Have you ever come up with a business idea and wondered if it could be the next great thing? Here's how to tell if it might be.
Starting a business takes time and energy, and one must undergo periods of extended self-reflection to find a business idea that's both realistic and viable.
Better yet, once you have a good idea, how can you be sure it will blossom into a successful venture? These early planning stages are essential. Don't skimp on brainstorming, and put your ideas to the following test.
Before we dive into determining whether or not you have a good business idea, let's take a look at how to create one.
How to come up with a great business idea
Start by analyzing yourself and your strengths. What interests you? What are you naturally good at?
What are you good at? If you're the go-to person for certain chores or tasks, this might be a golden opportunity to turn that skill or talent into a business. However, it's important to choose something you are passionate about and can see yourself doing day in, day out.
What do others tell you that you're good at? Maybe you have a hidden talent that others see in you that you never thought of as a big deal. If this is the case and that skill is something you could see yourself doing more of, it could be a great business idea. Talk with your family and friends, and see what they think.
- What service do you wish existed that currently doesn't? This happens all the time. You search the app store looking for something specific, thinking that it certainly exists, only to find it doesn't. This is your chance. You could pair up with an app designer or create an app yourself that could benefit people like you all over the world. Another way to think about it is what problem exists that needs a solution? Some of the most successful businesses are ones with products or services that solve problems for others.
Helpful sources to spark new ideas
Sometimes you need a source of inspiration to spur that lightbulb moment. Try and find inspiration in the world around you. Here are four places to look for inspiration:
- Study successful entrepreneurs. It's hard to know where you're going if you don't know where the great entrepreneurs before you have been. Read origin stories and study successful business titans. How did they come up with their business idea? What advice do they have to up-and-coming entrepreneurs? Learn all you can before you embark on your own journey.
- Use your smartphone. If you know you want to create an app, but you're not sure exactly what you want to create, search through the app store. Search categories of interest. Do you notice whether anything is missing or how apps in that category could be improved?
Can you find similar products or services using search engines? The internet is incredibly helpful when it comes to finding products and services that you are in the market for. But have you ever searched and searched for something, and not been able to find it? That should be a tipoff of a potential opening in the market that should you act on.
- Turn to social media. People on social media are often quick to identify issues and problems they have with current products, places, processes, etc., but few take the time to come up with a solution. Reading through people's grievances can give you great insight into problems other people have that you can solve. Online review sites can offer the same.
How to determine if you have a good business idea
Sometimes inspiration isn't the problem, it's determining whether you actually have a good idea or not. It's important to be critical of your idea and ask for feedback from as many people as possible. Several experts weighed in on other strategies to help you determine if you have an effective business idea.
Does it solve a problem?
Entrepreneur and co-founder of the web design school The Starter League (which has been acquired by Fullstack Academy) Mike McGee thinks the best business ideas are those that solve a problem in some way.
"If there is a problem that affects you, your friends, family, co-workers, etc., then the chances are high that it affects people you don't know as well," McGee said.
Will people pay for it?
It's paying customers who validate an idea and determine which ones have the greatest chance for success, said Wil Schroter, co-founder and CEO of Fundable.
"An idea is just an idea until you have a paying customer attached to it," Schroter said. "Anyone can discredit a simple idea, but no one can discredit paying customers."
What's your price point?
Charlie Harary, co-founder and partner of investment firm H3 & Co., said that while there are many ways to solve problems, great business ideas do it in a way that is less expensive than what the market will endure.
"Once you have determined that you are solving a legitimate problem in a scalable way, you need to determine not only the value that it delivers to the world but what people would pay for that value," Harary said. "Once you determine the price, then you can assess if your solution is business-worthy or not."
Is there a sizable niche market for it?
Without a large enough market, your idea may never get off the ground. You need to determine if a niche market exists for your idea. You're better poised for success if your business improves upon what's already out there – a novel response to a recognized need.
How can you tell if a niche market is, in fact, a market? It's a mix of "research, gut instinct and personal preference," according to Ari S. Goldberg, founder of investment firm RNMKR. "I consider overall industry trends, the amount of investment activity that's taken place in the space recently, how much I've read about it from the consumer side, and whether I've heard people talking about it," Goldberg said.
Are you passionate enough about it?
Your business will likely consume all of your time, so make sure you're passionate about it to make it successful. It's important that your idea is something you truly care about, not just something you've targeted because it seems like it could be lucrative.
"Since starting a business requires an inordinate amount of time, energy and patience, ideally, the idea will be one that you are passionate about as well as one that you have skills or experience [in]," said Melissa Bradley, managing director of Project 500 and an adjunct faculty member of Georgetown University's McDonough School of Business.
Have you tested your idea?
You won't know if your business is viable until you test it on strangers.
"Test it – not just with friends who will be too polite to tell the truth but with honest people who would make up your ideal target audience, and then listen to the feedback," said Lisa McCartney, chief "PLYTer" at educational math board game company PLYT.
"If your target sample is saying [your idea] is fantastic and [asking] where can they get it, you know that you're onto something, but if they are less than enthusiastic, it's probably not as good an idea as you thought."
Are you open to advice?
If you're not open to changing or adapting your idea to fit what your customers want, your business idea might not be worth pursuing.
"Success happens when you are willing to listen and consider others' advice," said Angie Yasulitis, CEO and managing partner at The YaZo Group. "Most good ideas take some tweaking to get to market. Being closed-minded is a business killer."
How will you market your business?
Many entrepreneurs think about the problems their business will solve but not about how they intend to market their business to their target customers. Jesse Lipson, founder and CEO of Real Magic, said that your marketing strategy can determine if your business idea is a good one.
"If you have a solid go-to market strategy and a decent product, you'll probably be successful," Lipson said. "But if you have a great product without any idea how to reach potential customers, then it's going to be really tough to make it successful. Thinking through that as early as possible is really key."
Are you being realistic about your goals?
As excited as you may be about a new business idea, it's important to stay grounded and be realistic about it. Thomas J. Gravina, co-founder and executive chairman of the board of cloud services company Evolve IP, said you shouldn't have a Field of Dreams mentality when starting your business.
"Just because you have a vision and decide to build it does not mean the rest will follow," Gravina said. "While you may have an idea that is original, revolutionary or ahead of its time, there should be a real, solid market opportunity to ensure it is successful. Any new business case or new endeavor has to have a viable market that you believe you can sell now – not theoretically or on the premise that there is a future for this market."
Stop talking and start writing. Talking about an idea prior to doing some initial processing on paper tricks our brains into thinking that we are actually doing something about the concept.