How to choose the best business idea
This is a common story I keep hearing from my students on Entrytoo: I’m a creative person so I’ve come up with dozens of business ideas for a startup. Which one to go with? How to choose the best one, read — the one with more chances for success? Are there technics, that might help you evaluate “chances for success score” for your venture and steps one should take before investing time and/or money into business?
I like to use the old-fashioned assigned value lists and, honestly, this approach proved it’s efficiency more times that I can count on my fingers.
How exactly does it work? I make a list for every idea I want to pursue focusing on 5 major areas:
- My personal expertise in the area. Do I have a deep personal knowledge of the subject? Can I relate to the customer’s pain I’m going to solve? This checkpoint is more important than you might initially think (like, Ok, I know nothing about cooking, but it won’t stop me from building a platform for cooking professionals, because I clearly see a growing demand in the market). Even if you can afford hiring a professional to build your product you will be a better first user, if you look at it from other perspective users point of view. And when time comes it’ll be easier to showcase your project for investors, banks or accelerators if you have a personal expertise to highlight.
- Accessibility to a sufficient team. Do I have someone in my circle whom I might attract on the project based on this particular business idea? I’m not necessarily talking about technical co-founder, though if you might think of someone with technical background who will be sold from the get go on your idea of building a crash junkyard cars services marketplace in Timbooktoo — move this idea to the top of your list. If you can’t think of a full-time team willing to invest their sweat in your project for 12 months without pay — welcome to the club. That’s where most of founders are, but it doesn’t mean you should forget about your startup dream and apply for the book keeper position (with all due respect to book keepers, your profession is marvellous, folks). Think of someone you might be able to hunt as an advisor. These people are crucial in terms of feedback, improvement ideas and connections to potential investors in future. If you can somehow reach out to a well known person and name her as your advisor — forget about crash junkyard cars services marketplace in Timbooktoo and go with this one.
- “Pain market”. I might have called this plain and boring “opportunity market size” but it’s not only about it. It is your answer to the question, how many people are out there who are really bothered by this particular pain? Like, I’m sure some people are really upset by not knowing the exact technology behind primitive flint axes production, but is it enough to build business upon? Keep in mind that market size might be (and actually will be) much larger than the “pain market”. For instance, your business idea is a solution for people’s pain caused by their inability to learn rock skipping real fast. There’s definitely a huge market for it. But you might also target people who know, how to do it and attract them as mentors. What about people choosing a creative gift for a friend? Or even Support eco-games national association? The point is, if the “pain market” is big enough, there always be surrounding and co-relating markets to play with.
- Downsides of existing solutions = level of competition and the entrance barrier. This is an easy one and I don’t feel any detailed explanation is actually needed here. If customer interviews show that users are mostly satisfied with existing solutions and it’ll take too much efforts to make something that has a significant differentiating advantage (like, the only way to build a different golf cart is to make it fly), this idea probably goes to the backlog.
- Access to funding. It is a straightforward question that implies a relative answer. You always have access to at least some funds. But do you have enough to move to the stage next to ideation? Can you build a prototype with what you’ve got so far? Like, I’d love to build a Tesla competitor (with that flying golf cart) but I definitely can’t effort it. At least, for now:). But what if you have nothing to go with? Well, there are always options. Fundraise from your friends and family, — is the most popular way, obviously. However, in this time of turmoil, perhaps it’s not the best path to pursue as they might have their own ideas how to spend not so excessive cash. Luckily, in most countries there’re federal, regional and industry-focused grants and co-financing schemes. But if you’re on idea stage you shouldn’t expect to get over €50,000 in EU (probably, it’s the same for US and my guess is it an upper limit for the rest of the world as well). So, back to our topic, if you have nothing to go with, limit your expectations to this amount and decide whether it’ll cover your expenses with the prototype.
Well, that’s it. Only 5 points to check but they make you think of your business idea in a totally new way. Moreover you’ll have to make a market research, run some customers’ interview, analyse your strong and weak sides, hunt for advisors or co-founders and actually make first very important steps on the way to get traction. Most importantly you’ll clearly see what ideas are worth committing to, and what is just a wishful thinking.
Anyway, good luck with you startups.