So, someone’s offered you a cherry-sounding business opportunity, but you’re not sure whether or not you should pull the trigger. Before you throw caution to the wind and jump headfirst into anything, you’ve got to do your homework.
Sure, sometimes it can seem fun to take a devil-may-care attitude toward your business, after all, no risk no reward, right? Wrong. Failing to do the homework on a business opportunity that’s been presented to you can have dire consequences, ones that have the potential to follow you throughout your entrepreneurial career. And, in truth, some of those potential consequences might even derail your entrepreneurial career entirely.
So, if you’re ready to get to it, then here are some general guidelines for vetting a business opportunity. This isn’t intended as an end-all be-all approach to doing your homework, but it should give you a good place to start and provide some insight into aspects of business that you might need to learn more about.
Start with a Self-Evaluation
Before you get involved with an opportunity of any shape or size, you should have a clear understanding of yourself as a businessperson. When making this evaluation, you should consider all of the essentials: What’s your tolerance for risk? How much capital do you have to invest? All of the things that any sane businessperson would consider before considering making a large investment. At the end of the day, you’re making a financial decision, and you better have a clear understanding of what your own financial situation looks like.
But, because you’re going to be going into business for yourself, you should strongly consider your own personality as well. How is your previous work experience going to lend itself to the opportunity that’s been presented? How might it hinder your performance? Are you comfortable with the products and services that you’re going to be dealing in? When you make a large investment, you’re going to be in it for the long haul. So, you better make sure from the outset that you’re prepared for whatever form of business that you’re getting involved with.
Start with the Market, Not with the Business
Rather than thinking about the business first, you should spend some time considering the market you’re going to be dealing in. Is it local? Is it global? What are the current trends in this market, and who are the major players that are already present within it? Is there really an interest from consumers in the area or region in which we’ll be operating?
By thinking of the market first and the business second, you’ll be able to identify potential pitfalls. Or if the situation on the ground seems fertile for the business that you’re considering, you’ll be able to come into it with ideas of how the business can be scaled and developed for the long term. Either way, you’ll be gaining a much clearer picture of what it is that you’ll potentially be getting yourself involved with.
Does This Business Opportunity Present Potential for Growth?
This is, perhaps, the most important question you can ask. The goal of opening a business isn’t to maintain it at a stagnant level; it’s to grow it. If you’re looking to open a business that’s going to remain the same and never grow, then you’re looking to start a hobby. As such, when you’re evaluating a business opportunity, take the time to try and project the business out into the future. What possible ways do you envision that the business can expand its product and/or service offerings? How difficult will it be to scale the business and expand it? You’re in business to make money, and then to make more money with the money that you’ve made, so make sure that scalability is a realistic possibility.
Prepare Yourself for Business Ownership
If you ultimately decide to jump on board with the business opportunity that’s been presented to you, then you need to prepare yourself for the biggest investment of all: your time. Will your family be okay with the amount of time that you’re going to need to devote to your fledgling business? How about yourself? Will you be able to meet the demanding schedule entailed by getting a business off the ground?
These questions aren’t meant to deter you from pursuing a business opportunity. Rather, they’re intended to get you asking the hard questions that you’re, at some point in time, going to need to have answers for. Making sure that you approach the whole situation with your eyes wide open is the most important measure you can take when evaluating an opportunity that’s been laid before you.