The thought of starting a business is frightening for many people because of the risk of failure. 42% of respondents in a Fortune magazine survey state, “lack of market need is the number one reason startups fail.” New entrepreneurs must validate their idea with a defined market. Not every idea is a good one. A bad business idea is an idea that sounds great on paper but never generates revenue. By asking yourself the following three questions you will be able to eliminate the risk of moving forward with a bad idea.
- What do you love to do?
Take a moment and think about what you love doing on an everyday basis. LOVE is an important word. You must be passionate about what you’re doing instead of doing it simply because you perceive it to be a strength. You will be spending days, months, and years on this project and in order to stay focused and motivated you MUST love what you’re doing.
- Who do you hang out with?
Who else do you know better than the people you are surrounded by? You understand their problems, interests and their everyday behavior. All of these factors play a part in finding a good business idea. Many founders reverse the order of finding a customer and finding an idea. They start by coming up with what they think is a great startup idea then they look for customers. This can result in new founders spending time and resources building a solution only to find out that their initial idea wasn’t as good as they thought it was. Find your target market first and then create a solution that solves a problem they have told you they have. You understand the people you see often. They are your friends, family, co-workers or people who enjoy a sport/hobby that you enjoy. You have easy access to them. This will allow you to more easily validate a business idea than if they were part of a group you rarely saw.
After you’ve identified a group of people you know well, and have easy access to, you will be able to conduct interviews in order to discover the challenges they are facing and problems they are trying to solve.
- What do people say you are good at?
People have different skills. These skills stem from years of practice, learning and experience. It is important to have some knowledge of your idea’s industry. This is called, Domain Knowledge. Having a moderate degree of Domain Knowledge allows you to better understand the industry terms and keep up with current trends. It also allows you to consistently test your assumptions and validate your idea.
What is the secret to finding a good business idea? Start with a segment of the market you know well, ask as many members of this market as possible about the problems they encounter, collate the results of your surveys and create a solution to the problem that arose the most often. In other words, define your market FIRST, and after you have discovered their unmet needs, you’ll better be able to create a solution, or a new startup idea.
The next step will be to test that idea with that same market segment to determine if your solution to their problem is a viable solution and if it is, whether they would pay for it. But one step at a time.