Starting a business takes a lot of time and energy, so it's essential to be passionate about your business idea. But passion alone isn't enough. You also need to understand whether your business idea is feasible and whether your personal investment is worth the sacrifice.
To help budding entrepreneurs, we explain what a good business idea means, how to determine if you have a good business idea, and how to generate a new business plan.
How to determine if you have a good business idea
Sometimes the challenge isn't inspiration, but determining if you have a good idea. It's important to critique your ideas and ask as many people as possible for feedback.
To help you evaluate your business idea, we consulted several experts and came up with nine key questions to ask yourself to determine if your business idea has the potential to be a success in the future.
1. Does your business idea solve a problem?
Mike McGee, entrepreneur and co-founder of web design school The Starter League (acquired by Fullstack Academy), believes the best business ideas solve a problem in some way.
“If you have an issue that affects you, your friends, family or coworkers, there's a good chance that issue will affect people you don't even know,” McGee said.
2. Will people pay for it?
Whether you're focused on a creative new business idea or have an idea for an easy-to-start business, you need customers. Paying customers validate your ideas and determine which ones are most likely to succeed, says Will Schroeter, co-founder and CEO of Fundable.
“An idea is just an idea until it has paying customers,” Schroeter added. “Anyone can kill a simple idea, but nobody can kill paying customers.”
3. What is the price?
Charlie Harary, co-founder and partner at investment firm H3 & Co., said great business ideas solve a problem at a lower cost than the market can bear.
“Once you've determined that you're solving a legitimate problem in a scalable way, you need to determine not only the value that it brings to the world, but also how much people are willing to pay for that value,” he said. “Once you've determined the price, you can evaluate whether the solution is right for your business.”
4. Does your business idea have a sizable niche market?
Without a large enough market, your idea may never succeed. You need to determine if a niche market exists that is a good fit for your idea. If your company improves on something that already exists and provides a novel response to a recognized need, you are more likely to succeed.
How do you know if your business niche is actually a market? According to Ari S. Goldberg, founder and chairman of investment firm RNMKR, it's a combination of “research, intuition, and personal preference.” “I consider industry-wide trends, the amount of investment activity that's happened in that space recently, how much I've read about it from the consumer side, and whether I've heard people talking about it,” Goldberg explained.
5. Are you passionate enough about your business idea?
Your business will likely consume all of your time, so to succeed, it needs to be something you're passionate about. Your idea needs to be something you care about, not just something you think will be lucrative.
“Starting a business requires a lot of time, energy and perseverance, so ideally it should be an idea you're passionate about, but also one for which you have skills and experience. [in]” said Melissa Bradley, managing director of Project 500 and a professor at Georgetown University's McDonough School of Business.
6. Have you tested your business idea?
You won't know if your business idea is viable until you test it on strangers who match your target customer profile.
“Test it — not just with friends who are too polite to tell the truth — with honest people who make up your ideal target demographic and ask for their feedback,” says Lisa McCartney, co-founder and head of tutoring and learning at PLYTIME.
“The target sample [your idea] That's excellent [asking] “Once you know where to get it, you'll have a good idea,” she adds, “but if the other person isn't too keen on it, it might not be as good an idea as you thought it would be.”
7. Are you open to advice?
If you are not comfortable changing or adapting your idea to meet customer demands, then your business idea may not be worth pursuing.
“Success happens when you're willing to listen and take into account the advice of others,” says Angie Yasritis, CEO and Managing Partner at YaZo Group. “Most good ideas require some tweaking before they can make it to market. Being closed-minded will kill your business.”
8. How do you market your business?
Many entrepreneurs think about the problem their business solves, but don't think about how they'll market themselves to their target customers. Jesse Lipson, founder and CEO of Real Magic, says your small business marketing strategy will determine whether or not your business idea is a good one.
“If you have a solid go-to-market strategy and a great product, you'll probably be successful,” Lipson says, “but if you have a great product but don't know how to reach potential customers, it's going to be very hard to succeed. It's really important to think about that as early as possible.”
9. Are you realistic about your goals?
While you may be excited about a new business idea, it's essential to stay grounded and realistic, says Thomas Gravina, co-founder and CEO of cloud services company Evolve IP. Field of Dreams The mindset when starting a business.
“Just because you have a vision and decide to make it a reality doesn't mean the rest will follow,” says Gravina. “You may have an idea that's original, revolutionary, and ahead of its time, but to be successful, you need a realistic, solid market opportunity. Any new business case or new endeavor needs a viable market that you can be sure will sell right now, not just in theory or assuming this market will have a future.”
