Do you have an idea for a
new business? While you may find it easy to generate many new business ideas,
it isn't as easy to identify which ones are truly stellar.
How do you know when you've
come up with a fabulous business idea? We asked successful business owners what
key characteristics point to a great business idea. Here's what they told
us.
It fills a need and solves a problem
One simple sign of a great
business idea is that people want it and need it.
Wade Gilchrist, startup
consultant and host at TechStartRadio.com, said he likes to tell startups
that they should identify a problem that is currently not being solved or is
not being solved well. If your idea is a better solution than those currently
available, and there is a way to prove it's a moneymaker before a long and
expensive development process is undertaken, it could be a great business,
Gilchrist said.
And don't think your idea
has to be especially innovative, said Ebong Eka,
a small business expert and television personality. "Too many
entrepreneurs believe that good business ideas have to be unique or the
first of its kind," he said. “That only matters with products you can
patent, and biopharmaceuticals."
In fact, it's more important
for your idea to solve a real-world problem, and solve it well, said Shireen
Shermak, CEO of venture capital and startup firm Launch Angels.
"A great business idea
must solve an easily articulated problem that a large group would like to
have solved," Shermak said. "If you are creating a solution
when there is no problem, no amount of marketing is going to create a
big business."
It reaches large and/or multiple markets
An easily identifiable and
measurable potential market for the product or service is another hallmark of a
great business idea, Eka said.
"It's imperative that,
when you're sharing your idea, you can describe the market
demographics," he said. And at the very least, the market must be big
enough to make money. “The idea must target a large market," Shermak
added.
Another market-related
characteristic of a solid business idea is that it can be replicated in other
markets, said Greg Isenberg, a 25-year-old award-winning serial entrepreneur,
founder of Wall Street Survivor and CEO of mobile video app 5by.com. After
all, if a business works in San Francisco, it's likely to work in Los Angeles,
he said.
"All of a sudden,
you've doubled your target market overnight," Isenberg said. However, he
cautioned that reaching multiple markets is relatively easy compared to the
prep work required to fine-tune a great business idea.
"Perfecting your
business model such that it works in one market is often the hardest
part," he said. "You might as well be able to scale it to many
markets so that you can take advantage of all that hard work you did perfecting
the model."
It can withstand free competition
Can your business idea hold
its own against a free solution offered by a competitor? If so, you may be on
to something, Gilchrist said.
"Google and Facebook
can kill many startup ideas by offering for free what the startup wanted to
charge for," he said. "If the idea requires a subscription model
[such as software-as-a-service (SaaS)] to make money, it has to be specialized
enough so the Internet giants wouldn't care to enter their market."
Shermak said that the
existence of competitors is actually an encouraging sign that your business
idea could be a good one.
"Counterintuitively, an
idea might have potential if there are a few existing competitors,"
Shermak said. "I've started multiple businesses, and there is always
the day you see a press release from someone who says they are doing the
same thing."
Shermak said this is when
business owners learn that idea execution is a major part of any business.
"It's also wise to consider that a good opportunity might actually be
validated by the fact that there are competitors or other solutions out
there," she said.
It develops quickly and spreads easily
In today's world of
accelerating technological change, a quick development cycle and products with
the potential to go viral are good signs you're on to a great business idea.
So, just how quick is quick?
"I don't like ideas
that will take a year or more to develop," Gilchrist said. "The
technology landscape changes so quickly that windows of opportunity seldom last
that long," he said.
Gilchrist suggested that the initial launch of a
business's minimum viable product (MVP) should be three months or less.
Ideas that spread easily,
especially consumer products, are often successful because they help fuel
customer acquisition, Isenberg said.
"Who needs television
ads now when you've got huge word-of-mouth marketing?" he said.
You're passionate about it
Finally, if the idea keeps
you so excited you can't sleep, it may be a great one, and this passion will be
a necessary ingredient in your business success.
"Your resilience and
passion [are] what's going to keep you sane as you build the business,"
Isenberg said.
And what if the other signs
are there, but the passion is missing?
"Don't just pursue a
business idea because you see a market gap," Isenberg said. "It's
your passion that's your competitive advantage in the early stages of building
a company."
Sarita Harbour. http://www.businessnewsdaily.com