Six Questions To Determine If Your New Idea Is A Real Business

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Can You Reach Your Target Market In A Cost-Efficient Way?
Even if you have an attractive product, enough capital to build a working prototype and a potentially large customer base, you still might go broke reaching those consumers. Post cards, press releases and grand openings require cash, after all. A decade ago, a young America Online spent so much money flooding the world with free trial software that it tried to mask the outlays by capitalizing those expenses on its balance sheet. Even established businesses have to keep spending to attract customers. In 2007, for instance, online retailer Amazon.com spent $344 million--2.3% of its $14.8 billion in revenue--on marketing. Other businesses, such as social-networking sites Facebook and News Corp.'s MySpace, keep expenses down by relying on viral marketing--but that may not work when it comes to peddling dog cologne.

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