Explain five factors that an entrepreneur would consider when evaluating a business idea.

Explain five factors that an entrepreneur would consider when evaluating a business idea.

​Factors that an entrepreneur would consider when evaluating a business idea
include:

1.  The profit margin to be earned from the investment. There should be a reasonable profit from the investment in order to cover all the operational expenses and get surplus.
2.  Existing attitudes, practices and beliefs of the target market. The new product, service or business idea must be in line with the people’s attitudes, practices and beliefs if it has to be accepted and hence marketed.
3.  Availability of appropriate technology. The technology to be used in producing the product or offering the service should be efficient and cost — effective.
4. Size and availability of the market.
5.  Possibly of pre-testing (trial use)Jt should be affordable to allow customers to try out the new product first without having to purchase it and get feedback from them.
6.  Availability of an effective channel of distribution. This will ensure the product is available ¡n the market do that customers buy it when they decide to.
7.  Ability of the product to satisfy the immediate need of the buyer. The new product must be of tangible or felt benefit to the buyer hence making it very attractive.
8.  Ease of usage. The new product or service should be easy for the buyers to understand and use since they may fail to buy the product if it is complex and difficult to use.
9.  The level of competition. The entrepreneur should look at the systems used by the competitors and strategise accordingly. ‘
10.  The payback period. This should be reasonable to allow the investor break even and recoup the capital invested.
11. The risks involved. These should be manageable and minimal to avoid unnecessary losses.

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