If you're reading this, you've probably had a lightbulb moment and have an idea for a new business.
Maybe it's a passion project or something that can fill a void in the market. Whatever it is, before you start pursuing your new great idea, it's important to make sure it's strong enough to withstand the trials and tribulations that come with starting a new business. [Related article: Taking the First Step to Start a Business]
Entrepreneurship can be incredibly personal and all-consuming in that you are pouring significant amounts of time, money and energy into one idea. Naturally, you want to do all you can to ensure that idea is worth your while before you start a business.
Business.com spoke to business experts and experienced entrepreneurs to see what you can do to make sure your business idea is worth executing, and how to know when it's time to let it go.
Validate your business idea
The first, and most important, step – once you have a business idea – is to go through the validation process. The exact process differs depending on what your business idea is, but, generally, you'll want to start by asking yourself the following questions:
- Is there a real need? Does my idea solve a real problem?
- Will people buy it?
- Will I be profitable?
- How many people will want my product/service?
You need to make sure that you have a product or service that people want and are willing to pay a reasonable amount for. If neither of these is true, it will be disastrous for your business.
This step is where you conduct the bulk of your market research, comparing your product or service to existing ones in the market and sending surveys to your target audience to see where they feel the market is lacking.
You should also investigate the competition and make sure that your product or service fills a gap or provides an added value, whether in price or features, but be sure that the gap doesn't exist for a reason.
"If the big players in your space aren't offering what you are, see if they've done it before and stopped," said Robert Livingstone, president and founder of Ideal Cost. There is often a good reason why a particular idea has never worked out.
Next, ensure your business idea is legally allowed and is able to comply with applicable laws and regulation. Finally, if possible, conduct a test within your target market with a prototype, beta version, or sample of your product or service. Offer your test product for free and take careful notes of reactions, comments, suggestions, and questions.
Use your network
As you're crunching numbers, reach out to your professional network and trusted friends to see what they think about your idea.
"Networking is a great way to carry out low-cost or free market research," said Hannah Attewell, success and business coach at Force of Nature Coach. "Look at how the people you meet receive your idea and how they talk about it. Seeing how people react to your idea will give you a great barometer."
It is important that you are willing to accept criticism and unexpected results or responses at this stage in the process. Negative feedback can be a good thing by bringing attention to places where your idea may be lacking, helping you revise your pitch to be more effective or identify key business questions.
You should also take every opportunity to reach out to entrepreneurs in the same industry or area of interest to see if they would be willing to review your idea and give feedback.
"You might think they [fellow entrepreneurs] won't be willing to lend you advice since you're technically competition, but there's enough work for everyone," said Carrie Anton, creative architect at Wonder: An Idea Studio. "Many small businesses tend to live by the saying 'a rising tide lifts all boats.'"
Give yourself a SWOT analysis
A SWOT analysis (strengths, weaknesses, opportunities, threats) of both yourself as an entrepreneur and your idea can give you a strong sense of where you stand, what you do well, what you need to work on and issues to keep an eye out for.
"By making a detailed list of all [your] personal strengths and weaknesses, [you] can determine what role you can take in your business and what roles you need to delegate or resource," said Sarkis Hakopdjanian, director of strategy and principal for The Business Clinic.
Do your homework
Doing thorough, diligent research as a way to flesh out your business idea can also help you determine how sound it is and potentially provide new insights and elements to your original idea.
"Do your homework," said Leeron Cohen, CEO and founder of The Clips Garage. "Even when you think you know certain things, you will never be at 100% knowledge gained on any idea you have. Always be learning."
As a potential business owner, it is vital that you are a near-expert on your product, your market and your target audience. As business is a constantly evolving field, it pays to keep up with the latest developments, products and services in your specific industry.
"The best advice I received in starting my business is to always keep learning," said Hakopdjanian. "The only thing constant in life and business is change, and businesses that adapt to a fast-changing environment can grow and thrive, while businesses that are slow to adapt and learn are left behind."
When to let your business idea go
Sometimes, despite all the best efforts, an idea just doesn't pan out. This can be difficult to come to terms with, especially with a business idea that you've poured a lot of work into. But with business ideas, letting an idea go is often less about abandoning it as it is taking it in a new direction.
"Many times, you don't need to scrap a business idea entirely; rather, you should figure out if a pivot in a new direction may be something that the market demands," said Cohen.
Gauging the reactions of a focus group, your network, or family and friends is usually a good way to see how the general public would receive your idea, plus it helps you determine whether or not you need to redirect. Pay attention to how excited your audience gets about your product or service and how hard you have to work to get a reaction.
"If you have to sell really hard and no one seems convinced, it's time to reinvent," said Bethany Babcock, CEO and founder of Foresite Real Estate. "You need cheerleaders for your business, and if the product or service isn't creating those, and quickly, it's time to re-evaluate."
If pivoting doesn't help, and you feel stuck in a draining cycle, that may be a sign that it's time to let the business idea go entirely.
"Running a business is hard, especially in the beginning," said Rivky Itzkowitz, founder and designer at Impact Fashion. "If what you're doing is no longer rewarding and is, instead, a drain on your day, you need to make some changes."
You should also make a point to pay attention to and be realistic about your numbers.
"I'd recommend scrapping a business idea if you aren't seeing measurable incremental growth each month for the first 12 months of sales," said Livingstone.