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How to Test Your Start-up Idea on the Investment Attractiveness?
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How to Test Your Start-up Idea on the Investment Attractiveness?

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In the world of Internet, there are many start-up ideas that could have been attractive for the potential investors. However, not every business idea is trustworthy as it does not seem to generate enough profit. Hence, it is important to answer the question of what is investment attractiveness and how you can convert your start-up idea into an attractive investment offer.

This article reveals 12items that can help you to determine the attractiveness of your start-up idea and consider whether or not it is attractive for the investors. In addition, the article offers a solution that entrepreneurs can use to improve their start-up ideas by making them more attractive for any further investment.

Understanding Investment Attractiveness

Internet is the modern marketing tool that generates thousands of businesses every day. Some of them are successful and others have serious problems. Every business owner faces two main problems such as lack of time and enough investment. In this article we are going to understand the reasons of such problems and the ways to solve them for a particular start-up idea.

Today, any challenging start-up idea is nothing but a business strategy that penetrates into the market. Nevertheless, it has almost no chances for success without sufficient investment. In addition, you have to understand that every start-up idea should match its customers. Consequently, it is important to examine the needs of the potential customers are transform them into your goods and / or services with the maximum value.

As a result, these customers will be happy to invest in your products and recommend your services. In other words, your start-up business will generate substantial revenue and would become attractive for the investors.The analysis of the following 12 items would be highly valuable in case you are already a business owner with a certain number of problems or you are just starting an online business and wish to test your start-up idea on the investment attractiveness.

How to determine the urgency for the potential customers?

It is important to understand how demanding your goods and / or services are for the potential customers and how soon they will agree to purchase your products. For example, both health products and services are urgent to cure people whereas any means of entertainment goods and / or services could be postponed.

Another example is that there are more people who are willing to have a website compared to those who need a program on converting WAV to mp3. As a consequence, it would be much easier to find the customers of a website builder compared to those customers who need a media format converter.

What is the size of the market share?

In order to define the market share of your start-up idea, you can evaluate the number of customers who already pay good money for the products and / or services similar to those you are offering. For example, comparatively not many people can afford to buy the handbags from the latest collection of Louis Vuitton but almost all the people pay the bills for the phone calls and purchase hair shampoos.

How to define the price ceiling for your products and /or services?

People are ready to pay good money for the goods and / or services that bring significant value to either business or life. It is important not to set the price too high as not to lose customers and not to set it down too low and devaluate your products. In other words, you need to verify the maximum price a potential customer will be ready to pay for the products and / or services you are offering.

For example, the rent of apartment costs can vary from a thousand till twenty thousand dollars depending on the level of conveniences. Another example is the medicine costs that could fall into the range between a hundred dollars for a contemporary medication and thousands of dollars for the heart surgery.

What are the customer acquisition costs?

It is significant to calculate the start-up expenses on the attainment of customers. The purpose is to find the ways to generate leads more effectively and in less time. For example, fast food companies do not need to spend much time and money to gain new customers whereas the companies that offer advertising services need to invest thousands of dollars to attract every customer. In fact, the more entertainment is involved in a business, the more investment is required but the return on such investment would be much higher.

How to calculate the Net cost?

In order to calculate the Net cost, you can estimate the amount of efforts and resources to produce the end product or service. It is also important to examine the manufacturing and / or transportation costs to the customer. For example, the products and / or services that could be easily purchased online do not require any additional costs whereas there are supplementary expenses for manufacturing and shipment of these goods and / or products to the customer. In fact, the Net cost should be relatively low as this will allow you to generate high profit from every sold item.

Such a business strategy can help you to offer your customers more discounts and various promotions, which attracts even more customers to your goods and / or services. However, in case the Net cost of your products is slightly lower than the cost at which you are selling the products to your customers – you will be limited in finances. In addition, it has a direct impact on your income from the online business.

What is the uniqueness and value of your products or services?

The offerings of any start-up business should strive for being unique compared to the equivalents goods and / or services on the market. A challenging idea for your start-up business is a balance between the new product line and ready products for which people are ready to pay just now. In addition, it is important to evaluate the speed at which the competitors will generate the same offers.

However, the fact of duplication is important as it proves the value of the offered products and / or services that you offer to the market. For example, there are many companies that produce different computer games but there are hardly a few companies that deliver unique and valuable computer solutions such as Microsoft and Apple.

How to protect your start-up business from duplication?

It is important to protect your start-up idea from duplication by the competitors. Before starting an on-line business you need to consider that you could go bankrupt if your competitor invests more money in the same start-up idea. For example, there are many site builders in the Internet but you have an idea on how to create a unique site builder.

Hence, you invest $2 million into your start-up business and add a number of unique features to the best available site builder on the web. As a result, you have more customers who are willing to purchase your product due to its additional value. In contrast, you can assume that your competitor invests $20 million into the same idea of a site builder as you do.

The difference is that their product is different due to one extra feature and it has a lower price. How do you think will your product be purchased by the same customers again if they are offered a cheaper site builder with more valuable features?Therefore, you need to think of an instrument that will protect both your start-up business and your investments.

For example, you can invest ten times more money into your start-up project but only in case you think it is worthwhile and it has been tested and proven many times. There is one fundamental thing to remember, a slow start of business does not bring money whereas a rapid one can help you to capture the market and capitalize on your products and / or services.

What are the start-up costs for your business?

In your online business you should mind its initial expenses for the start-up products and / or services. It is important to estimate the approximate amount of time and money to invest into the company in order to continue running a business. For example, opening a chain of caf’s in your city will be less expensive than opening a plant of manufacturing automobile tires.

How to optimize the product launch speed?

The number of products and services that your start-up business can offer has a great impact on its ability to generate profit. It is important that your start-up business could have at least 10 products and / or services of different value with the purpose of saving time for the next product launch. For example, McDonald’s meals do not take much time to make ready whereas creating movies takes up to several years.

What makes your products and / or services better compared to the alternative ones?

In the Internet it is difficult to operate effectively without offering high-quality products and / or services that are better compared to the similar ones offered by the competitors. In this case, you can take advantage of your start-up business idea by combining the benefits of your competitors and the needs of your customers. For example, Instagram is an on-line service that combined the unique solutions of photo-sharing, video-sharing and social networking compared to the alternative on-line services such as Picasa, Photobucket, Tumblr and Flickr.

How to add more product line offers?

Any start-up business could operate more effectively on the market in case it offers extra goods and / or services in addition to the central product. These bonus offerings have a strong impact on building customer loyalty by enhancing your brand’s value. Such products and / or services could be offered at a different price or given as a bonus to the central product.

For example, Google started its business as a search engine and turned out to be a multinational corporation. It offered the range of services such as productivity tools known as free webmail or Gmail service, enterprise products such as Google Search Appliance, Google Apps, and other products such as Google Translate, etc. In parallel, the products such as cell phones do not have many additional offerings and the customer will only buy a new phone after the old one is broken.

What does stability and advancement mean for your start-up business?

Stability is what makes your business worthy of the market. However, not all the businesses can operate after the initial offering of products and / or services. It takes time to build a reputable business and you should think of both positive and negative outcomes. For example, business consulting takes numerous efforts to operate on the market whereas you can create a brand of clothing and receive dividends all the time.

How to develop your start-up idea in the future?

It is important to measure how long your customers will be interested in your products and / or services. In other words, you need to have enough room for the advancement of your start-up idea. Such an approach to your business will allow you to be flexible with your competitors while utilizing modern technologies and developing better solutions for your customers.

It is important to measure how long your customers will be interested in your products and / or services. In other words, you need to have enough room for the advancement of your start-up idea. Such an approach to your business will allow you to be flexible with your competitors while utilizing modern technologies and developing better solutions for your customers.

Interested in more solutions to attract investors?

Pay a visit at www.strategicprofits.com for more valuable information on how to build your start-up business and make it more attractive for the investors.

Gordon Spike Through my professional life I've seen lots of startups and I can truly say that I'm some kind of specialist in this field. I know why startups don't work and what should you do to force them to work. Keep read my articles and you will find out lots of interesting things.

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