Much good advice (from much smarter people) has been written online about evaluating business models (be sure to look at the business model canvas), but in the past few years I’ve seen many ideas fail because the founders didn’t consider the following key questions:
- How can you defend yourself from potential or existing competitors/copycats when you start to show success?
- (Non exhaustive list of) good answers: Proprietary knowledge, legal ownership of idea, the community is on your service and wouldn’t swap, it’s a winner takes all market and you’re going to be first.
- How strong is the competition compared to the size of market of this idea?
- If the market is large then competition is less of a problem since you can carve a niche.
- If your product depends on gaining lots of users then what are your viral loops?
- How is your idea different from what’s on the market? (If you’re a subset of a competitors features then identify why this gives you an advantage they’re missing)
- Is there a chicken and egg problem? Do you need user-generated content before new users will sign up? How will you overcome this? (This is the biggest struggle of new dating websites)
- Does your startup suffer from Airbnb problem of being based around introducing users to each other and then taking a cut but struggling from those new relationships then negotiating payment offline?
Considering these and ensuring you can confidently answer each will help steer you away from just a few more pitfalls along your journey.