Ideas are an incredibly valuable commodity and something that you should always treat with the utmost respect. Behind every huge company, every social movement and every product is an idea, and it’s the quality of that idea that dictates the success of the respective venture. One of the most wasteful things a person can do is to come up with a fantastic idea – whether it’s an idea for a website, a business or a book – and then squander it by never getting around to actually capitalising on it. You might have just walked right past a gold mine…
That said though, it’s also true that not every idea is going to be golden. While some of your ideas might be flashes of genius that could change the world/make you rich/help make people’s lives easier, others might be wild goose chases that simply waste your time and energy and never yield any reward. In business it’s particularly important to make sure your idea has legs – because to make a success of it you are going to have to invest a lot of money as well as your time. You might even leave your job, or become responsible for other people’s financial security. Ignoring a great idea is a waste and a missed opportunity, but getting fixated on the wrong one could well do a lot more serious damage.
The trick then, is to distinguish between the good ideas and the bad ideas and to spot that ‘fool’s gold’ before you become too committed. Here we will look at how you can tell a good business plan from a bad one before it’s too late.
The first thing to do is to ask yourself objectively whether you would actually put money into the business if it wasn’t your own idea. If you’re idea is a product, then would you buy that product as a customer? Likewise if your business is a service, then would you spend money on that service?
Of course you shouldn’t toss out every idea that you wouldn’t personally use. The point of business is to sell to other people, and as long as theirs a market out there for what you’re pushing it doesn’t matter if you aren’t among their number. The next step then is to ask other people whether they’d use your product or service, or whether they’d invest in your concept. Give them prices and specifics and then ask if they’d bite – and if not, why not?
Note that asking your friends alone isn’t usually the best strategy. While they will want to help, they’ll also want to protect your feelings which might lead them to be overly positive. Unless you have a friend you know is going to be brutally honest with you, you should also ask for professional advice from a consultant or another businessman/woman.
Market research of course is another way to test out if there’s an audience for your idea. You can either outsource this to survey companies, or create your own online surveys for free with sites like Survey Monkey. The more data you collect, the more confident you can be in launching your business.
Go Over it With a Fine Comb
Now you know your business proposal is attractive in theory, you need to look more closely at the specifics. What are your overheads? Your profits? What would your projected turnover be at the end of year one? How would you scale up the business subsequently? These are the questions that an investor would ask and you need to think the same way before you invest in your own business. If your margins are too low, then it doesn’t matter how many people want to buy your product. And if it can’t be scaled, then do you really want to invest that much energy into it?
Numbers aren’t the only concerns you could theoretically have over a new business. You also need to think about legal issues, about any moral implications and about the practicalities of things like order fulfilment. Develop your business plan fully before deciding if it’s viable, and show it to as many professionals as possible.
If your business has passed all these stages, then the next thing to do is to create a prototype, to run your service on a trial basis, or release an alpha/beta. This is the only way you can really see how your idea will perform in reality, and it will allow you to iron out any wrinkles before you’ve put too much time and effort in.
Back to the Drawing Board…
And if your business doesn’t pass all these stages? Then it’s time to rethink. Ask yourself if your idea can be adapted, or if elements of it can be salvaged, but if not, make sure that you do the sensible thing and just let go. There’s no room for sentimentality here…
The founder of Berkeley Sourcing Group, Greg Fisher, is the brains behind this article. When he is not busy working, he enjoys reading books or playing a good game of chess with his friends. He has a strong affinity for creative writing and an undying allegiance to eco-friendly living.
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