How do you choose which idea to turn into full-fledged business venture? Here's one method to choose your best idea.
Now is a great time to start a business. Technology is cheap. Funding is more available than ever. There’s a bevy of new tools available and online resources that didn’t exist five years ago. Most importantly, society is supporting start-ups more than ever before. But before you assemble a team, raise money, and dedicate years of your life, how do you choose which idea to focus on?
You don’t have to have an MBA to sort through your business concepts and choose the best one. Instead, just plot your idea on each of the following 2x2 grids.
Customer. Can they pay or not? Can they pay a little or a lot? How much do they want the product you envision? The sweet spot here, as with all these charts, is the upper-right quadrant. You don’t want to be like Nokia with its high-end Vertu phone, which retailed for $2,000 to $10,000 per unit and naturally sold very few units. You don’t want to be a low-value product like a virtual good, where the need is as low as the price. And while finding a much-needed solution to a major problem--like the need for clean water--is important, it’s hard to build a business when your customers can’t afford your product.
Product. On this matrix, you consider how difficult it will be to build your product versus how hard it will be to distribute. Again, easy to build and easy to distribute is the place to be. Finding a way to get a difficult-to-build product distributed easily is pretty awesome too. In most business planning, distribution considerations get short shrift. Be honest with yourself about the known difficulties and unknown possibilities that will affect your new venture.
Market. Before you put any money into this venture-;and before anyone else will fund it-;you obviously want a sense of the market. Simply put - is it big or is it small? Is the competition numerous and established, or fragmented and weak? Great companies are built in niche markets, but your choice here will affect your financing options. Most venture capitalists won’t invest in companies attacking small markets.
Passion. This one comes last, but it’s the most important. Hopefully passion sparked your idea in the first place. How much do you care about what you’re going to be pursuing? Is your motivation intrinsic? No matter your business, from mowing lawns to drug discovery, you are going to get knocked down. Do you love this business so much you’ll keep getting up? You should also evaluate how knowledgeable you are about the industry you’re about to enter. Compare yourself to everyone else in the world, and then place your dot. This last chart is so important that if you aren’t in the upper-right corner, you should probably drop the idea and find something else.
Choosing one idea from many is a tough process--and it should be. Executing even one big business idea takes years, and life is short This process is not about bringing ideas to life. It’s about bringing your best idea to life. Get ready for the adventure because breathing life into your own company is going to take everything you have. Once you decide what to do, you’re going to build something great. That’s the big idea.