Evaluating a new idea

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Surely, you’ve said to yourself, “wow, that’s a great idea.  If only I had thought of that…”  Ideas are the lifeblood of all entrepreneurs and the seeds of all great businesses.  How do we identify what is a good idea versus a terrible one?  It’s not always easy, but in this article, we’ll take a look at a number of factors for you to consider before launching your next industry-defining startup.

The Path, Not the Plan

Looking at a startup like Airbnb, the founders’ initial idea was simply to pay rent by providing air mattress and breakfast for guests at a local engineering conference. By their own admission, they had no idea what their company would grow into, but their nascent kernel grew into the juggernaut that their company is today.

With our ever-changing technology, it’s almost impossible to predict what exactly will work, and therein lies the secret: allow your idea to grow and evolve when new information and obstacles present themselves.  DropBox and Reddit’s founders were steered away from their initial ideas by investors, instead having their enthusiasm channeled towards greater and more egalitarian goals.  The end may not be in sight initially, but as the saying goes, one great idea leads to another.

Scalability

Can your idea scale?  At the end of the day most of us want our businesses to grow and in order to do that we need our idea to be able to grow as well.  As the business scales (grows) so do the costs, requirements, inefficiencies and so on.  It is important to ensure that your idea & operation can grow while maintaining the service & reputation you provide at a larger scale while positively effecting the overall returns.

For instance, selling handmade bespoke ukuleles from your grandmother may seem a surefire win, but will her gnarled and arthritic hands be able to keep up with demand and not lose the initial “authenticity” that was your company’s initial selling point?  Take into consideration how feasible the idea is in the long-run.

Location (x3)

Every real estate agents credo is “location, location, location.”  For your great new business idea, ask yourself whether there is a local demand for your product or services.  Additionally, if your product is distributed online (read: it should!), what kind of virtual real estate—your website —can you maintain?  And don’t forget you’ll need some digital signage, better known as “marketing and advertising” to guide your customers towards your business.  Have you considered how your idea will address these concerns?

When’s your Idea Showing Up?

Timing is everything.  Even if your idea is brilliant, time-sensitive execution is crucial. Would your idea come to light before the next technological jump?  Will you be selling Christmas Trees in July? Would your minimum viable product not be ready before the competition rolls out their industry-defining designs?

The most classic and relevant example is PDAs ill-fated attempts in the early 90’s versus the now-ubiquitous smartphones.  Both accomplish nearly the same tasks, but PDAs not having the technology (ie. widespread wireless internet access) forced this good idea back into hibernation for another decade.  The idea was strong, but timing was wrong.

Consensus

It may seem fairly obvious, but if other people resonate to the novelty of your idea with enthusiasm—Wow!  What a great idea!–then you may be on to something.  Try to get a measured response from different types of people: optimists, skeptics, rich, poor, etc.  What is especially novel about your business idea that almost everyone can agree on?  For instance, Uber may have been met with skepticism, but anyone who has waited for a taxi will tell you that a solution to that problem is.

Cut Out the Middleman

There’s nothing more frustrating than being forced to deal with a middleman.  If your idea can cut out the go-between and provide a direct link to what consumers are after, you’re definitely on the right path.  Think about it: Travelocity put travel agents out of business.  Airbnb put a significant dent in the overcharging hospitality industry.  Digital file sharing eliminated the music industry and the $19.99 CD’s!

The hidden benefit to all of this is that you’re actually striking a chord within the heart of consumers.  Think of the relief it is to avoid the mosquitoes of the world when all you want to do is have a nice campfire.  Be the citronella candle.

Keep It Short

“A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.”  Antoine de Saint-Exupery.

A good way to know if your business idea is good is if it’s short.  No, really.  Boil down the essence of your idea to its simplest components.  With our ever-diminishing attention spans, ideas that cut through the noise are the ideas that get heard.  If you can’t summarize in a short sentence what your business idea is and intends to do, to quote Albert Einstein, you don’t understand it well enough—and that shows that its value (whether it’s a good idea or not) is in question.

Getting with the Times

Every week, there’s a new slew of buzzwords and politically-correct behavior that the collective unconscious tends to believe.  While you don’t have to be a Carl Jung, you do have to consider how your idea aligns or contradicts these ideals.  Environmentalism now plays a large part in consumer decisions—does your idea address this?  The more you can show your idea is relevant, the greater chance you have for consumers to jump ship from the rusty yachts of complacency and ride your modern speedboat idea into the horizon.

What is a Good Idea to You?

Finally, the most important component to deciding on how good your idea is you.  It all depends on your endgame: Are you trying to solely make lots money?  Develop and showcase your skills?  Change the world?  Defining your endgame is the essence of good ideas because you, the entrepreneur, will be involved from Day One.  Even if you considered the brilliance of the new buzz around Li-Fi, would your skills and interests be enough to partake in this particular industry? You might be happier (and more successful) making homemade soap bars.  It sounds cliché, but if your heart isn’t in it, don’t do it.

So to summarise:

  • Be Adaptable and be ready to pivot if you have to
  • Make sure you can scale
  • Ensure demand
  • Get your timing right
  • Solve a problem/inconvenience
  • Get feedback from a variety of different people
  • Understand your idea well enough to convey it simply
  • Be aware of current trends relating to your idea
  • Ensure you truly believe in your idea enough to stick it out through the hard times

 

 

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