How to Spot a Bad Business Idea

Posted 20 May 15

In times when forming and registering your company takes minutes and when with help from an experienced and professional business consultant you don’t have to be an expert in the field you want to explore; it is very easy to fall for business ideas which sound great in theory but turn out to be unsuccessful in practice.

We enter a wonderful, little cafe in the centre of the city with a beautiful river view and a fresh and seasonal menu and we decide that it could be a perfect business to run for us, without considering all the ‘behind-the-stage’ difficulties the owners are dealing with on the daily basis.

We tend to judge businesses that fail and boldly state that we could do it better without doing any research in the market. At last, we often fall into businesses we see as fulfillments of our childhood dreams, but which not necessarily are needed right now or in the place we start them.

Running a bookshop might sound like a great idea, but if you out it between Waterstones and Foyles, your business might fail. How to spot a bad business idea before getting involved in it?

Based on our research we are able to give you a few simple advice and hopefully help you avoid those mistakes in the future.

1. Discuss Your Business Idea

What sounds like a good business idea might not necessarily sound as good to your target audience. If you know anyone who might be your potential future client, a friend or a family member, ask them to give you feedback on your idea.

Try answering all the questions they pose even if you don’t believe you need to know all the details at such an early stage of the development of your business.

If you don’t know anyone who could act as a target audience, you can talk to one of our expert business consultants at Tawanda Accountants and we will help make the decision easier for you.

2. Learn from Failures

If you’ve ever attempted to form a business that failed, think about the reasons why. Can the problem that occurred back then affect your new business? Or was it something fixable like a badly executed business plan?

Was there a demand in the market you targeted for the product or services you offered? If you’ve never attempted a business before, you can find a lot of useful advice in broad literature on the subject, as well as discussing your worries and doubts with one of our professional business consultants.

3. Make Drafts

Be open to the development of your initial idea. If, for example you want to open a bookshop, but your area is not in demand of one, maybe a similar business would be more likely to bloom?

Think of the services and products in much wider way: if the books don’t sell, maybe it’s because your target audience prefers their electronic equivalent? Or maybe there’s a school close by and the bookshop should specialise in student books?

Improve your business plan and work on your idea. Practice makes perfect.

About Us

As a leading UK accounting firm and expert business consultancy, Tawanda Accountants carry out scrupulous accounting and provide payroll services and procedures for small businesses, individuals and business start ups.