Ideas, Entrepreneurship, Investment, Innovation

Five ways to tell whether you're on to something good.

By Kayleigh Alexander on May, 17 2019
Kayleigh Alexander

MicroStartups

Have you ever had a sudden business idea that changes the way you envision your future? It’s not unheard of for business students, immersed as they are in creative and practical possibilities. A concept materialises in your head, and you’re instantly filled with a powerful confidence that you’ve hit upon something huge — something that will change your life, your industry, the world, or maybe all three.

Frustratingly, that confidence doesn’t typically mean much, because it can vanish just as quickly as it arrived. An idea that seems revolutionary upon first thought can easily be revealed as fundamentally unworkable, or even already in use. And even if your idea holds up in principle, it might not be sufficiently practical to be made a reality — it’s particularly hard to gauge if you don’t have much real-world experience yet.

Before you commit to it, you need to subject your idea to serious scrutiny. Even entrepreneurs with lengthy histories of success know that it’s essential — and here are 5 ways to do it:

Clearly define the concept

Spontaneous revelations aren’t typically crystal-clear, even if they may feel like it in the moment. They often consist of rational threads bundled up with emotional investment, making it extremely difficult to tell whether you’ve happened upon a stroke of genius or simply become carried away with the prospect of reinventing yourself as a brilliant innovator. 

That means you need to get the emotional high out of the way, and the fastest way to do this is to write down (or type up) the crux of your idea. Take away every potential consequence to your life, and focus entirely on the fundamental value proposition you’re looking at. Ask yourself: 

  • What would the idea cost?
  • What value would it return?
  • How long would it take to come to fruition?
  • How difficult would it be?

Address these questions, then use the resulting answers to carry out a simple SWOT analysis. Do the strengths outweigh the weaknesses? Do the opportunities outweigh the threats? If it doesn’t look good overall, scrap the idea. You’ll have more ideas soon enough.

Research competitors

I’ve certainly had the experience of coming up with an idea only to discover that it’s been an established part of the business world for a long time — and I don’t think it’s uncommon. After all, no one person can know about every company in operation, but you need to learn about all possible rivals the moment you’ve confirmed that your concept is viable.

 Search the internet for other companies that do what you’re looking to do. If you find any, think carefully about whether you could do better than them, and whether you only have an interest in pursuing something that hasn’t been attempted before. Ask these questions:

  • Are they profitable?
  • Is the market saturated?
  • How long did it take them to grow? 

Their past could be your future, so dig deep.

Attempt a soft launch

Not all ideas are suitable for soft launches, but plenty are — particularly in this time of businesses that are either largely digital or entirely digital (this even goes for B2B, with 93% of B2B buyers preferring to buy online). The point of a soft launch is essentially to get proof of concept (and, if possible, pick up some profit to help fund a full launch down the line) without draining your resources.

If you’re launching something like a consultancy, start operating on a freelance basis and trying to win some initial work. It can even be during your free time while you’re continuing your studies, and the feedback will give you insight into what kind of market you’re dealing with.

If your idea is retail-centric, you can set up a basic online storefront and start selling drop-shipped products, customising your branding and playing with themes and layouts to get an idea of possible directions. You can eventually turn it into your main store, or scrap it and start again — either way, it’s a great learning experience.

This testing stage is also important for a reason that’s commonly overlooked: it gives you a chance to find out if you truly want to action your idea. Entrepreneurship has a dark side that can damage lives if left unchecked, and different people want different things. You might be happy working 80-hour weeks, or you might find that intolerable. Finding a workable idea doesn’t oblige you to execute it at the cost of your health.

Whatever approach you take to your soft launch, be realistic about the results. If you try your best but get no interest, don’t make the mistake of assuming that results would come if you only had more time. Be rational about your prospects, and remember this: when you give up on a doomed idea, you make room for something significantly better.

Write an elevator pitch

By this point, you may be set on the idea, but remember that you’ve given it some serious thought. Should you introduce it to a potential investor, it will need to stand or fall on its immediately-evident merits, without any of your personal attachment or enthusiasm. (If you’ve had a successful ecommerce soft launch, and you think you can action your idea as a solo operator, then you can consider skipping this step — but it’s still worthwhile.)

Imagine that you run into a potential investor and have 30 seconds to outline your idea, explaining what it is, why they should care, and how you’ll deliver it. You may discover that your idea — while broadly solid — simply doesn’t have enough of a hook to get attention. Plenty of ideas can be somewhat profitable. Investors are looking for standouts: does your idea quality?

Additionally, be ready to justify your overall competence and reliability, because someone who invests in your idea is also investing in your as a person and as a leader. Whatever experience and skills you bring to the table, be ready to forge them into a compelling case.

Run it by someone you trust

It’s tough to discuss business ideas, because it’s entirely understandable for an entrepreneur to worry about their idea being stolen or simply undermined. It’s tempting to keep a business plan secret for as long as possible, but it’s also tremendously ill-advised. Find someone you know and trust — ideally with some kind of business expertise — and run your pitch by them.

Provided they know you well enough to be honest with you, you’ll likely get some highly to-the-point comments that may even feel harsh. This is a good thing. If your idea can’t survive an interrogation from a friend, it’ll never survive in the hyper-competitive business world. (Ideally, you’d get expert feedback, possibly online, but that adds risk that you might prefer to avoid.)

Get as many opinions as possible (you’re not going to get true objective analysis, certainly), then consider them carefully. Are they correct? Would you be making a huge mistake to attempt it, or to forget about it? The ultimate decision is yours, but outside perspectives will help you make it a sensible one.

Your business idea can pass comfortably through every one of these steps and still fail, because most businesses (and most ideas) don’t go anywhere. Success is unusual, after all, and unpredictable at the best of times. That said, applying these 5 tactics whenever you think you have a great idea is an excellent way to eliminate the likely failures and maximise your likelihood of turning your idea into a thriving reality.