April 9, 2018

How to evaluate your business idea

That bolt of brilliance that struck you in the shower this morning – is it a ticket to entrepreneurial success, or a thought-exercise that’s better left unexplored?

All successful businesses were once just a spark of an idea, a “what if..?” moment that shifted a future founder’s business brain into gear. But a great idea is just the tiniest of first steps. Some are viable, some are non-starters – and others just need a little bit of luck, funding and faith.

So how do you tell the difference?

Mostly by asking yourself the tough questions that will expose the weaknesses of your idea – or reveal hidden strengths. Questions like “Have you worked in this industry before?” or “Have you thought about how you’ll get funding?” or even simply “Who will buy this product?”

Here are some of the areas to think through when you’re putting your brainwave through its paces. If you can borrow a friendly pair of ears to help you sift through all the considerations, so much the better, as another person can offer objectivity as well as bringing their own knowledge to the table.

Scope

First things first – what is it? Have you dreamed up an app? A product? A service? Ideas can fly thick and fast in the world of your imagination, so it’s worth reining them in, putting them on paper and finding out where the edges of your concept are.

Try writing an elevator pitch for your idea. (That’s you explaining it to a layperson during the time it takes to ride an elevator a few floors.) See if you can crystallize it into one or two sentences in a way that’s clear and compelling. Would it fit onto the back of a Postcard or a Flyer? Could you even squeeze it onto a Sticker? In most cases, boiling your idea down to the essentials is more difficult than it sounds.

Another approach is to define the minimum viable product – i.e. the most basic working version of your idea made reality, the product you’d kick off your business with. Doing this will help you figure out if your idea is clear and defined enough to be turned into something practical, or if it’s more of a shifting set of inspirations that haven’t quite matured yet.

Market

A business idea is only worth pursuing if it has a market. That’s the people who will buy it, of course, but also the landscape of products and services that already exist – i.e. its competition.

For a good idea to find its own niche out there in the world, it needs to appeal to customers the competition isn’t adequately serving already. If you can think of at least one business that’s meeting the need of your potential customer, you’ve got a few questions to answer. What can your concept do that others can’t – will it be cheaper? Cooler? Bigger? More eco-friendly?

Attending a trade show or convention is a great way of putting your ear to the ground and listening to what people in your target industry want. It can also double as a marketing exercise, so even if you’re early on in the process, consider getting some Business Cards made up with your name and contact details so potential partners and customers can stay in touch.

Finance

The majority of businesses need some kind of start-up capital to get them off the ground. If yours is one of them, where would this money come from? And would you be able to work for free to get your business started (in addition to doing your day-job, if you have one)?

If you do have some funds available, you need to figure out how they could be used to your best advantage. This is where professional advice can really be worth its weight in gold. If you’re in the UK, check out Great Business, the government portal for finding startup advice and support. In the USA, there’s startup guidance available via the .gov website.

Expertise

Think about what kind of skills and knowledge you’d need to get your idea off the ground. Do you have the know-how to build a prototype or set up an app? What about marketing and pitching your idea or using networking to get your business known? If you don’t know everything yourself (and hey, you’re not a superhero) it’s worth thinking about who else could be involved, and whether you would be hiring them as an employee or making them a business partner.

Looking for more insights?

Entrepreneur.com offers an idea evaluation checklist filled with probing questions to test your idea’s viability. Meanwhile Investopedia has a 5-step plan to stress-test your idea and iron out any weak spots.

Having ideas is exhilarating – but thinking them through can get confusing. Keep your thoughts in order by writing them down in a MOO Hardcover Notebook

 

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