There’s nothing like the thrill of professional inspiration. When you get that light-bulb moment of seeing a new business in your future, it’s incredibly exciting, motivating, and terrifying at the same time.
Even so, it’s important to curb your enthusiasm. We all know that some ideas that feel right never work out, while others that seem less ripe with potential turn into huge money spinners. How do you tell if your concept is a winner?
The next time you wake up in the middle of the night with a new business idea clear in your mind, validate it first. Here’s how to do that:
Make a note of your idea, move on, and revisit it later
Something that feels like a stroke of genius in the twilight hours can be revealed as a stroke of idiocy in the harsh light of day. But there’s potentially danger here. If you fully sell yourself on the idea when it’s fresh, you might be so determined to follow it through that you firmly skew your perspective, making it hard for you to tell how good the idea really is.
When you get what feels like a great idea, record it however you prefer (use a notepad or a note app on your phone), set a reminder for a later date, and forget about it (even if you lose the note, you should be able to think of the idea again if it’s really that good). Carry on with your everyday life. When the reminder arrives, and you go back to the idea, that initial compulsion will no longer drive you — you’ll be able to review it dispassionately.
If it seems like an awful idea, then you’ll have dodged a bullet. If it still seems worth pursuing, then you can continue with the validation process.
Do comprehensive industry research
While it isn’t true that absolutely everything has already been done, it’s fairly unlikely that any given idea hasn’t already been done, or at least attempted. If your idea is based on novelty, but there’s already a company out there doing exactly what you thought of, it will be dead in the water unless you’re sure that your implementation of it would be superior to any alternatives.
If your prospective business wouldn’t be based on novelty but would instead be about the execution of a common operation (opening a restaurant, for instance), then you’ll need to start learning why comparable businesses succeed or fail so you can have the best possible plan.
If your idea is genuinely fresh, and/or there’s room in the market for some new competition, you need to start crunching the numbers, as we’ll see next.
Break your business idea down practically
It’s very easy to make an idea work in your imagination because you don’t need to take into account the basic things like startup costs and profit margin. But you have to consider them eventually, and it’s far better to do it before you reach a conclusion about the viability of your idea than after you’ve committed to it.
Note down your savings, your income, and how much you can afford to invest. Look at how much money is going around in the industry, and be realistic about the best-case and worst-case scenarios. If things didn’t go the way you expected them to, how would you react? Is there a viable plan B you could fall back on?
It’s entirely possible to have an innovative idea that would fit in a market gap but would never make enough money to be worth doing. But if the sums add up, you can start looking for some all-important feedback.
Float the MVP with the planned audience
Having figured out the practicalities, you’ll have worked out exactly what audience you’re looking to serve with the idea. You’ll know where the money will need to come from. Come up with an elevator pitch for your plan and share it across all relevant social media channels with the people it needs to impress (this is known as seeding). What do they make of it?
Be careful not to sell them on an idealized version of your concept. Their feedback needs to concern your minimum viable product (MVP) — the most bare-bones implementation of your idea that delivers only the essential service.
If the MVP gets a good reception and it’s something people want, you’ll have time to expand it however you like. When the Oculus VR team opened a Kickstarter for the Oculus Rift in 2012, they were realistic about what could be achieved, and ultimately delivered an improved product just over six months later. Since then, they have continued to iterate, building on that initial model.
If you describe a fantasy version of your idea and don’t follow through, however, you’ll attract enmity. Look at the backlash against No Man’s Sky, for instance; they lazily oversold the idea and faced a storm of criticism when the product they shipped fell far short of their claims.
Consult smart people who’ll give you honest advice
We’re never great at judging our reasoning, and we’re useless at assessing our work. What if you misunderstood something in your research, or flubbed the metric analysis? What if you simply missed something along the way? You need external feedback to provide that last piece of reassurance that you haven’t deluded yourself into believing that your strategy is viable.
Try to avoid getting feedback from anyone with a vested interest in your feelings (family members, friends, partners) because they might get swept along by your enthusiasm. If you absolutely must consult someone like that (because you don’t know anyone else, or the idea is so innovative that you’re concerned about it being ripped off), then insist upon their brutal honesty.
If you can get independent affirmation that your idea is solid from someone with a decent understanding of business, that’ll be a great sign that you’re not stuck on a pipe dream, and it’s something you can make work.
Got a business idea that keeps appearing in your mind? Maybe it would never work, or maybe it would make you a lot of money. Take the time to follow these steps, and you’ll find out definitively if it merits a real strategy.