10 ways to know if your new business idea is a good one
- You’ve slept on it
- You have explained it to 10 people to see how they react – except for family
- It’s within your capability to do it
- You can afford it / are able to get it funded
- You are able to deal with things not working out, and can change /adapt accordingly
- You have researched the idea and made a plan.
- You’ve trialled it
- You’ve worked out how to reduce the risk
- You’ve figured out, that it can be sufficiently profitable to satisfy your requirements
- You have identified your USP’s
It’s a truism that the world is full of good ideas, but short of people who are willing or able to execute the idea. Dreaming about starting a new business is a heady, thrilling and exciting adventure, that may cause sleepless nights, as you contemplate the success of the new venture, and your part in it as the heroic leader.
But starting any new venture is fraught with risk, there are so many unknowns, and so many things to think of, not least of which is your ability to run it.
Running through my simple guide doesn’t guarantee success, but maybe it helps you think about it properly, and that may contribute to getting your new idea off the ground sensibly.
1. You’ve slept on it
What may seem like a brilliant idea yesterday, or last week – over a few drinks, or with a friend, often may not last the overnight test. Meaning does it still seem like a good idea, after you have reflected on it for a while. The difference between dreamers and realists is that the realists can look at both sides of an idea, and see the potential problems and downfalls, and not just the upside.
2. You have explained it to 10 people to see how they react – except for family
Running your new idea past 10 people from different backgrounds is one of the best ways of testing your concept, but that doesn’t include family. Your family saying it’s a good idea (with some exceptions) is probably the worst reason to take the plunge, and that’s because your family love you, and want to support you, and will tell you your fantastic and it’s a brilliant idea, because they don’t want to burst your bubble.
Running it past others though is good. 10 people will have ten different takes on the idea, and will spot flaws with your plan, which you may not have seen yourself. Honest feedback is what you need at this stage, and worth it’s weight in gold. If you have access to independent professional advisers like Lawyers, Accountants or Bank Managers even better. They will have seen lots of ideas, and will be able to give dispassionate advice (that is if you are prepared to listen to it!).
3. It’s within your capability to do it
It’s not something people often consider, but running a new business, where you have to make difficult decisions, potentially with far reaching implications is really hard – and definitely not for everyone. For most people who start a new business, its the most difficult thing they ever do – and understanding the commitment you will have to make in time and energy, is obviously important.
Probably the no.1 determinant of the success of a new business idea, is not the prices you charge, or the quality of the product, or the toughness of the market – but you. In my experience in 40 years of franchising, undoubtedly the most successful franchisees are ones that are inherently good at business (even if they have no previous experience), and the opposite is also true – the poorer performers are often just not very good at recognising what’s important in the business and dealing with that.
The good news is that starting, or running a business is not rocket science. The very best business people apply common sense to complex problems. Looking after your staff, so that they look after your customers is just common sense. Minding the money, selling for more than it costs you to produce, marketing your business in a way that reaches most customers is just common sense. Surprisingly in short supply with lots of business owners, which creates opportunities for the smart ones to thrive.
4. Think about starting a business in an area that you are familiar with
Seems obvious, but how often do we see people starting things in an area they are not familiar with, and risking everything, as they find out the hard way, the nuances of the business they are looking at.
If you think about it, lots of people start businesses in areas they have previously worked in. Someone who worked in a boutique may start a fashion business, an accountant may branch out on their own, having worked for a big firm, to start their own practice.
When people come to me with a business idea, asking me what I think. I nearly always advise, if it’s in an area they’re not familiar with, to go work in a company that does what they’re thinking of, and learn the trade.
5. You can afford it / are able to get it funded
Having an idea to build a Cruise Liner for your unique new singles cruise business may be a fantastic idea, but if you’re not able to come up with the €100 million you need to buy a boat, the idea can’t get off the ground.
Most businesses start small and then grow, and as they grow and can demonstrate success, they have an increased ability to get investment, or to borrow money.
Camile is now a substantial multi-million euro business, but at the start I had to find the money to open a single restaurant, and that was a challenge, but one I knew I could overcome. Once the first one was open and successful, the bank was willing to fund a second one and so on.
“Bootstrapping” a new business, is using the least amount of money, to get your business off the ground and try it out with customers.
6. You have researched the idea and made a plan.
Researching your idea properly, and making a plan are the first serious steps in getting started. And the good thing is doing research doesn’t have to cost much (if any) money. You can find out a lot about the market by looking at competitors, or businesses in a similar space. Similarily you can find out what it costs to make something, to rent space, to advertise and market a product. While your doing initial research you can start to write the plan for your business. A business plan is like a road map, to give you some idea of where you’re going. How much sales do you think you might do in a first year. Who will you need to hire? How much will you have to pay them. Where will you operate the business from? How much space will you need? – these are some of the questions you try and address in a plan - maybe during the process you come up with some insurmountable problem – and maybe that’s a good thing to find that out, before it’s too late.
7. You are able to deal with things not working out, and can change /adapt accordingly
The only certainty about a business plan is that it will not work out the way you plan. You will either do better than you think (that is a good thing), or worse (not so good – you might run out of money before you break even). The important point here is that when it doesn’t work out as planned, that you are able to respond to that, and tweak the plan accordingly, to make up for any shortfalls. This is what successful business people do. When the plan doesn’t quite work out, they change it, and then they change it again, and they keep on changing it until they figure it out.
When I was setting up the business that became Camile, it started as a Chinese takeaway. That didn’t work, and I quickly change to Thai. Then I went into partnership with another Thai operator, and that didn’t work out, so I got out of that. At the end of the first year of my new business, I had changed the cuisine, changed the name over the door three times, and gone into and come out of a partnership – and the business survived. None of this was in the original business plan.
8. You’ve trialled it
There a concept in new technology companies called developing a “Minimum Viable Product” or “MVP”. It’s a brilliant idea that we adopted whole heartedly when developing new business ideas. The basic concept is that you should try a really basic version of your idea out on as many people as possible, and start getting feedback which helps you refine and improve the idea, rather thain waiting for perfection.
For example, we might have an idea for a new dish for our menu, which we think is briliiant. Before we heard about MVP we would just have put it on our menu and seen what happened.
Now we don’t do that. Before going on the menu, we get 100 people to try it and get feedback on the name, the packaging, the price point etc. before we launch it. Sometimes after we do this 100 test, we abandon the idea, because we now know it wont work the way we had planned.
New entrepreneurs tend to obsess over the product or service, taking months to get it right, almost to the exclusion of everything else. The MVP method says get a basic version developed and expose it to customers ASAP and see how they react – maybe before you decide to bet the bank on it.
9. You’ve figured out, that it can be sufficiently profitable to satisfy your requirements
If you dream of making a lot of money, then you need to set up a business that has a chance to deliver on that. If your dreams are more modest – a good living for example, or just to be your own boss and not have to work for someone else – then you might think of a different type of business.
It’s a good idea at the time you are thinking of starting a business, to do a personal life plan. How much would you have to earn in a year to make you feel fulfilled – for you to feel that you had arrived ? Where do you want to live? Do you like working nights (good if you want to run a restaurant business), or are you more an early morning person. Your new business ideas should tick some of these and other boxes.
10. You have worked out your USP’s
Every business should have something different about it, that will differentiate it from it’s competitors. It doesn’t have to be a huge obvious difference – but it needs to be there. Better service than the competition is not necessarily a ground breaking idea. But if you had stayed in a Four Seasons Hotel, and compared that to a Premier Inn – the difference is obvious. In Camile we developed Health, wellness and sustainability in hot food delivery as our USP.
There is an old saying in business that you can be two of the following three things, but not all three. Price / Service / Quality. If you think about our Camile business we have picked service and quality, but not price. Ryanair have picked quality and price, but not service. Which are the two for your business idea?
Turning your business idea from a dream into reality is what we all aspire to. But having that realistic look at the idea, understanding your own wants and desires, and capabilities, will help you make a better decision.
Good luck and stay safe.