{"id":74013,"date":"2022-07-31T17:53:00","date_gmt":"2022-07-31T21:53:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=74013"},"modified":"2022-08-02T14:36:15","modified_gmt":"2022-08-02T18:36:15","slug":"how-to-evaluate-business-ideas","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/how-to-evaluate-business-ideas\/","title":{"rendered":"How to Evaluate Business Ideas: Is Yours Good?"},"content":{"rendered":"\n

Do you have an idea for a business? How can you tell if it’s a viable one?<\/p>\n\n\n\n

Ash Ali and Hasan Kubba say you don’t need to come up with anything spectacular. A viable business idea should build on your unique strengths, or “unfair advantages,” and offer value to people’s lives.<\/p>\n\n\n\n

Keep reading to learn how to evaluate business ideas.<\/p>\n\n\n\n\n\n\n\n

Evaluating Business Ideas<\/h2>\n\n\n\n

Once you\u2019ve chosen the type of startup<\/a> you want to launch, you should carefully consider which business idea to pursue. Ali and Kubba say your idea doesn\u2019t need to be revolutionary; you just need to execute it well and use your unfair advantages to get an edge<\/strong>. You can build a successful business<\/a> simply by improving upon an existing product or service. And, remember, sometimes success comes down to getting the timing right. Capitalizing on a growing trend often facilitates success even when your business idea isn\u2019t notably original.<\/p>\n\n\n\n

Ali and Kubba provide advice on how to come up with new ideas. Then, they offer guidance on how to evaluate business ideas you generate.<\/p>\n\n\n\n

How to Tell If You\u2019ve Got a Great Business Idea<\/strong>

Most business leaders agree with Ali and Kubba that your business idea doesn\u2019t need to be completely original. But if it\u2019s not original and revolutionary, how do you know whether your idea is good? Here are some indicators that experts suggest you check:

You can sell at a reasonable price and make a good profit<\/strong><\/a>.<\/strong> Your business idea has to make sense for your customer and<\/em> your profit margin.

It\u2019s hard to copy<\/strong>. Explore protective legal steps, such as patents, to make it harder for others to copy your product or idea.

You believe in the difference it\u2019ll make<\/strong>. No matter how profitable an idea promises to be, if it goes against your values, it\u2019s not worth it. You need to be passionate about your business to stick with it for the long haul.

People you trust\u2014and people you don’t know\u2014say it’s a good idea<\/strong><\/a>. Pay the closest attention to people\u2019s immediate gut reactions, which generally reveal the most about their authentic feelings.

It\u2019s easy to understand<\/strong>. If you can easily explain your idea and why it\u2019s important, you\u2019re more likely to succeed with prospective customers and investors.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

To come up with a good business<\/a> idea, Ali and Kubba recommend thinking creatively about how you can solve a problem in a unique way that somehow adds value to people\u2019s lives<\/strong>. For example, you could create tires that last twice as long as competitors\u2019 tires or build a transcription app that\u2019s more accurate and sensitive to regional accents than other apps on the market. To generate ideas, Ali and Kubba suggest talking to people about things they find frustrating or products they wish they had. Also, reflect on problems you encounter routinely. Your life experiences are an excellent source of insight. <\/p>\n\n\n\n

(Shortform note: Ali and Kubba recommend generating ideas by paying closer attention to your problems and the problems of others. Some business experts claim that the most effective way to stay tuned into these kinds of opportunities is by practicing meditation.<\/a> Meditation<\/a> can help calm your thoughts and make you more present and attentive to the people and circumstances around you. When you\u2019re more present, you\u2019re more likely to tap into the inspiration required for creative thinking. Also, consider how to improve the customer experience for a segment of the market<\/a>. For example, you could explore offering travel advice to LGBTQA+ customers who have concerns about safety that other businesses don\u2019t take into account.) <\/p>\n\n\n\n

Once you have a business idea, Ali and Kubba say you must ensure that it fits two essential criteria: 1) enough people want and will pay for your proposed service or product, and 2) your unfair advantages match up well with your idea<\/strong>. For example, if you want to design the longest-lasting tires on the market, but you don\u2019t have any technical or engineering expertise related to tire tread and wear, you probably want to consider another business idea (unless you have an extraordinary business partner to fill that role, which we\u2019ll discuss in the next section). <\/p>\n\n\n\n

(Shortform note: As Ali and Kubba assert, it\u2019s crucial to ensure that there\u2019s sufficient demand for your business idea. According to research, 42% of businesses fail because there\u2019s no market need<\/a>. How can you estimate demand? One way is to distribute surveys to potential customers or conduct focus groups<\/a>. You can also access publicly available market data on distinct industries. For example, Pew Research Center shares data from public opinion polls, demographic research, and other social science research<\/a>. A simple strategy that Chris Guillebeau suggests in The $100 Startup<\/em><\/a> is to research keywords on popular search engines to see how many people are interested in a given product<\/a>.)<\/p>\n\n\n\n

When You Don\u2019t Have the Right Unfair Advantages<\/strong>

Although Ali and Kubba say it\u2019s important to make sure your business idea matches your unfair advantages, some highly successful entrepreneurs have achieved success without clear alignment between their initial unfair advantages and their business ventures. For example, Peter Kelly owns four successful restaurants and a catering business with combined annual sales or roughly $10 million<\/a>. He never went to culinary school or even graduated from college, and he grew up in public housing as one of 12 siblings. He attributes his success to a strong work ethic<\/a> and high self-confidence. So, you shouldn\u2019t necessarily limit yourself to business ideas that intuitively align with your obvious advantages.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Exercise: How Viable Is Your Business Idea?<\/h3>\n\n\n\n

Ali and Kubba say a good business idea<\/a> solves a problem that you\u2019re passionate about and<\/em> matches your unfair advantages.<\/p>\n\n\n\n