Will It Work?
Apply now to be an Entrepreneur 360™ company. Let us tell the world your success story. Get Started »
Nancy Drescher has been a dentist, a teacher, an entrepreneur and a small-business advocate. She was also a business broker who helped people buy and sell small businesses. Now Drescher is in the process of starting her own multimedia company, which produces CD-ROMs, videos and a Web site that provides interactive skills training.
As part of her journey to choosing a new business, Drescher wrote Which Business? Help in Selecting Your New Venture (Oasis Press, $18.95, 800-228-2275), a book designed to help others make their own decisions. We asked her to explain how someone can tell whether a business idea is just a dream or a viable venture.
Business Start-Ups (BSU): What is the first thing you must consider when evaluating a business idea?
Nancy Drescher: It should be something you really want to do. Make sure you're not just following the advice of a friend or being influenced by something you read. Those are all good sources for ideas, but you really need to decide if this is something you want to do. If it's a hot business idea, would you really want to do it even if it weren't? Your business has to be something you feel you can commit to and pursue with passion.
BSU: What are the key elements to a successful idea?
Drescher: The very first thing is to make sure your service or product has a market; you have to have customers who want what you provide. Second, you need to ask, Is the price I'm going to need to charge something my customers will be willing to pay? If your customers don't value it a the price you need to charge, they're not going to buy it from you. You should also look at the long-term potential of your product and ask yourself, Is there potential for multiple products with this business; is it something I could develop into a long-term business? In addition, you should look at the business's profit potential and overhead costs.
Also identify your competitors. Almost all businesses have competition, even when they're unique, never-been-done-before businesses. If you're going to go up against a very large, well-capitalized company, you need to redefine your idea and find a unique niche you can call your own.
Talk to competitors' customers and suppliers. From the customers, you'll find out how satisfied they are with their current product or service and what can be done to improve it. Suppliers can be a really good source of information as well. They know who's really doing well in the field. You can find plenty of suppliers at trade shows, or you can read trade magazines for your particular field.
BSU: What type of research can you do if your idea is truly unique?
Drescher: Talk to your potential customers. You need to know who these people are in order to orient your business toward serving their needs.
BSU: What specific community resources can you use during your evaluation?
Drescher: There are really so many. That's one thing that's really fantastic at this point in time. I think Small Business Development Centers (SBDCs) are the absolute best community resources. They're usually associated with local colleges. They often utilize small-business owners within the community, so the people who are mentoring you are already in business. The SBDCs can usually refer you to other small-business organizations in your community.
I also think the Small Business Administration (SBA) is a good resource, as well as the SBA's Service Corps of Retired Executives (SCORE). Places such as chambers of commerce are good, too, and some communities have business incubators that help fledgling businesses get on their feet. (See "Way To Grow")
Often, just going to similar businesses outside your local community for advice is a good idea if you're not going to be competing with them.
Nancy Drescher, P.O. Box 779, Mesa, AZ 85211, email@example.com