as per the desired skillsets or assigning the tasks to members based on their areas of expertise.

Team selection is the most critical factor of startup success. Since at initial stage the only motivation is to achieve your dreams, it’s essential to choose the right people with clear focus and dedication.

[11] Planning on Related Verticals – Planning of what needs to be done is the next step. All the related verticals of your work scope – for example – time frame, budget, communication flow, risks and mitigation plans etc shall be pre-planned to track the achievement and avoid future failure.

[12] Prototype Testing – A prototype is a simple working model of your product that is capable of explaining the concept, potential, functionality and features etc. Though it’s not fully functional, but by creating a rough prototype of your startup vision, you’ll have a much easier time, explaining the concept to potential investors, clients, folks at meet ups and anyone you encounter when evaluating the potential of your startup.

Benefit of testing the concept on prototype is that it gives the feel of real time execution, feasibility limits and challenges in execution, acceptance by mass and the possible modifications required in the planned setup.

[13] Monitoring and Control for Final Product – Once you have done all of the above mentioned steps, it time to execute the final concept. Based on the results of your analysis, you can decide the right and wrong among the available options.

Though no fool-proof system can be developed for startups, above mentioned pre-analyses reduces the possibility of future failures / risks / issues.

Wish you luck for your startup. Stay tuned with FS for more updates.