Five ways to tell if your business idea is fantastic, or destined to flop.
This is a bit of an odd blog post to write as it’s something that comes up a lot, but it’s a really complex answer. Ideas are subjective and humans are notoriously bad at predicting future trends. There are countless examples of businesses that everyone said was a terrible idea, that went on to become billion dollar brands. Inventions too – the most famous probably being the computer, or even the car. Sometimes, we don’t know a good idea if it is staring us in the face.
I am an ideas person, rather than detail oriented (which is why I need people around me to balance that out), so I come up with a lot of ideas. Even being optimistic, 95% of these are rubbish. I think my favourite so far is one I came up with when I was around 11. I wanted to inject everyone around the world with chloroplasts so they could photosynthesise, doing away with both malnutrition and world hunger. No doubt there was also a less altruistic angle, of having to eat fewer vegetables. I didn’t understand why we hadn’t done it yet. Now I’ve studied a bit more science and have a fair idea why this idea is probably not one to pursue.
So with that said, here are some red flags to evaluate your business idea against. Though this list is by no means exhaustive.
#1: You are not excited about it.
This one seems obvious, but the number of times it comes up is surprising. The age old wisdom to wannabe entrepreneurs is to find a problem and solve it – and this is true. But, sometimes people solve problems for other people, that they don’t really care about. Starting and scaling a business is beyond hard. It’s lonely, stressful, exhausting and all-consuming. If you don’t think your idea is exciting and the best thing since sliced bread at the start, I promise you, you will not last the course.
#2: Experts aren’t a fan.
Now I say experts as opposed to just ‘people’ because unfortunately, relying on friends and family for advice on an idea isn’t the best idea. Often they will say your idea is fantastic simply to spare your feelings. On a sadder note of course, some people will give you the opposite answer and pan your idea simply because of envy. I’ve experienced both, neither are helpful. But if you talk to a few neutral experts in your field and get some straight feedback and it’s unanimously negative, you might want to rethink where you are headed.
#3: Your ambition outstrips the business potential.
Sometimes, entrepreneurs want to build a billion dollar brand in under ten years. Sometimes they just want to create a business that provides them enough income to live on happily. However a local community farmers market won’t do the former, and sometimes the product is so good runaway success can actually kill the business before it even gets started (experienced that last one with my second company). So you need to ensure that what you want to do, matches the idea. Seems obvious, but often not discussed. Super niche products, whilst potentially solving a particular problem, may not be the key to that unicorn you want to build.
#4: Too many people are doing it.
I often talk about how the most important question an entrepreneur needs to answer is what makes their product different – why would a consumer pick your product up off a shelf, rather than your competitors. The world is smaller than ever, louder than ever and busier than ever, so standing out is harder than ever before. If you have an idea that loads and loads of people are already doing, and you don’t have a solid strategy for making it different (read: better, cheaper, whatever), you’re going
to struggle. All those copycat businesses you see jump on to a trend? They don’t last long. This is of course also an opportunity. If you see someone making a real hash of a great idea, you can work to make it better.
#5: The financials don’t stack up.
Finally, most important (arguably) last. The financials don’t work. In the early days you won’t have much to work off, but have you seriously looked at costs, expenses and what you need to charge to make it work? There is an enormous graveyard of genuinely brilliant ideas that no one has been able to make financially viable. Sad truth, but one to really watch out for. If you need to charge $40 to make the financials work on a toothpaste product, is that really going to fly with consumers?
As I mentioned, this is not an exhaustive list. And ideas are subjective – even the ones almost everyone hates might breakthrough and become the next big thing. But this list of five red flags is a great checklist to run your idea through. If it runs the gamut, wonderful! If not, what can you tweak?
And if your idea passes the test, but you don’t know what to do next, I am here to help! Head over to businessbutbetter.co, for a step-by-step course on how to start and scale your purpose-led business.