5 Steps to Take when Vetting a Business Idea

You’ve probably heard the saying, “Good ideas are a dime a dozen; it’s good execution that counts.” In other words, it doesn’t matter if you have a brilliant, once-in-a-lifetime idea if you’re unable to execute it successfully.

While that may be true, it is certainly easier to build your business on a good idea than a bad one. You have only a limited amount of time, money, and sanity, so don’t waste any of those valuable resources by not doing your homework. Instead, vet your idea’s potential by taking these five steps.

•     Write a business plan. There are many resources and templates available to help you begin writing your plan. We like liveplan.com, which is organized by sections such as opportunity, expectations, financials, etc. Not only will it help you start getting your thoughts on paper, it will walk you through areas you may not have even thought of, eventually creating a professional document you can present to bankers and future investors.

•     Research your competition. As with your business plan, there are countless online resources to help you conduct deep competitor analysis and research. This is your opportunity to uncover issues now, before they cost you money later. Another resource is to find a mentor familiar with the industry and its players, and who is willing to provide knowledgeable feedback about your idea.

•     Establish a waiting period. If you’re like most entrepreneurs, you’re thinking of ideas all the time. Rather than pursue all of them, slow down and take the time to think. Sleep on it, giving your subconscious time to consider the pros and cons of the idea before making a final decision.

•     Learn your customer. Steve Jobs once said, “[Get] so close [to your customers] that you tell them what they need well before they realize it themselves.” The market for your idea might not even exist yet. Is that because your idea is a “hero” or because it is a “zero”? And is your potential customer base even one you will like and want to do business with? Figure that out before committing to pouring every last resource into those customers.

•     Write down what success looks like. Aside from financial achievement, how will you gauge success? Define it in terms of your customer: e.g., “I will help 1,000 people start their own businesses.” You can’t go wrong if your customer is the focus of your mission and vision from day one.

Starting a business is hard enough, so selecting the right idea at the beginning is key. Pivoting in a different direction later could put you back practically to square one, so take the time now to formally define your idea, share it with experienced, potential shareholders if you can, and determine whether or not to invest the money and time needed to make it work. And of course, if you need assistance with any of these steps, get in touch with us. We are here to help.