A useful business idea assessment tool for the entrepreneur
Below you will find a link to download an Excel file called the Business Idea Assessment. Try out this tool and let me know if you find it useful.
Bruce Barringer, in “Preparing Effective Business Plans” (and published by Pearson Ed in 2009) provided a First Screen assessment for entrepreneurs to use to do a quick evaluation of their potential business. Bruce broke his assessment into five sections: 1) Strength of the Business Idea, 2) Industry-Related Issues, 3) Target Market and Customer Related Issues, 4) Founder Related Issues, and 5) Financial Issues.
Although I quite like the assessment, I wanted to build an assessment that was quicker to go through. Thus, I have reduced the assessment to three sections: 1) The Entrepreneur, 2) The Idea, and 3) The Market. I liked his use of a simple scale that would help to visualize certain areas of low or high potential. As such, I’ve used a similar scale with -1 being low potential, 0 being neutral, and +1 being high potential. I’ve used this assessment in my course, “The Entrepreneur and the Idea.”
What do we do?
Most of the questions are straight forward, though reasonably subjective. I’d encourage you to go through this document with your idea and potential target in mind. I would then have someone who knows you go through the document as well. In particular, you’ll want to get their feedback on things like your management skills, value-added for the customer, and other components as you see fit for your idea.
Most of the questions should be self-explanatory, but a few may require a bit of research. I have an article posted on perceptual mapping, which you may have to dig into further (a Google search works too). As well, you might want to do some thinking about what substitute products are for your idea as this is an area people often underestimate.
What does it mean?
Once you have gone through and noted a -1, 0, or +1 beside each statement, focus on the different parts honing in on any parts that total to 0 or less. The overall score on this assessment is less useful than the totals for the individual parts. Think to yourself, “what do I need to do to rectify the weak areas?” It may be that you need more money, or refine your target market a bit, or find a few people with the skills you lack. Either way, I encourage you to do this exercise before diving into a full business plan. For that matter, I will provide my opinion of what business plans should and should not be in a different article. But as a spoiler, most business plans miss the mark on what they really ought to deliver.
Let me know what you think about this tool, and if you have found it helpful by contacting me now.