A core competency is the special skill, technology, process, knowledge, expertise, or ability that is unique to your new business and could be done better than your competitors. Some examples are:
- Valuable – a large revenue generator
- Rare – not easily found in other businesses
- Non-substitutable – it’s cannot be replaced by any of your other capabilities.
- Costly to imitate – it will be expensive for your competitors to try to duplicate
Step 2. Test the Concept
Develop a proto-type of the product or service and bring to prospective customers so you can gauge customer interest, desirability, and purchase intent. Try it with at least a few dozen people and get their feedback.
Step 3. Study the Market
Obtain information about the current market by researching trends and analyzing the competition.
- What is the estimated size of the market for your product/service?
- What is your projected market share?
- Is the current market attractive for your product/service?
- Are there any predictions for future trends?
- Based on research refine your target market
Step 4. Conduct Feasibility Analysis
You have a good concept with a target market, but can you serve your customers profitably? Can you do it alone or with a team? What resources do you need?
- Evaluate non-financial resources – is there a sufficient labor pool (quality and quantity), availability of office space, protection for property, patents, etc.?
- Prepare a Financial Feasibility Analysis: evaluate start-up and other capital requirements, your projected rate of return, and the overall attractiveness of the investment.
- Estimate Sales on monthly and/or annual basis – Do not count on promises; be conservative; estimate sales using different methods and compare figures (both in units and dollars).
- Estimate Costs – Identify both fixed costs and variable costs.
- Estimate Break-even Point and Profitability
If the business opportunity:
- Has a core competency
- Passes the concept test
- Has a market that demands it
- Is financially viable
Then, it is time for you to move forward!