Does your idea structurally have enough potential transactions to make enough money? If you buckle down tight and build this business, identify how big it can get, and what resources you will need to get there.
If you are marketing your own time as a consultant, for instance, is it scalable to your needs? You only have 24 hours a day to sell—and will occasionally need to sleep and eat. So your inventory of product is limited.
What political, legislative, or economic factors are you depending on to stay in business? For example, building a vehicle emissions testing device as a core product is highly dependent on having states legislate that such testing is required.
If your chosen business model is dependent on a third-party license or company, what are the risks associated with that dependency? What guarantees do you have for the long-term stability and availability of that relationship? For example, becoming an independent agent of an insurance company creates a clear dependence on that company’s strength and evolving reputation.
An example of this is the current fad of serve-yourself yogurt shops, which is hitting hard in Austin, Texas. A dozen such shops have opened there in the last 18 months. These market players cannot control how many more of these will pop up and eat up local market share from them—they just have to watch what happens.
An example of “control done right” is a car dealership. When you are lucky enough to get the go-ahead to open a Honda or Lexus dealership, you are given a region wherein only you will represent the brand. That is a powerful type of control.
If you are licensing a solar technology from China to build a customer base in Europe, can you negotiate an exclusive right to do so? Or will any company with an interest in the technology be able to do the same thing?
If you have a novel technology of some kind, can you get patents to cover your invention and make it defensible?
Most folks think that building a product or packaging a great service is the hardest part of becoming a successful business owner. The thought is something along the lines of, “If we can just build the web site, or open the restaurant, or create the widget—then we are going to start making money!”
Building it, opening it, or inventing it is often the easy part. The hard part is usually what comes next—connecting with customers, communicating your value, and convincing them to pull out their wallets to give you money.
Figuring out exactly how you will connect the product with enough customers in a short enough time span so that you survive, and grow to thrive—that’s where the real work awaits.