Perhaps the first issue an entrepreneur needs to face is “How strong is the business case for this new venture idea?” Every founder needs to answer that question to prevent over-investing themselves and to be prepared for the legitimate skepticism of others. The list that follows probes the strength of the business case systematically … if you answer the questions completely and candidly.
- What’s the business model? Where does the company fit in its industry, who will its customers be, and how will it generate its various revenue streams?
- What customer or market problem does it address? How much old pain or new pleasure does it provide? Does it solve a critical problem or satisfy a strong desire?
- How big is the market opportunity; big enough to cover the costs of acquiring customers and providing the product or service at a profit? Is it big enough to build a company around and to interest investors?
- What’s the value proposition? How powerful is its competitive differentiation with respect to directly and indirectly competing ideas, technologies, products or services?
- What are the competitive barriers? How defensible is it: will it rely on patents, trade secrets, trademarks, or just being first to market?
- How strong is the management team’s knowledge, experience and commitment?
- How does the current operating environment influence the timing for this kind of venture? Assess any relevant economic, demographic, technological and regulatory influences.
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