You are a budding entrepreneur and you want to know if one of your ideas is a viable business model. You run it through your friends and family and you get a mixed bag of responses, which leaves somewhat unconvinced.
So, you ask yourself do I have a good business idea?
You will likely get many answers to that question. And based on these answers you can make an informed decision on whether it is a good idea or not. Even then, knowing which ideas to pursue as well as figuring out what products and services to offer will remain a challenge.
At the end of the day, you are going to spend your time, money and resources to get your idea up and running. It takes real-world pragmatism and a leap of faith to keep you going when things are not looking so bright. But it all starts with a good business idea.
Do You Have Good Business Ideas?
Initially, most entrepreneurs think the business idea they come up with is probably good. Some might even think it is great. It is only after they vet, evaluate and validate their idea they end up with a more realistic conclusion.
Here are 10 ways to know if you have a good business idea.
Your Business Model Can be Easily Monetized
This question is obvious enough, but you have to make sure your idea is profitable. Whether you are selling a product or service, you have to identify the profit point.
You won’t need a full-on financial forecast initially, but if you know it will eventually be profitable it is a good start.
However, you might be looking to open a not-for-profit organization and making money is not your end goal. But even not-for-profits need to raise funds in order to solve the problem they are addressing. In this case, a solid fundraising strategy will be key.
Your Business Solves a Problem
The most successful businesses were founded based on their intention to solve a particular problem. If your idea solves a problem which no one else is solving or properly solving, you might be on to something.
In addition to identifying a problem, there have to be customers who also want said problem solved. Once you identify and find your customers, it is only a matter of putting the pieces together to start your business.
You Can Get Funding for Startup
You might be an idea person with little to no capital. This is where an idea which can be funded will have a good chance of actually becoming a business.
The fact that your idea is able to get funded means you have more options to establish your company. In today’s digital ecosystem where crowdfunding is an option, it is a dependable way to determine the viability of your idea.
If you get your idea funded and there is a good response, it will lead to more funding opportunities as more people become aware of the business.
There’s No Other Business Like It in Town
The location of a business is one of the biggest drivers for determining the future of a business. Depending on where you live, the business idea you come up with maybe the only one of its kind. Generally, this can provide a great opportunity, but it is not always the case.
You also have to vet the town to see if there is enough of a customer base to ensure your business will be profitable. Even if your idea may not work for this particular idea, keep your options open because your research could lead to new opportunities.
You Have a Good Value Proposition and Room to Grow
Again, standing out or being unique is a great indicator your business idea is a good one. Having a unique value proposition will, in the initial stages of your business, give you a great advantage.
As competitors start adopting your business model, and they will, you have to continue innovating and doing more to keep the customers you have acquired. You might have to file for patents, copyrights and other tools to protect your intellectual property. But if all goes well, and you have taken the necessary precaution, your business can thrive even with new competition.
You Have an Approach that Differentiates You from Competitors
Your idea is great, but you soon find out there are many companies providing the same product or service. This doesn’t mean you should be discouraged or give up on it entirely.
Your unique perspective can introduce enough differentiators at the core of your business. This will set you apart enough from your competition to drive customers to your business. But don’t make yourself so different you will alienate your customers.
The key is finding the right balance between being original and an innovator to bring customers in.
You’ve Tested Your Idea
Once your idea checks all the boxes, you have to test it. Eventually, you will have to find out if customers are willing to pay for your product or service. And when you are ready to test it, you have to choose people you don’t know. After all, you might not get the most objective answer from your friends and family.
If you get enough of a positive response from your target audience, you are on your way to making your entrepreneurial dream a reality. The goal is to test your idea on a large group.
Granted this may not be possible if you don’t have the funding, but there are now options for carrying out tests on a budget.
You’ve Selected the Right Market
Finding the right market for your product or service early goes a long way to acquiring customers quickly.
If you are searching for a market and you haven’t quite figured out your target audience, the process can take a long time after you have established your business.
On the other hand, if you know your market beforehand and you are well aware it will strike a chord with your customers, you then have an idea which is worth pursuing.
Being in the right market also means you understand the market. This is going to allow you to adapt and make iterations to your product or service so you can continue to meet the demands of your customers.
You’ve Really Done Your Homework
If you are scratching your head to come up with a new business idea don’t give up. Again, location plays a big role to find a market but it doesn’t necessarily have to be local.
For the local angle, you can drive around town and see what is missing to get inspired for coming up with a business idea. This will take time, an open mind and thinking outside the box.
Similarly, you can do the same vetting for an online business. In this case, the research is going to take much longer, but it is still possible to identify a unique niche. If there isn’t a unique idea, you can use a proven business model to start your online venture.
Remember not all business ideas are going to be unique, innovative or groundbreaking.
You’ve Answered the Why Question
There are many reasons people start a business, and some of them are in this article. However, you have to ask yourself why you are starting your business. Even if you have a good business idea, you should list the reasons.
Your mission, sense of purpose, and passion for your idea is critically important to ensure the long-term success of your business. In addition to these qualities, your heart has to be in it too.
If your heart is not in it, it won’t be long before the daily grind of running a business wears you down. It is times like these people who are wholly invested keep going and eventually succeeding.
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