Not sure if you're business idea is a good one? Here's how you can tell.
Credit: Business ideas image via Shutterstock
Coming up with a business idea is easy. Coming up with a good business idea? That's a challenge. Yet, perhaps an even bigger challenge is distinguishing the good ideas from the not-so-good ones.
How can you tell if your idea for a business is worth pursuing? Here are 10 signs to look for.
No one else is doing it
It might seem obvious, but if no one else is doing what your business proposes to do, you could have a good idea on your hands.
"There are a lot of business frameworks you can use to evaluate business ideas," said Pawel Cebula, COO and co-founder of Medigo, in an email interview with Business News Daily. "However, what I have found to be a particularly good indicator is one question people keep asking once they hear about a great business idea— 'Why does it not exist yet?'"
Cebula got the idea for Medigo — an online platform for medical travel that connects patients looking for treatment abroad with physicians around the world— from his father, a doctor. When he shared his father's vision with potential investors, Cebula said they were shocked that no one had thought of the idea yet.
He and his co-founders were able to get their Berlin-based business off the ground, thanks in part to the excitement they generated among investors with their unique idea. [Looking for a business idea. Visit our business ideas section.]
Someone else is doing it ... but not like this
Not every great business idea needs to be one-of-a-kind; some successful businesses are based on an old idea, re-imagined. That's the case for Men in Kilts, a decidedly different window washing and exterior cleaning franchise based in Vancouver, Canada.
Nicholas Brand, who founded the company in 2010, set his business apart from competitors by injecting a bit of humor into his business model. Unlike most window washers, Brand's workers climb their ladders and set to scrubbing in kilts — those long, plaid skirts best known as the leg-covering of choice for bagpipers.
As you can imagine, this strange business strategy gets a lot of attention from customers and the public.
"We would have customers who worked in marketing tell us what a great idea we had and that we were going to be big," Brand said in an email. "That is when I knew we had the potential to grow beyond a small operation."
Thanks to his new take on an old idea, Brand has expanded his franchise to include 10 locations across North America.
It solves a problem
If donning a skirt isn't your thing, don't worry. Your business idea doesn't have to be funny to be successful. Many businesses find success by doing something very straight-forward: solving other people's problems.
"You know when you have a great business idea when you see a problem which others don't see and you know how to market the problem and the solution," said Arun Verma, founder of TeacherOn, an online platform that connects teachers and tutors from around the world with students who need their help.
Verma's business uses technology to solve a problem that's been plaguing mankind for centuries: how to share information across national and cultural boundaries.
For those who are at least mildly tech-savvy and unafraid of putting their ideas out there for others to judge, there's an easy way to test any business concept— run a crowdfunding campaign.
"If you can raise money on Kickstarter or Indiegogo, then you know there is a demand for your product or service or, at least, interest in it," said Bruce Hurwitz, an entrepreneur, educator and author of the new book "Success! As Employee or Entrepreneur" (CreateSpace, January 2014).
Mindy Godel, U.S. director of public relations at Pozible, an Australia-based crowdsourcing platform, seemed to agree with Hurwitz, explaining in an email how crowdfunding campaigns can be used to determine whether a business idea is a winner.
Godel said that Pozible uses a simple rule to gauge the likely success of projects (including businesses) launched through the site: the 20/48 rule. If a project reaches 20 percent of its fundraising goal in the first 48 hours, Godel said, it will likely reach its fundraising goal.
If you run your business idea through the crowdfunding gamut and it doesn't succeed, that doesn't necessarily mean you should give up, but you may want to reconsider how you're approaching prospective customers and investors and how you can improve for next time.
It fills a niche
If your idea for a business solves a very specific problem— one that only a select group of people need solved— you might be onto something big. Irina Jordan, founder of Artisurn, learned this lesson upon the successful launch of her business, which sells handcrafted urns for cremation remains.
"If you have experienced a lack of something in your own life, you may have found a successful business niche," Jordan said in an email. "In my case, I wasn't able to find a unique cremation urn for the ashes of my friend, so I started my own company to address this need, and it's been very successful."
Businesses that cater to a small segment of the population need to be sure that there are enough people out there to buy the goods or services they offer. But by tapping into a specific demographic, prospective business owners can often find an untapped market for even the most out-of-the-ordinary ideas.
People you don't know say it's a good idea
One simple way to find out if your business idea is worth pursuing is to ask people — specifically, people you don't know — whether they think it's a good idea. In an email to Business News Daily, David Reischer, a serial business owner and Internet operations manager with LegalAdvice.com, said that all business ideas must be tested in the court of public opinion.
"The initial spark of an idea that gets me excited about a project must first be validated by external confirmation," Reischer said. "It is very dangerous and costly to take an idea to market without first testing out the concept."
Some simple ways to test your idea on the public? Contact friends of friends to get impartial opinions about your product or service. Or create a survey online or on paper and ask a range of people to participate, from coffee shop patrons to people you pass on the street.
Sam Bruce, co-founder of Much Better Adventures, a travel company that pairs ski enthusiasts with the right chalets for their skill levels and budgets, used the latter tactic when deciding if he should proceed with his idea for a business.
"When we came up with the idea for our travel startup, we went straight to Trafalgar Square in London with a mock and asked 100 people if they would use it and why," Bruce said in an email. "When 98 people said they would because it would save them time, we decided to go for it whole hog."
People you trust say it's a good idea
Some entrepreneurs advise others not to bother asking people they know what they think of a business idea. After all, if these people are too nice (or afraid of you) to tell you when an idea is half-baked, they really can't be trusted. But for people with more candid acquaintances, using those you know as a sounding board can pay off.
In an email, Scott Harris, president and founder of the California-based marketing firm Mustang Marketing, said his system for gauging a good business idea involves speaking with five candid, business-savvy people whom he trusts.
"Study — with an open mind — their immediate reaction [to your idea]," Harris said. "The gut reaction tends to be the same amount of attention and time the general audience gives when faced with a new business, and is a remarkably good tell."
Violette de Ayala, a serial entrepreneur and CEO of Femfessionals, a resource and community for women in business, uses a similar approach to Harris when testing a new idea.
"Typically, before we launch a new program or a new feature, I [run it by] five women who fit my marketing demographic and are diverse in age and profession," de Ayala said in an email.
"I listen to their feedback and get specifics on how it would best fit their needs. If all five that I ask rave about it and expand with further thoughts, it's a pretty good indication that it's wise for me to spend the dollars in following the venture."
It does well at trade/consumer shows
If you don't know five people you can trust to give you an honest opinion, you may want to try a different strategy. Many entrepreneurs test their new ideas at trade shows or consumer shows. These exhibitions for businesses in a specific industry attract prospective customers who can give you valuable feedback about your product or service.
"I believe consumer shows are the best way to know if a product or idea is worthy," said Christy Cook, CEO of Teach My, in an email. "Ideally, the entrepreneur can find a consumer show that fits their product profile and target market. Most consumer shows are reasonably affordable and a great testing ground."
Cook said that when she launched her company's first products — educational materials for young children and their parents — at a consumer show, it was a resounding success. Kathy Steck, owner of DinerWear, a company that sells fashionable adult bibs, had a similar trade show experience as Cook.
In an email to Business News Daily, Steck said her trade show experiences gave her the confirmation she needed to go ahead with her business idea. Attending such events also enabled Steck to conduct valuable, firsthand research on the customers she was targeting.
It's easy to understand
This next strategy for testing your business idea needs little explanation: if your idea is easy to understand, chances are it's more likely to succeed with prospective customers or investors.
"A key to knowing if you'll be successful isn't so much whether [others] like your idea, it's if they can easily understand it with minimal explanation," said Andrew Hersch, COO and co-founder of City Lunch Club, a company that delivers fresh lunches to New York employees from some of the city's top restaurants.
Jeff Harmon, president of Brilliance Within Coaching and Consulting, also believes that good business ideas are ones that simply make sense. Harmon said he looks for one thing when clients approach him with a new business idea: clarity. Being able to answer questions about what your business does and why it exists in the first place is a good indication that your idea might be successful, Harmon said.
Your heart is in it
Anyone who has ever started a business can tell you that, before launching a new venture, you'll need to crunch some numbers. What's the return on investment? What's your potential market share?
But when you're determining whether or not to pursue your idea for a new business, you'll need to use more than your head. You'll also have to use your heart.
"After you run the numbers and do the plan, is this a business that you feel so passionately about that you would do it for free?" said Shannon Nash, founder of Autism Job Board, an online resource that connects individuals with Autism Spectrum Disorder and other cognitive disabilities with prospective employers.
Nash said that if you can answer that question in the affirmative, you may have found a winning business idea. Having a good head for business is important, Nash said, butbeing passionate about your idea means you "have the heart to make sure it's successful."
Originally published on Business News Daily.