Questions

How do you determine if a business idea is worth pursuing?

8answers

You ask the customers, and gauge their level of interest. Better yet, get yourself in front of some customers, and instead of telling them what you make or do, ask them what they need. When you notice that many of them need the same thing, and if it is something you can make or provide, you then have a business idea worth pursing.


Answered 7 years ago

I help companies find their most profitable customers working with everyone from pure B2B startups to $75M+ consumer businesses. First, I would separate whether you are solving a problem for a consumer or a business (they have very different ways of being sold to).

To build on what Daniel is saying, I would begin with meeting as many people as possible you think you solve a problem for. At first, ask them what's bugging them about the area of their business or lives your idea pertains to. Is what they currently do too slow, too complicated, too expensive? Shoot for talking to a couple dozen people. Clarity and your friend group are a great place to start these conversations.

As you have these conversations you'll start to see patterns emerge. Holes in what's currently being offered in the marketplace, etc. From there you can start narrowing the conversations. After they've discussed what they don't like about what's currently out there you can pitch your idea. "Hey, listen it sounds like you really hate changing your summer tires to winters. What if I could have a team come to your home, change them and store the summer tires for you all for $49.99?" And the last bit is the most important part, asking for the sale. People will throw out objections: "Too expensive." "Nah, it's actually not that important. I'll change them myself." Or they'll say "yes" which gets some $ in the door. That's when you can start doing the traditional business planning of determining market size, etc.

I hope that helps!


Answered 7 years ago

99% of the time Start-ups fail because there is no tangible "market" for what they are creating...this is why it is SO important to validate that the market demand truly exists and can power a business. I see over and over again this is the mistake a HUGE number of entrepreneurs make in the first 90-Days. You have to be diligent about testing your hypothesis and quantifying market demand - before you tae a single step.


Answered 7 years ago

Aside from everything the other experts covered, I would give you one easy recommendation:

1. Build out a quick landing page clearly explaining your product/service and make it interesting.

Set it up as a "coming soon" page with an email field so customers can be notified when it launches.

You can have this done by a designer or use a service like Instapage, Leadpages, Unbounce, etc that makes it easy for you to do it yourself using templates.

2. Send a bunch of people to your landing page using Adwords, Facebook Ads, etc.

Make sure you specify your market clearly so you only target the appropriate people (there are many courses out there on how to do this).

3. If you get a good response (many people signing up), you know there is a market for your product/service.

You can then capitalize on the list you created by giving everyone that signed up a discount or free trial once you launch.

Let me know if you try it out!


Answered 6 years ago

The main question to be asking yourself is this a product or service that people really want or need. I have been working with my own businesses and startups for over 20 years and I can tell you that on the surface sometimes a business seems like a good idea when it is not.
However, if you feel like it is a good idea, it has a high probability of success. That is if you understand a few basic business principles.
First, make sure there is a true need or demand for your product or service. Never try to create this need or demand unless you have as much money as Amazon.
Secondly, how many units of your product or service would you have to sell to return your total investment do not include any other costs in this initial calculation.
Next how long do you estimate it will take to sell enough units in order to return your initial investment.
Now if you got luck and sold twice as many of your units in the amount of time you calculated would it be a profitable use of you time and money?
This is a simplification of how I work this formula, but the point is to make sure that if everything goes perfectly that it still would be worth investing your time and money in the venture.

To Find Out If There Is A Demand
My suggestion is to first get a conversation started regarding your product then make sure that you are offering specifically what the market demands. You can do this be participating in LinkedIn groups, etc.
Make adjustments to the product or service to meet the real demand.
Don't Stop and Take Massive Action.
Regards,
Michael T. Irvin
www.michaelirvin.net
My books are now available on Amazon.com by searching for books by Michael T. Irvin


Answered 7 years ago

Worth Pursuing is a measure of your highest value. If its money, then google "Your business idea Statistics" and you will be able to see failure rates and revenue returns.

If you value a challenge, Any business will do.

If you value environment impact, "Go Green" And go fund me.

If you value People, then your business should directly solve the problem the masses are facing or at the very least a great majority of people.

If you value God, then it will be non profit.

If you value time then you would have started it already.


Answered 5 years ago

Spend time scotching out a business model and a business plan for about two months to see if the idea is financially viable. The key is to properly determine the target customer, the current problem and/or need that they have and how will your product address their issue. From my experience, most new businesses struggle because they have not articulated a value proposition accurately.

Value proposition: my product XYX is for customers ABC that have the following problems: p1, p2, p3. Unlike current solutions, our solution is about 30% better, faster, cheaper.

Obviously, to get to the value proposition above, you have to do extensive market research, industry research, competitive intelligence, customer discovery. All of that can be done without actually build a product.


Answered 7 years ago

The short answer is: if you would have to spend the rest of your life regretting never having pursued one specific idea, go ahead, and start your business because life is too short for regrets. Unfortunately, not every decision is as straight forward because sometimes the thing you would be regretting the most is never having tried any of your ideas and there is no specific idea that you have set your heart on at the moment. Here are five ways to find out whether your business idea is a yay or a nay.
1. What Do Competitors Advertise?
You can go around and ask potential competitors what they think their strengths are. The issue with that is two-fold: a) they might not respond at all and b) what they say might not correspond to what their numbers are saying. One easy way to find out what sells for them is to check out their online ads. Whatever makes them most competitive in their given market is 99 percent of the time literally spelled out in their online text ads.
2. Can You Make it a Purple Cow?
The idea behind the purple-cow-concept is to offer your product and service in a way that would make it so remarkable as if it was a limited edition. Remarkable is a great term here because it is defined as “worthy of attention.” If you cannot make a remarkable version of what you are offering, I would say to cross this business idea of the list because if you do not stand out, nobody will buy. If you are asking for a concrete example of implementing the purple cow concept, take at Tim Ferriss’ 4-Hour-Work-Week book cover as an example. He split tested the cover by putting the book next to other books with a variety of covers, watched what people ignored and what they picked up, and then made a decision of what the book cover would look like. He chose what was “worthy of attention.” He also split tested different titles of the book with Google AdWords ads and chose the one with the highest click-through-rate which is a common technique to split test business names.
3. Competitive and Perceptual Positioning
It is time to go back to the drawing board. Use a competitive positioning matrix to figure out where your brand or business would rank compared in the current industry. The traditional perceptual positioning metric looks at how a brand is perceived, not how companies are perceived. This differentiation is extremely important because a company can carry more than one brand that are perceived very differently from each other. If you only carry one brand, then you can, of course, use the perceptual positioning metrics for the company as well. If you have a hard time thinking of the respective perceptions for your perceptual positioning matrix, think of the five biggest players in the market and find one word for each that best describes how you think people feel about the brand. If feelings are not your thing, think of a typical item that you associate with the company. For instance, for Nike it would be the running shoes, for Starbucks it would be coffee in a paper cup and so on. Then find terms that customers would use to describe the item. These are just examples to illustrate the concept, the perceptions of the matrix change based on what industry or brands you are looking at and of course based on what you are planning on offering.
4. Likelihood of Successful Execution: Based on your analysis from point 1-3, how likely is it that you will be able to make your business idea a reality? There are several things to consider when determining the chances of success.
Aspects to consider include but are not limited to:
a) Up-front costs
b) Funding needed yes/no/how much/when
c) Time commitment
d) Core competency needed
e) Dependency on others
f) Market size
g) Level of competition
There are very few niches nowadays where the level of competition is low. One of the things I feel is most overlooked is the question of why the level of competition is high. It is not enough to figure that you are competitive and able to handle the competition. Handling the competition is not the game. The game of entrepreneurship – or at least part of it – is beating the competition. To be more successful than others, you first need to know how the industry works. One of the ways to find out is by using Michael Porter’s Five Forces. The easiest way to understand this model is with examples. Think of it as a microenvironment that surrounds the company, almost like an ecosystem that the business lives in.
If you are launching a protein product that is targeted at people who are going to the gym, there is an enormous threat of new entrants. Hundreds of new protein products come out daily. You can also use this model in relation to the perceptual positioning matrix. The threat of substitute products or services can be the perceived level of product differentiation. Think of bottled water for instance. The water in the bottle is the same everywhere, it’s clean drinking water. Nonetheless, you will surely never see your dad pick up a bottle of Skinny girl water because the perception is different than from, let’s say, Evian. If you were to launch bottled water for athletic women ages 15-25, you would be a substitute threat to the Skinny girl brand. The bargaining power of customers refers to price sensitivity among other things. As seen in the example with the online shoe store, buyers can be extremely sensitive to prices and simply go for the lowest price. This is one of the characteristics companies like Walmart count on for instance.
5. Impact Your Lifestyle: Great business ideas have the ability to take over your life. The trouble with being a passionate entrepreneur is that you do not really mind. Beware of what I call golden cage syndrome. The golden cage is a profitable business that you cannot get out of because, well, a cage requires the bird, and you are that bird. It is a good cage to be in because the business is making money, but it requires you to be there all the time and is not worth a whole lot without the bird in it. It is difficult to be bought at this point because the business does not work without you. You cannot change the world in a cage anyway, so why start building one in the first place? Making a difference and living the life you want are not mutually exclusive, so go for what is best considering your personal happiness also.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath


Answered 8 months ago

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