How can you determine if your small business idea has the potential to succeed as an actual business? An Achievability Analysis is a great way to work out what your business will need to succeed – before you launch.
What is an Achievability Analysis?
An Achievability Analysis is research that helps you spot holes or fatal flaws in the business idea before you invest some savings and dive right in. It’s like running your business on paper first to make sure you’ve planned it out properly, thought through your business model canvas critically, tested your business concept with potential customers, answered fundamental questions ahead of time and achieved a higher level of confidence about your chances for success. Think about how much easier it would be to make changes to a business on paper than on a business that is up and running with real customers and real invoices needing to be paid.
The components of an Achievability Analysis
An Achievability Analysis covers four areas:
1) Customer Development
Gathering information on who would buy your products or services is Customer Development. Before you consider starting a business, you need to determine if a market for it even exists. Not only that — the market must be large enough to warrant you going into business and sustainable enough that your business becomes profitable. Small, scattered, unpredictable or unstable sales spell early doom for many small businesses. Here are some articles about finding and understanding your ideal customer:
Identifying both current and potential competition is important to understand the potential of your business idea. This can help you determine what proportion of the market you might expect to capture. To identify who your competition really is, look from the customer’s viewpoint at existing companies that offer the kinds of things they would look for in your own company. Make sure to include both direct competition (offering a product or service very similar to your business) and indirect competition (offering a substitute or a variation of the product or service delivered by your business).
For more about researching the competition, download GoForth’s free How Do I Measure Up? Competitive Matrix, or read about competitive analysis for small business, and all about the competitive advantage.
A well-planned and executed strategic positioning within an industry can help a new business succeed. By contrast, playing a weak role in the industry and not knowing much about the major players that shape your industry can put a serious damper on your chances of success. Understanding how your industry works is key to helping you figure out appropriate entry and growth strategies.
Read more about industry analysis and the importance of your NAICS code.
4) Business Environment
Before you take the leap into business, or if you are a current business owner, you’ll need to stay on top of the business environment. The only thing that’s constant is change! Learn to spot changes in the business environment before they arrive so that you can make adjustments to your business strategy to take advantage of these changes, before your competitor does.
To evaluate the current business environment, we recommend doing a STEP analysis — measuring Social, Technological, Economic and Political trends which may impact your success.
Taking the time to research and analyze your business idea thoroughly will help improve your odds of success — and that’s never a bad thing!