You just came up with a great business idea, and your gut tells you that you’ll get rich on it. Maybe you share the idea with your closest friends and family, but they don’t seem very enthusiastic. So how do you know you really have a great business idea?
The truth is, you won’t know until you try it out. And, even after you do, you might still struggle for a while before you can convince others that your product or service is worth paying for.
But there are ways to gauge how great a business idea truly is. Below, we’ll give some tips on how to do this. Let’s make sure your idea is worth pursuing before you sell your house, quit your job, and devote all your time to it.
Know What’s Unique About Your Business Idea
Here’s a piece of great business advice spotted in a business journal a long time ago:
You must be able to describe what’s unique about your business in one sentence. If you can’t, then your business will fail.
If your business idea is not unique, then you’ll probably fail. And if you can’t succinctly describe what that uniqueness is, you’ll probably fail too.
This is not to say that you can’t copy someone else’s idea and be successful. Plenty of businesses do that. They squeeze the little guy who originally came up with the great business idea out of the marketplace.
But these latecomers tend to be bigger businesses. They usually have a lot of advertising money to help them take over the market with a cheaper but similar product. You’re the little guy. You don’t have the money to do this.
(We will go over how to protect your great business idea against latecomers in future articles. For now, to succeed, you need to have a clear understanding of what makes your business idea unique.)
Unique Can Mean Different Things
Your great business idea doesn’t have to be a unique product or service. It can be a faster or less expensive way to make an existing product or provide an existing service. You can compete better because you have a higher profit margin and/or can lower your price more than your competitors to acquire new customers.
The Business Idea Doesn’t Have to be Spectacularly Unique
There are plenty of restaurants, so an idea for a new restaurant probably isn’t groundbreakingly unique. Still, you can set yourself apart by the deliciousness of your food.
The Idea Shouldn’t be Unique for the Sake of Being Unique
The uniqueness of that great business idea has to give you some competitive advantage. A lawnmowing service where all employees must dress up as cowboys might be unique, but it doesn’t make the business more competitive in any way. But a costume shop where employees can creatively dress up in different ways might convince customers that your employees are experts who can suggest just the right costume for their occasion.
As long as you can verbalize in a sentence or two what makes your idea unique, then you’re off to a good start. All your future marketing or your ability to get a loan or get investors will flow naturally from this.
Is Your Idea Obvious, but Only in Retrospect?
When was the last time you saw something advertised and said to yourself, “Why didn’t I think of that!” This is what is meant by obvious, but only in retrospect.
Sometimes, this type of idea can be hard to protect legally. For instance, you might have a hard time getting a patent to protect your product or service, or your competitors can easily tweak the product or service to get around your patent. But these obvious-in-retrospect ideas tend to be the best ideas.
You might have to spend some money on at least one prototype to convince people that your idea is good. However, if your obvious-in-retrospect idea truly is good, then people should be pretty easy to convince.
Your Buseinss Idea Addresses a Long Felt Need
The long felt need way to look at an idea is similar, but not the same as obvious in retrospect.
Sometimes, there’s a long-felt need if we all do something that we vaguely hate but still do it because it’s necessary. No one had tried to make it better until you came along with your idea. Other times, it’s some problem that many people had been working on, and you’re the first to come up with the breakthrough.
For instance, we all hate washing dishes. A long time ago, your only choice was to wash by hand. People were resigned to it because they didn’t think there was another way. Then, someone invented the dishwasher. The machine filled a long-felt need.
The breakthrough idea might sometimes be obvious in retrospect, but the motivation of your idea is to address a long-felt need.
You Are Already Familiar with the Industry
Even if you’re a brain surgeon, if your idea is on how to make a new type of rocket engine, that idea is probably not a good one.
Every industry has its own quirks. Only those already working in that industry are likely to know its obvious in retrospects and its long felt needs. What is more, if you’re already working in that industry, you’re more likely to know (or know people who know) how the industry’s products and services are sourced/procured and distributed. This knowledge can help you avoid rookie business mistakes that waste time and money.
Of course, even if you don’t currently work in the industry your great business idea relates to, you can still do the research and find out most of what you need to know. (Some types of knowledge only come from experience, though, and you won’t find those written down anywhere.) It’s just easier and faster for you to evaluate your idea if you already are familiar with that industry.
Does Your Buseinss Idea Have a Repeat Purchase Component?
It’s easier for your business to succeed if you have repeat customers. Some products and services are designed to have a reusable component. Customers would always need to buy the component to keep going. Other goods or services are subscription-based, so you’ll have a steady income stream.
Examples of such products are:
- Water filtration devices. You have to buy a new filter once every few months.
- Dry sweeps or mops. The cleaner sheet of a Swiffer sweeper or mop is a single-use item.
- In-game subscriptions for some software games. Monthly subscriptions where you are given items to use in the game to help you grow faster.
So, assuming you can convince people to buy your product or service, having this repeat purchase component can help you succeed faster.
What If Your Business Idea Doesn’t Fit into Any of the Above?
If your business idea doesn’t fit into any of the categories above, it doesn’t always mean that it’s a bad idea. Almost certainly, though, you’ll have to work much harder to make your business a success. So, you might want to proceed more carefully as you build your business.
And, as you start building your business, be a little more flexible on your vision for success. Many businesses start as one thing but morph into another—something that better fits into one of the categories above.
So, if you spot that kind of possible change, don’t be afraid to pursue it. There are many paths to success. You have to find just one.
Questions? Comments?
