Signs of flawed business idea

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  • Many start-ups are doomed from the beginning. Somehow, their business idea has a fatal flaw. It may not work in real world, it might not be solving a real PAIN of its customer, or its business idea may only be feasible in entrepreneur’s mind and can not realized profitably in reality, or its potential market is not large enough.If your idea solves the pain of a few hundred customers then it is not a scalable business idea and a failure from the beginning.
  • Here are some red signs entrepreneurs should beware of:
  • Absence of real need: Business idea trying to solve customer’s PAIN may actually turn out to be ‘not needed’ by the customer. It means that the entrepreneur misjudged the customer’s PAIN which is actually not a PAIN for the customer. In this scenarios the customer is not ready to buy the product or pay for the services.

  • Incorrect assumptions: Many entrepreneur assume that the customer will love their products or services. Are your assumptions supported by market research? Or is it your emotional attachment?
  • Real world feasibility: Many great inventions work good in research but fail to give satisfactory results in real world. The feasibility of the ideas in real world scenario should be carefully analyzed without any prejudice or emotional attachment to the idea.
  • Unprotected ideas: Some business ideas can be easily copied or may have low market barrier. A business concept that does not have any sustainable competitive advantage like copyrights, patents, trade secrets, location advantage (specific for certain locations, for example, business idea valid for Indian market only or Jhumritalaiya), cost advantage or distributive advantage.

  • Short lifespan of the business concept: Some business ideas have a very small market life. For example, toys’ market related to a new children movie. The market of such business ideas last for a few months only. Another example is a business idea related to world cup cricket. Imagine a business where millions of dollars have been invested in research for the development of the concept. However, if the idea has low market life, a competitor may surpass the idea with a turn around solution and the business will have no time to recover, respond, and regain vitality.
  • Failure due to the deployment environment: Many business concepts may have been developed for real life applications, but they may fail to be compatible with the deployment environment. For example, a startup may have developed the most revolutionizing RFID technology for logistic industry and the customers think that it is a dream come true. However, it turns out that the RFID kit gets easily damaged in the handling of the logistics and the customer sues the company from which the company goes bankrupt before seeing daylight.
  • Hidden marketing barriers: There may be hidden marketing barrier overlooked by the entrepreneur. For example, a product may threaten the career of the person who is the decision maker for that product. Consider a product which can perform the job of network administrator or Human resource or accounts department. The manager of that department may not approve the product as the product may be considered as a threat to his career or department. Such type of products will fall in the ‘marketing trap’ or hidden marketing barrier. It is important for an entrepreneur to think about their business concept in this regard.
  • Economic disadvantage: Even your business idea is great and there is a real need for it. But if the cost of this product is too high then customer will not be willing to buy this product or pay for it due to the low cost advantage.
  • Requires education or training: If success of your product requires lots of training at the customer end, it is a DANGER sign. Beware of it! Educating/Training the customer is a slow process. If education involves reading complicated instruction manuals, the customer will prefer to buy/use product familiar to them.
  • The idea demands change in consumer behavior: If your concept is very new and requires change in consumer behaviour then resist yourself to pursue the idea unless the rewards are as high as Facebook and Twitter, and you are sure of it.
  • Inconvenience: Many new products are inconvenient to use. Customer may reject them and favor to use those products which are easy and convenient to use.
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