4 Simple Questions to Ask Before Getting Excited About Your New Business Idea
- July 7, 2017
- by:Serhat Pala
This article was originally published on Inc.
You’ve probably come up with at least one seemingly brilliant business idea in your life but then after some sober thought, decided that it wouldn’t work. This happens a lot with what appear to be amazing business ideas. They pop into your head, you get excited, but when you think about it some more, you realize the idea isn’t going to be feasible.
Sometimes it’s not easy to tell whether an idea will work or not, so this is a little checklist to help you vet your business ideas.
1. What is the income potential of the Idea?
To have decent income potential, your business must have:
- A large target market: Even incredibly niche products and services need a large enough potential market to be sustainable. If it appeals to too few people, it won’t be sustainable. The term “large” is subjective here, but basically it means the market has to be large enough to sustain the business. That could be 1 percent of market share if the market is huge, or 10 percent of market share if the market is smaller. But, it needs to be large enough that you can get a market share and sustain your business.
- Target market growth potential: If your target market doesn’t have the potential for growth, you’ll find that you’ve run out of customers to sell to pretty quickly. You can manually grow your target market by introducing different models of your product or service (a teen model if you originally target children, for example). Your target market should also be growing at a pace that will not only support the growth of existing players in the market, but also sustain newcomers.
- Market Entry Barriers: A market that is too easy to get into can potentially get flooded by pop-up businesses that dilute the market and any potential earnings from it. Market entry barriers can be government regulations, required certification or anything else that presents a bit of a speed bump so not just anyone can start a business in that market.
- Significant Required Startup Investment: A market shouldn’t require too little investment of money, time or effort, otherwise it could easily get flooded with businesses. An example of an industry that doesn’t have high market entry and doesn’t require a significant investment is social media marketing. Anyone can claim to be a social media marketing expert and can run an entire business on a computer (or even a phone).
2. Does your desired lifestyle fit the business idea?
The second most important thing to look at when vetting a business idea is if it is actually what you want to do. When starting a business, it is imperative that it is something you care about. You will be spending endless hours working at getting this new venture up and running and you likely started this new business to get out of some kind of dead end job.
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If you give three or four years of your life to this, and end up being successful, would you be happy? If you don’t have the drive, desire and urge to live through the lousy days, the downturns and all the bumps in the road, you should not start the business.
3. Do the logistics work?
Logistics relate to the money you’ll need to start the business, but also your overall abilities, your skill set, your experience and your network. Raising capital isn’t easy, but it might be the easiest part of starting your business.
A good way to find out if the logistics will work is to ask someone you trust to be perfectly honest with you to play devil’s advocate and essentially try to talk you out of your idea. Before you do that, though, you should get busy with researching and analyzing the logistics for yourself to see whether your idea is feasible.
4. Will your business be agile enough to change with future trends?
Obviously you can’t know what trends will develop in the future, but you should try to build some flexibility into your business idea to accommodate a shift if necessary. To ensure your business has a solid future, you have to accept that it might not be the same for its entire existence and frankly probably won’t be. In fact, your business might not even be the same as the idea you first came up with.
Even the best business ideas need to be put under a microscope so you can decide whether they’re truly worth risking a lot of time, money and effort to pursue. Coming up with the idea is the relatively easy part. Putting your brilliant idea through wringer of the vetting process is the hard part (or, more accurately, the first of the hard parts).