Estimating the success of a new business is an important venture that entrepreneurs
need to undertake before they seek funding. After all, no business investor will
want to fund a project that does not have evidence for potential growth. There are
several common components that predict the success of a new business. Here are just
a few of them:
1. Strength of the management team
Many successful businesses have a strong management team that demonstrates commitment
in the companyâs objectives. Not only are they responsible for sustaining an exceptionally
high level of confidence and productivity among staff members but they also work
attentively to satisfy the needs of the customers. In addition to establishing effective
leadership abilities towards employees and customers alike, a successful management
team is one that tends to work meticulously in resolving any conflicts through effective
communication with others.
2. Efforts of entrepreneurs
The future success of a new business is also indicative of entrepreneurial effort
and involvement in the venture. Entrepreneurs who have demonstrated a laborious
commitment in establishing their startup and working towards sustaining its operations
were more likely to be successful with their new businesses when compared to those
who did not dedicate the time and effort. These optimized efforts also paid off
in terms of acquired knowledge and skills; the more involvement in a given venture,
the more expertise was gained and more credibility among investors was established.
3. Competitive advantage
Another predictor of success for a
new business is its competitive edge. Successful
entrepreneurs have the tendency to always find ways to outdo their competitors.
They remain current with market performance and research and are knowledgeable about
the tactics of other major competitors. New business owners use this information
to their advantage and lure customers by providing better sale discounts and offering
promotions that entice their return. As a result of their meticulous abilities to
gain a competitive advantage, they are able to establish a good reputation in the
market as well as gain a considerable amount of loyal customers.
4. Marketing surveys
Online marketing tools have proven to be very successful with entrepreneurs. Since
the internet is an effective interactive medium,
entrepreneurs can get immediate
feedback on their products and business concepts through traditional marketing surveys.
In such an assessment, the consumer response to a new product or service is measured
via online questionnaires after they purchased products from the company website
or answered inquiries via e-mail. Marketing surveys can also be made available at
local stores or by direct mail. Such evaluations can be used to improve an existing
business proposal and in identifying the most appealing product features. Even though
there are many more innovative ways to obtain consumer opinion, marketing surveys
are still an effective means that a company can use in order to fully understand
consumersâ needs. Through this tool, an entrepreneur can predict the outcome of
the new business concept and estimate market reaction to a product.
5. STMâs
Compared to the conventional means by which consumer feedback is collected, simulated
test markets are a tool that many new businesses use to predict the success of products
and services globally. STMâs use a combination of consumer research and prediction
markets in order to evaluate a new product before it is mass produced. The advantage
of using STMâs before seeking funding from business investors is that it helps an
entrepreneur gauge reaction of a large number of potential customers as opposed
to a smaller cross-section of people. For example, the traditional focus groups
involve a small amount of individuals to provide feedback on a new product. STMâs,
on the other hand, collect data from thousands of consumers.
The data obtained from simulated test markets can provide information regarding
the projected profitability of a product. If the results are not so promising, the
entrepreneur can consider ceasing mass production until a more viable model can
be produced or can abandon the idea completely. More and more
small businesses are
resorting to STMâs for marketing. The cost of using such online marketing tools
to estimate a new business proposal is not very expensive, and the results are more
immediate compared to more traditional marketing tools.
6. Web analysis
Web analysis is another online marketing tool that is used by many businesses. Rather
than estimate the financial outcome of a new company as well as potential client
response to an issue, web analysis is primarily used to measure and collect anonymous
session information when consumers visit the website. This can be helpful to the
new company by giving an analytic report of the siteâs performance, breaking down
which pages of the site are popular and how long a potential customer remains on
the site. If feasible, entrepreneurs can tailor their website according to these
results in order to increase a customersâ chance of making a transaction.
7. Area of industry
Many successful businesses tend to be in industries of high growth potential, such
as information technology, education, science, etc. By meeting the demand of the
advancing technological market, entrepreneurs are able to gain a large consumer
base. Since the field of information technology is constantly changing, entrepreneurs
who wish to remain in this niche should always be ahead of their game. They are
encouraged to diligently analyze the industry for new innovations and make sure
that their products are what customers are willing to pay for through feedback and
test marketing and by developing their business ideas according to those changes. There are
many predisposing factors indicative to a new businessâ success. First, startups
with strong management teams and dedicated entrepreneurs are both important factors
to consider when determining the success of a company. In addition, a business with
a viable competitive edge that is in an industry of growth is also relative to a
companyâs success. Furthermore, small and large companies both have similar questions
about future sales and can greatly benefit from online marketing tools, such as
surveys, STMâs, and web analysis.