So you think you have a great idea for a business? You might want to think again. While entrepreneurs are best known for the businesses that make them money, they often go through a series of bad ideas before settling on one that works.
But how can you tell if the business you've been building in your mind will be a total flop? While there's no set criteria for judging business ideas, there are several indicators that your scheme might be a waste of time and money.
Here are 10 ways you'll know your business idea stinks.
Someone tells you it stinks
The most sure-fire way to know that your business idea stinks is if someone tells you your business idea stinks. Of course, not everyone you talk to will be qualified to give you that kind of critical feedback.
If you're looking for a negative opinion that you can trust, find an expert or two in the field you're pursuing and ask them, point blank, what they think of your idea. That's the approach taken by Dan Fendel, a serial entrepreneur whose latest project is a boating safety company, Float Plan One.
In an email to Business News Daily, Fendel said that— in exchange for a free lunch— the experts he contacts will typically offer candid opinions about his business ideas.
"People love to be respected as experts and, to be frank, they love to shoot down things because they know what you don't," Fendel said. "And when you encourage that — which means getting past their natural "not-wanting-to-offend-you-by-telling-you-your-baby-is-ugly" politeness — it is a good thing, because it saves you going down a dead-end street, spending lots of money and effort along the way." [Looking for a business idea? Visit our business idea section]
No one's buying what you're selling
Experts aren't the only ones whose opinions you should solicit about your business idea. Friends, family members and even strangers can also provide valuable feedback that may help you fine-tune your idea or decide to scrap it altogether.
When telling people about your idea, you should ask them, first and foremost, whether they'd be willing to pay for the goods or services you plan on offering through your business. If the only one willing to buy what you're selling is your mother, your idea for a business probably isn't a good one.
"Every entrepreneur is enthusiastic about their idea, that's the nature of entrepreneurship," said Mike Poller, president of Poller & Jordan Advertising in Miami. "However, success is measured in dollars, investors and customers. Once your idea has convinced people to put their money where their mouth is, then you can know if it truly is a good idea."
If you're not excited by the idea…
While outside opinions about your latest business scheme can certainly help you decide whether or not to follow through on your idea, there's only one person who can tell you with real certainty whether your idea is worth pursuing: you.
As the person responsible for seeing a business idea through to fruition, you are the best gauge of whether an idea is worthwhile, or not worth the trouble. One way to make that decision is to ask yourself a simple question: do you feel passionately about your idea?
"If you're not passionate about what you're doing, then why should anyone else be?" said Paige Arnof-Fenn, founder and CEO of the global marketing firm Mavens & Moguls, in an email. "There's a lot of noise in every category, so if you don't have a unique story to tell and a new approach or idea that excites you, then go no further."
No one is willing to help you
Few entrepreneurs launch businesses without asking for (and receiving) outside help. Whether that help comes from investors, industry experts or simply friends and family members, having some support is crucial for new businesses.
However, if you can't seem to find the support you need to get your business off the ground, that might be a sign that your idea isn't very good.
"If you ask one person for help— and it’s a good idea— you'll get the name of someone who can help you. If you don't have a good idea, you don't get help," said Billy Bauer, marketing director for Royce Leather, a New Jersey-based luxury leather goods company.
It's too cool
Hipster boutiques and organic, gluten-free juice bars might be all the rage right now, but if your idea for a business is tied to passing trends, it could be a total flop.
"Ask yourself if [your business idea] is a fad," said Gary Tuch, co-founder of Professor Egghead Science Academy. "Fads are not good business ideas. Many people get hyped about the cool new thing and try to get in on it. Once something is cool, you are too late."
It isn't scalable
How big is the business you want to start? If the answer to that question is anything other than "small," you might want to head back to the drawing board. While some businesses are bigger than others, the most successful businesses can start out relatively small and grow bigger over time.
"Launch small," said Danny Halarewich, co-founder and CEO of LemonStand, an e-commerce platform for online retailers, who went on to say that businesses need to start small to account for the inevitable tweaks that will have to be made as the business evolves.
Brahm Kiran Singh, founder of CoachPal, a tutoring service for engineering students in India, also emphasized the importance of scalability in assessing business ideas.
"There should be a large number of target clients and it should be easy to scale to them," Singh said in an email. "A restaurant business is not as scalable as a SAAS business."
It's nice, but not necessary
Sure, you may have invented a new product or come up with a different solution to an age-old problem, but that doesn't mean you should start a business. Businesses with staying power can't just offer something new, they must offer something people actually need.
"Innovation has to be useful," said Conrad Bayer, CEO and co-founder of Tellwise, a cloud-based sales and communication platform. "It's an area where entrepreneurs often make mistakes. They confuse novelty and utility. Just because it's new doesn't make it useful."
Marc Meyer, a serial software entrepreneur and professor of entrepreneurship at Northeastern University's D'Amore-McKim School of Business, is of a similar opinion, saying in an email that a good business idea is one that offers a "must- have" type of solution, not just something "nice to have."
Your niche is too small
Many successful businesses exploit a niche market within a particular industry. But if the niche you've chosen is too small, you might want to rethink your idea for a business.
"If it is a niche product or service, it probably isn't a good idea unless the niche market is substantial in size and test sales are tremendous," said Andrew Zurbuch, president of Healthplanbrokers.com, a site that provides free medical insurance quotes for groups and individuals.
Ruben Soto, CEO of the e-commerce shape-wear site Hourglassangel.com, agreed with Zurbuch, explaining in an email that catering to a niche market can mean big sales growth, but only if done right.
"Make sure the market is large enough and that you and your team can serve those customers better than the alternative," Soto said.
It's not generating a buzz
Many people test their business ideas in the biggest court of public opinion there is: the Internet. To determine if your idea is worth pursuing, you might want to consider going the same route.
"The best way to judge a business idea, in my opinion, is to figure out how to test it with as large an audience as possible, on a budget that you're comfortable with," said Dustin Christensen, an entrepreneur and digital marketing manager at Jackson White P.C., a law firm in Arizona. "The point is not to make money out of the gate, but to get a realistic idea of the demand of your idea."
Christensen said he's tried a variety of strategies to test his business ideas on the Web, including running a Craigslist ad and launching a simple website and seeing if it receives any attention. Many of the ideas he's tested this way, he said, have been duds. But, as Christensen explained, it's worth working through these bad ideas to get to the ones that might actually gain traction.
If no one, including you, can explain what exactly your business idea is all about, it's probably not an idea worth pursuing. At least, that's what Jeff Harmon, president of Brilliance Within Coaching and Consulting, a New Jersey-based business coaching firm, tells his clients.
Harmon said the No. 1 thing he looks for in a business idea is clarity. If a prospective business owner isn't clear about his or her idea, then chances are that business won't be successful, Harmon said in an email.
Harmon said that to measure clarity, he uses a group of questions popularized by business management guru, Patrick Lencioni.
If you want to know if your business idea stinks or if it's actually worth pursuing, try answering these questions for yourself:
- Why do we exist? (i.e., what is the purpose of your business?)
- How do we behave? (i.e., what are the values of your business?)
- What do you do? (i.e., what is the main function of your business?)
- How will you succeed? (i.e., how are you different than the competition?)
- What's most important, right now? (i.e., what are your priorities?)
- Who does what? (i.e., what role does each person play in your business?).
"If a business can answer these six questions simply and crisply, they have the beginnings of a successful business," Harmon said.
Originally published on Business News Daily.