Which Small Business Model is Right for Your Startup?

So you have an idea for a small business and you have developed your initial small business model.

How do you know if your model has any chance of success?

Nicholas Humphrey (2004, p. 16) recommends a five step analysis process to systematically evaluate new business ideas to develop your start up concept.

Step One: Personal Considerations

Even before you can decide whether or not your business
idea is a good one, you have to ask yourself three questions.

1) Do you have the necessary skills?

There is no point in developing a business start up concept that involves designing purpose built beach houses if you do not have skills of an Architect.

2) Will the business hold your interest?

Even if you are a qualified architect, there is little point in developing this particular business start up concept if the main reason you are developing a small business concept is that you don't actually like designing houses!

3) Do your friends and family think it is a good idea, i.e., will they support you?

A brand new small business will eat up your waking hours and chew through your cash. Are your friends and family going to be able to put up with that?

Step Two: SWOT Analysis

Strengths, Weaknesses, Opportunities and Threats. Sounds good, but what does that actually mean?

In a nutshell, SWOT Analysis involves identifying the strengths and weaknesses of your proposed business (internal factors) and the threats and opportunities in the environment (external factors). The idea being that you should take advantage of your strengths and any opportunities in the market. Fix or minimize any weaknesses, while doing everything possible to counter potential threats.

Step Three: Is There a Market?

This one is important. Unless there is someone out there (many, many someones actually) who is prepared to buy the product or service you are offering there is no point in opening your doors. Market Research is critical when evaluating your business model prior to startup.

Step Four: Financial Viability

So you have found a gap in the market (or are duplicating a existing business idea, or have created an innovative new twist), and you know who your customers are and why they will be prepared to buy off you instead of Bill Bloggs. Looks good, but will you actually make any money doing it?

To answer this question you need to know whether or not the business will generate enough revenue to cover costs and return a profit.

Step Five: Comparability

This step involves comparing the small business models you have generated, to select the best one for further analysis. Of course, it only applies if you are trying to decide between two or more models.

Final Step: Developing Your Business Model into a successful Business

When you have completed the process of evaluating the potential of all of your business models and are ready to move forward with your final choice, it is time to develop your business model into a real business.

Starting with defining your business identity.

	Enter your search terms Submit search form
	Web www.how-to-start-a-small-business.com

Return to top of Which Small Business Model

Return to top of Why Small Business Models Matter

Home | Privacy Policy | Contact