How To Tell If Your Business Idea Is Any Good
Written by Simon Slade for Gaebler Ventures
Successful entrepreneur Simon Slade offers his perspective on evaluating business ideas. His five-step business idea evaluation process can be an excellent tool for both new and experienced entrepreneurs.
If you search for "business ideas" in Google, you get over 27 million results.
Clearly there's no shortage of them out there - indeed, some of us drive our loved ones insane by coming up with several a day (at least), quite easily.
The problem, for those of us with who fall into this category, is more about pinpointing which idea will be the one to triumph.
Although there is never going to be a sure-fire plan to follow, we can learn a lot from existing businesses that have achieved success in all its glory. Here's a 5-step process for evaluating business ideas that has worked for many successful entrepreneurs.
1. Identify a Problem and Solve It
For the most part, successful businesses solve a problem for people: they make rare book titles readily available for purchase online, they teach people who've never even made an omelet to cook impressive 3-course meals for their friends, they get rid of embarrassing body hair, they stop your dog making the house smell like the jungle.
In fact, this is often how many business owners come up with the idea in the first place: they get fed up with something and decide to change it.
You may think - "oh well if I can see the problem, then so will everyone else, so I'll never find anything that way".
But you'd be surprised at how many people find it difficult to identify problems in the first place. Something makes them a little cranky, but they don't immediately think: 'I keep dropping my soap in the shower and it's very annoying. I know what - I'll put it in a pump bottle!'
So the fact you've identified a problem and a way to solve it actually puts you ahead of most of the population. Who would've thought that not being able to store photos for free on the internet was a bothersome thing? Not me - that is, until some budding entrepreneurs showed me the wealth of benefits from doing so. And I bet now, if you took that service away, there would be a heck of an outcry - people would be in no doubt now they had a problem on their hands!
2. Measure Your Enthusiasm for the Idea
The second test is probably one your granny would ask: "But do you enjoy it dear?"
In other words - is your idea something you are passionate about?
To last the distance in business (which can be very trying at times in between the fun bits), you need to be prepared to be thinking about this industry 24/7. So if you don't like dogs, then you're going to find it particularly difficult promoting and running a dog grooming business in hard times.
Of course, we've all heard stories of business owners making a spectacular success of an idea they had no particular affinity to. But do you know what? These are generally experienced businessman with pots of money to pay a manager to look after the day-to-day running of the thing.
For those of us who can't afford that, being passionate about your idea is a huge motivating factor and a great force behind overcoming lack of business experience.
3. What Will Others Think About Your Business Idea?
Even with personal passion on your side, your idea does need to appeal to a wider audience.
A significant proportion of start-ups fail because the people starting them are too deeply immersed in the industry to realize how removed their idea is from the lay person. Sure, you may spend 8 hours a day carefully cataloguing your butterfly collection - but how many other people do the same?
There's a pretty easy check for this one. All you need to do is ask yourself: "Can I imagine my mother using this?"
Obviously, the answer may not always be a true reflection on the rest of your market, but if you can't see at least some people you know (apart from your best friend) getting on board, then perhaps it's time to change tack.
4. What Stops Everybody From Doing It?
The next question to ask yourself is: can my idea be easily copied by competitors?
If there is no real barrier to entry, you could find yourself in trouble fairly quickly, even if the overall idea is good.
The key here is to find a point of difference: are you going to be first to market? Will you offer exceptional customer service? Will you be internet-based? A strong business idea will contain a barrier to entry, maybe even more than one.
5. Testing the Idea In the Real World
At this point, if your idea has passed all the tests so far, you may well be feeling pretty good.
But, don't get too excited yet. The final check is the most difficult and the most important: testing your idea on the market.
It's extremely important than you put together a prototype and get it out to market as soon as possible. Why? Because, ultimately, it's the market that decides whether your idea is any good and the longer you put that off, the greater the risk becomes.
So don't make the mistake of thinking that you'll just add "one more thing'" before your widget launches.
Your idea definitely needs to function properly (obviously an unexpected explosion or melt-down would not be welcome), but do try to avoid any unnecessary extras.
Does it really need that extra handle for left-handed users? Does it really need the cool zoom feature when someone mouses over a link? Maybe. But more likely: maybe not.
Getting your idea out to market is the ultimate test of whether an idea is any good or not, and although the time it takes for the market to make its judgment varies, most experts believe that within 6 to 24 months, you'll have a clear picture of the future ahead.
Simon Slade is the founder of SaleHoo, a global product sourcing startup that grew to over 50,000 subscribers in less than three years.
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