4 Ways to Know If You Have a Great Business Idea

The DEMO Conference
Tuesday, June 24, 2014

According to Business Insider, over 543,000 new businesses are started up each month. What’s equally astounding is their statement that more than 65% of jobs created since 1995 have been the result of small businesses. If you’re thinking about starting up a new business, you’re not alone.

That said, only half of those small businesses make it more than five years. Before you start a new business, what are some ways to find out if you’re business has what it takes to make it?

  1. Tell a friend: In fact, tell lots of friends. Spend time with people you trust reviewing your business idea. That includes your addressable market, what problems you’re solving for that market, how you think you can make money, and what you’re offering that the competition can’t duplicate. It’s easy to spot flaws in business plans, so let your friends do that for you. Then, keep pitching your revised ideas until your friends can’t find flaws any more. Remember: have a thick skin. Identifying flaws early can help you succeed in the long run.
  2. Condense your pitch to a single sentence: If you’re not able to pitch your product in a sentence–a short one–you’re not ready to pitch to customers or investors. You either need a tighter target market, or your unique sales proposition needs better definition. In a single sentence, your customers should know immediately what makes your product uniquely suited to their needs.
  3. Test it out: Start with keyword analytics to see if people are already searching for solutions to problems that your business addresses. With the online tools available, it’s easier than ever to test out ideas at a minimum cost. Build a proof of concept online, set up a website, optimize your keywords, and see what kind of traffic you get. Add in online response mechanisms to generate a list of leads and feedback before you launch.
  4. Try it out on crowdfunding websites: Sites like Kickstarter let you put your product or service online. This is especially true if you’re able to take pre-orders for your product before producing the first one. If there’s little interest online, you know you need to change your product, your targeting, or your pitch. 

Spending time sharpening your business pitch and socializing it with friends or colleagues will help you make the most of your time and resources when it comes time to test your business. And testing online with a small website and/or on crowdfunding sites will give you a low-cost way to determine the viability of your business idea.

Being distinctive and having a sharp value proposition are in no way the only keys to entrepreneurial success. They are, however, important benchmarks for knowing if you should proceed.

Don’t end up in the half of small businesses that don’t make it past the startup phase; take your time to test your idea before you even think about bringing anything to market.

If you have a business idea and would like to develop the skills you need to launch, grow, and manage your own business, consider applying for our Entrepreneurial Leadership Certificate.

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photo credit: The DEMO Conference via photopin cc

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