How to know if your business idea is worth pursuing
Picture this. You’re talking to a friend or relative about using a product or service and they are the third person to be moaning about the same thing you have found to be a nuisance. And when you share your idea of how it could be improved, they agree and you get excitement in your stomach that there might actually be something in your new business idea.
Sound familiar?
Having worked with hundreds of founders now, one of the most common reasons I hear that’s driven someone to start up a business is their own experience of a problem using another product or service and their ability to see a better way of approaching this.
But are a few conversations with people in your immediate circle enough to start pursuing a new business idea?
Here are my suggested 5 activities to do before investing any more of your time and money into a new business idea:
Identify the problem you are trying to solve
Every business idea is actually a solution to a problem in the world.
Food delivery services are launched so people who are busy can still get their groceries. Babysitters can help parents who don’t have relatives nearby to have a break every once in a while. Eco-cleaning products allow homeowners to keep their houses presentable without harming the planet.
When we articulate these ‘problems’ it is from the point of view of the person who will benefit from the solution. The busy people, the parents, the homeowners.
Activity 1: So what problem is your business idea trying to solve? Take your time in thinking about this.
It may not be immediately obvious or easy to articulate, but this is the core of what you need to know to take the next steps. Without getting clear on this, you’ll face a lot of unnecessary barriers on your journey without even knowing this is what’s causing it.
2. Do your research on whom else is tackling this issue
I’m going to be honest with you and I don’t want it to hurt your feelings.
You’re probably not the first person to think up the idea that you have and that’s okay. Every person will bring an idea to life in their own unique way and in reality, the majority of people who have good ideas don’t do anything about it.
But you do need to do some research on who is currently doing something to tackle the same problem, whether that is through similar solutions or completely different ones.
For example, if we take an example of tackling the challenge of getting to work across a city for busy parents who have to drop their kids off at school each day some solutions tackling the challenge that are similar are a car, the bus, and taxis. A solution that is completely different is a nanny.
Activity 2: Time for some research.
Get on the internet and start typing in some key words around the solution you are thinking of or the problem you’re looking to solve and see what comes up. This is the first time that going down a rabbit hole is encouraged. The more information you have, the better you can assess if your idea is worth pursuing.
3. Start to identify whom this problem is impacting
In the first activity, you started articulating the problem that a group of people have. You may think that the problem impacts everyone at the moment but now is the moment to look a bit deeper and start to identify which group of people you want your solution to focus on.
For example, you may be launching a new vegan shoe brand to make it easy for people to buy sturdy shoes without a cost to animals. And you might say this is a problem everyone has in the existing shoe market. But let’s start breaking it down.
Unfortunately, there are people in the world who still aren’t making purchasing choices based on vegan values so we’ve narrowed down the group of people to “conscious consumers”
There are lots of different styles of shoe and the ones you are designing are very punk rock, so we’ve narrowed it down a little more to “conscious punk rockers”
The shoes are made in the UK with high-quality materials and are therefore very expensive to make so they are priced high, so we need to narrow down your group to “conscious punk rockers who earn over £60K a year”
You don’t currently have the structure and capacity to ship the products outside of the UK, so we narrow down your group to “conscious punk rockers who earn over £60K a year and live in the UK”
And so on and so forth.
Some key areas that can help you create your profile can be segmented based on location, age, family status and role, business title, value, hobby, how much they earn.
Activity 3: Create between 1 - 3 profiles of some of the types of people whom this problem is impacting and, if you know real-life examples of people who fit the profile, jot down their names.
4. Get in front of those people and ask the right questions
Now you’ve got some examples of the types of people you want to support with your new product or service, it’s time to go ask them some questions.
Does that terrify you? Make you feel overwhelmed? Feel too soon?
I get it. This is the action that most people try to avoid at all costs. They would rather get their head down and think through the idea on their own. Or just launch the idea when they think it’s ready and see what happens.
And I can tell you now with confidence that the majority of people who do this either won’t be running a business in a few years’ time or if they are, will be struggling to make it work and won’t know why.
As much as we feel our business ideas are about us - our ideas, our decisions, our legacy - the reality is that businesses are about the people we serve. If you’d like to have a business that stands the test of time, this should be your mindset.
At the end of the day, we need to create something they need and will therefore buy, so why wouldn’t you go and talk to them about that?
Activity 4: Get in front of a good number of people (at least 20) who fit one of the profiles you drafted and listen.
This is not an exercise to showcase your ideas around the solution. Quite the opposite. This is an opportunity for you to assess your assumptions from the previous activities and get clear on how close you were to reality.
Have you identified the problem accurately?
Did you find all the other businesses already working in this space or are there others you didn’t come across?
Does your profile fit those people you’ve identified or can you now start narrowing it down further?
5. Shape your solution around their responses
Now you are armed with the right information to assess whether your idea is worth pursuing and what the first version might look like.
From activity 2, you will either have found someone doing something really similar or not at all. If the latter, then you have an advantage being the first to the market. If you have found businesses doing similar things to what you had in mind, this isn’t necessarily the end of the line for you.
Remember at the start of this blog when I said that everyone has their own unique way to approach things? Well, now you’ve got to review their offer and business approach and assess if you think you could do a better job or not. And be honest.
If you think the businesses you’ve researched are already well known or are very established, have a really large following or some key partners whom they can leverage, their website and branding look sharp, and the product is priced and packaged as you would have, it might not be worth pursuing your idea. But at least you’ve figured that out before investing all your time and money into launching, right?
If you’ve come out of activity 2 and think you’ve got a chance, then from activity 4, you should feel more clear on the problem and who it’s impacting and it’s worth pursuing the idea further.
So there you have it. 5 activities that, if you approach with dedication and detail, will allow you to come out the other side with the clarity and confidence you need to decide whether to pursue your idea or not.
This is the point where I’d encourage you to think about a small version of the solution that you can create simply and cheaply so you can test out if people will buy it. I will explore the minimal viable product (MVP) and how to go about testing it in my next blog, so sign up to my mailing list here to get updated when this goes live.
Wonder what else it takes to launch a good business that stands the test of time?
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