HOW DOES THE TOOL WORK?
You will be asked to provide answers to a series of questions, selecting from options on a continuum or scale. Your responses will be plotted to create a spider diagram (or diagnostic profile) against the following three key business issues:-
- Market viability – is there a market for your idea and can you make money from it?
- Risk of failure - how aware are you of existing risks to your business and how well positioned are you to anticipate future risks?
- Business model – do you have a business that creates, delivers and captures value for your customer, i.e., will it make money and be sustainable?
WHAT YOU WILL SEE
Plotting the responses will create a visual representation of each issue and you will be able to identify the strengths and weaknesses of your business idea against that key criterion. BizLab will plot three diagrams. At the end of the exercise you will calculate a numerical score between 1 and 100 that indicates the overall commercial feasibility of your business or business idea.
Sample spider diagram
INTERPRETING YOUR SCORES
Determining the commercial viability of a business or business idea is to determine whether or not the business has a chance of success. Answering the BizLab questions will give you an idea of how you rate against the three key issues outlined above. The results are indicative only, but they should get you thinking about whether or not the idea or business really has commercial merit.
THE THREE KEY AREAS EXPLAINED
Market Viability
Your responses to questions 1 to 15 will be plotted to create a spider diagram for MARKET VIABILITY.
Can you identify evidence of a viable market? The issue is not just about the opportunity itself, but also the market you want to enter. The bottom line is that some markets are just not worth the effort, no matter how good the opportunity may sound. On the other hand, some markets are sufficiently attractive that developing a niche opportunity may be enough to make it worthwhile.
Unattractive markets are not usually good environments in which to start a new business. On the other hand a viable market is not sufficient reason to automatically invest in a new idea either. Before you can be confident that you have discovered a genuine business opportunity you need to investigate the risks involved and find a business model that makes sense.
Risk of failure
Your responses to questions 16 to 25 will be plotted to create a spider diagram RISK PROFILE.
The purpose of this section is to answer the question of whether you can anticipate the risks involved. No evaluation system can fully anticipate all the risks you might face if you decide to go ahead, but you do need to be as well prepared as possible. You also need to ask yourself what level of risk you are willing to bear. Your risk profile will determine how each response contributes to the overall risk assessment.
Risk reduction is important and you need to be constantly focusing on those risks that you can manage. Never ignore risks in the hope they will go away – as a general rule, they won’t. A good score for a particular risk doesn’t mean you can ignore it in the future – circumstances can, and generally do, change. You will start to get a clearer picture of your business opportunity when you consider both market viability and risk together.
Business model
Your responses to questions 26 to 40 will be plotted to create a spider diagram addressing your BUSINESS MODEL.
The purpose of this section is to address the third key issue: do you have a business model that makes sense? These final questions cover the skills, experience, resources, and financial components that make up your business model and are the basis of your business plan.
The business model profile enables you to visualise how each response contributes to the overall assessment of your business model. Spend some time thinking about the strengths and weaknesses of your business model.
SOME TIPS:
- The key is to focus carefully on each response in order to understand how it interacts with the others in the same category.
- You are looking for a well-rounded profile in which the line uniformly extends toward the outside edge of the diagram.
- Look carefully at any responses that fall towards the centre of the profile. Questions with (d) and (e) responses are usually matters of concern that need to be investigated further.
- It is important that you are totally honest in your answers because not all weaknesses can be managed in a timely or cost efficient way.
- Think of improving your idea as ‘panel beating’ it into a more rounded shape. If you conclude that your idea is weak in a number of the key areas, then abandoning your idea or substantially changing it may be the wisest course of action.
- As you proceed through this assessment process, you should always be asking yourself, what can I do to panel-beat my diagnostic into a more rounded shape? Is there anything that can be done to minimise some of the weaknesses?
- If you conclude that your idea is directed at a clear niche in which you will have a significant advantage then further development may be warranted.
Completing BizLab is part of the fact finding mission you need to undertake before you commit yourself to starting a business or changing the direction of an existing one.