Making a critical evaluation of the
new business concept at an early stage will
allow an entrepreneur to discover and address any flaws in the
business plan before
it goes into the production stage.
The first step in evaluating a new business proposal is by subjecting the business
proposal to market research. An entrepreneur of a small business company can seek
the help of family and friends in market research. They are often the first sounding
board for a new business proposal.
After this, an
entrepreneur needs to expose the new business proposal to a larger
audience usually the potential target audience. At this stage, the entrepreneur
can tweak the
new business concept and correct any flaws that may exist in the design
and marketing strategy.
But market research is just one aspect in evaluating a new business. Once the market
research comes through positively, an entrepreneur needs to step back and evaluate
whether he or she is really interested and committed in pursuing the new business.
An entrepreneur needs to evaluate the business proposal and estimate where the product
needs to be placed in the market place? Whether the product will be hold the value-capture
power in the industry? and, Whether the firm will be differentiated and stay that
Taking time off to answer these questions is impetrative to the success of the proposed
new business concept. Early stage financing can be very frustrating and time consuming
and unless the entrepreneur is really committed to the product and the cause, there
is not much chance that the business plan is going to be successful in the open
Apart from market research, an entrepreneur also needs to do early-stage financial
analyses of the business proposal, define the development path necessary and gauge
the investor attractiveness of the business proposal.
Recognizing the tasks that must be performed in order to develop the business proposal
is also critical for setting up a new business. If the tasks are not followed by
substantial business, they can create a financial burden that will bring down the
new business venture's chance of making a profit.
Evaluating the business proposal is essential to find funding from
venture capitalists. No investor will be willing to invest in a product that
does not show even potential for growth.