Learn how to choose the right business idea for you
A common problem that new and aspiring entrepreneurs, like yourself, constantly face is the issue around narrowing down that list of business ideas to the final one to launch.
If you have a list of ideas that all seem to have the potential to be a great business, how do you choose the one to run with? It can be tough as you will be spending a lot of time and potentially money on this idea in the years to come. You also may be working long hours without making much money in the beginning, so it’s important to spend the time now and choose a business idea you like and one that fits your life.
In this article, I am going to explain in-depth why finding the right business idea is important, as well as show you how to choose the right idea for your to run with.
Table of Contents
Why finding the right business idea is important
There are many reasons why finding the right business idea is important. From the passion aspect to making sure the business idea you find fits your goals as an aspiring entrepreneur. If your business is a success, you won’t want to walk away because you hate the day to day tasks required to operate it. Which is why it’s important you take the time and consideration now. There are many examples of entrepreneurs that have built businesses
Passion is important
The first reason why spending time on your business idea is important is that you need to incorporate passion into your idea. If you just run with any business idea you come up with, you may not have the passion and motivation to continue on with the idea in tough times (as every entrepreneur faces these).
You’re working late at the desk on a Saturday night, hoping to get a big project done for your client (a client for YOUR business you launched), who is expecting to have it early Sunday morning. Well, in times like these, if you aren’t passionate about what you’re doing, giving up on the project and having a relaxing Saturday evening can be tempting. But if you’re passionate about what you’re doing and love the work, then completing that project may bring you enjoyment, as well as money.
Determining if you’re passionate about the work you will be doing is key to the long-term success of your business, as well as your entrepreneurial career. One of the major reasons why new startups fail is because the founders close up the business when they run out of money or fail to offer the right product or service to customers. This is usually because they aren’t passionate enough about the idea to change their positioning, potentially create a new minimum viable product to launch. All this takes a lot of passion, especially if your first launch didn’t go as planned.
Both unique and regular ideas are needed
When you spend time thinking of an idea, you can make sure it is unique compared to the competition. This will help you significantly when it comes to standing out from the market, allowing you to have a sustainable business that isn’t going to drown in competition.
Having a unique differentiator will allow you to compete, without worrying that your competition will simply copy you, invest more money and wipe you out. Which is an unfortunate reality for many businesses these days, but can easily be avoided by spending time to find the right business idea. Some of your business ideas may or may not have this so make sure you take it into consideration when deciding what one to go with.
Ideas you can launch
Working on your idea allows you to create and develop a business idea that fits your lifestyle and goals. Many new and aspiring entrepreneurs come up with business ideas that don’t fit their lifestyle goals.
What do I mean by this?
Well, for example, if you are going to try and launch a business that requires you to have $10,000 in startup funds but you only have $500 in the bank, and you don’t want to take on investors, then you may want to go back to the drawing board.
The key here is to that we want to think and run with business ideas we can launch given our circumstances, resources and abilities. It helps you save a significant amount of time by avoiding the 16 to 18 months spent chasing investors, when that time can be used to get valuable clients and build your business instead.
How to Choose the Right Business Idea: 3 Methods
Now that you know why it’s important to choose the right business idea, I am going to show you how you can do that. This will be important if you already have a list of business ideas, but are not sure what ones you should run with to validate in the marketplace. And if you don’t have a list of business ideas, be sure to check out the getting started page. It will help guide you.
Method 1: Assessments Method
The assessments method is one of the best strategies I use with private clients when narrowing down their list of business ideas. It is designed to make sure the business idea you choose will be one that fits your life and goals. It also dives deep into your
Step 1: Conduct the assessments
The personal assessment will guide you on what you enjoy in life, what your passions are and what you really love doing. It will help you understand yourself better, so you can align this with the business idea chosen so you love working on it every day.
There are a few questions you can ask yourself for the personal assessment if you need help getting started:
- What do I find to be meaningful, enjoyable and important to me?
- What do I currently do in my spare time that I love?
- What would I feel proud of to wake up and work on every day?
The resources assessment will answer key questions to make sure you have the money and time to launch the business idea into consideration. There is nothing worse than trying to start a business and realizing you’ll need to raise a lot of money, ex.$150,000, just so you can develop a prototype or initial product to sell, without having that kind of money in the bank.
A common blocker for many new and aspiring entrepreneurs is thinking they need to raise money before they launch their idea, which is not usually the best route to take. However, here are two questions to ask yourself for this assessment:
- How much money do I have available to start my business?
- What skills and abilities do I possess?
The strengths assessment will determine what your strengths are, so you can use those strengths, combined with your abilities identified in the personal assessment to solve a problem, and ultimately creating a business idea you can launch, even if you little money to start a company with.
For this assessment, simply make a list of what your strengths are. By knowing your strengths, you can narrow down your list of business ideas to include only ones that compliment your strengths. This will allow you to initially start the business without hiring others, as well as help you excel and grow the business without struggling by doing something that plays to your weaknesses.
Need help with this assessment? Ask yourself these questions:
- What are my hobbies and why do I like doing them?
- What qualities could I not do without?
Get family involved
Once you answer these questions, you can also get your friends and family involved. Take those questions I’ve given you, and develop a few more of your own for each assessment, and then email them or ask them to answer these questions over the phone. It can also be a good way to get them interested at the beginning of your entrepreneurial journey.
Narrow down your list with the Assessments
Once you’ve completed the personal, strengths and resources assessment, it’s time to narrow down that list of business ideas.
We can begin eliminating ideas in our list that don’t fit our personal assessment. What business ideas in your list do not compliment your passions and tasks that would fuel you to wake up and complete?
Next, move onto the resource’s assessment, and don’t be discouraged if you end up crossing out a lot of business ideas in this process. What ideas in your list cost too much for you to execute without an investor? You’ll also want to cross out ideas that don’t match your time commitment level. For example, if the e-commerce business you want to start requires you to deal with a lot of customers during regular business hours while you continue to work your day job, this idea may not be so good for you at this moment in life.
Using the strengths assessment, go through the remaining business ideas you have left and see what ones don’t fit your strengths profile that you developed in that assessment. For instance, if there are businesses that require a high level of computer hardware skills and that is an area of weakness for you, cross it off the list, as you want an idea that compliments your strengths.
With the final ideas you have left that are not crossed out, you can use these business ideas to go and validate in the marketplace to see if it will be profitable and successful. If you’re looking to get started with idea validation and further narrowing down that list to the final one, you can check out this guide using the lean canvas tool.
Other tactics for choosing the best business idea
Method 2: Basic Revenue and Cost Analysis
If you have a list of business ideas you’re looking to narrow down, and you want to choose the one that will be the most profitable. The basic revenue and cost analysis will involve listing out all the potential revenue streams for a business idea you have, along with a list of all the potentially large costs associated with the business. If the revenue sources outweigh the potential costs, it could be a good idea to consider for market validation.
Once you do this, you’ll be able to see if the revenue potential of the business heavily outweighs the costs that could be incurred. If this is the case, it could be a great business idea to consider and validate. This exercise can also be really valuable in pointing out business ideas that don’t have strong revenue streams and have high costs associated with them.
The costs analysis can also help you assess if you have the available resources to start the business. If you don’t have enough startup capital to launch an idea that has large initial costs that you identified, it may be best to move on.
How to conduct a revenue and cost analysis
In step 1, you’ll want to first make a list of all the possible revenue streams for that business idea. Literally every type you can think of. This will help you gauge the scope and types of revenue the business idea could potentially generate.
Next, you’ll want to make a list of all the potential costs. Similar to how you listed out the revenue streams, you’ll want to think of all the large costs associated with the business idea.
Once you have done this, see if the revenue streams will provide more than the costs associated to run and operate your idea. If there are a lot more potential revenue streams than costs, that could be a good business idea to consider. However, if the potential costs seem to outweigh the revenue list you’ve made, then consider crossing that idea off the list.
Method 3: Feasibility Analysis
The feasibility analysis can be another strategy you can use to choose the best business idea for you, as well as eliminate potential business ideas that will waste your time and are just not feasible. There are some ideas we all think of that won’t work as the technology may not exist, or the idea does not fit with the culture from that certain area or country.
There are also certain business ideas that are not ready for our time yet. For instance, many virtual reality companies did not take off like many people said, as the consumer adoption was not very high in the beginning, and has been slow to increase.
An example of a business idea that may not technologically feasible would be a teleportation system or moon transportation system (unless you have money like Elon Musk).
What business ideas in your list are not feasible?
Now choose a method to use
So there you have it, several different methods for choosing a business idea that is right for you, and as well as for the local market you operate in.
If you’re looking for more in-depth ways to develop business ideas that fit your goals and lifestyle, I highly recommend you pick up a copy of the Finding The Fit Ebook. It’s an original book from Business Idea Insight, designed to help you spot business opportunities for your local market and ones that fit your life.