How to know if your business idea will work or not

So you’ve had an idea for a new business, but how do you know if it’s going to be a soaring success or an unmitigated disaster? Well, of course you can never know for sure, but there is a series of questions you can ask beforehand that will give you a better idea.

Does the idea solve a problem?You need to be absolutely clear that your idea is the answer to a genuine difficulty. Focus on those two words – difficulty and answer. Define the problem your idea solves as precisely as you can. Then precisely describe how your idea is an answer to that problem. Also describe how it is a better answer to the answers already available to people. The problem doesn’t have to be a brand new one. It can be one that nobody else is tackling that well. Richard Branson built his Virgin business by doing just that. The Virgin way has been to shake-up existing and complacent industries by offering outstanding alternatives.

Is it a problem that people care about?You may have a great solution but people may not care enough about the problem to want what you propose to offer. Some problems are just not important enough to people.

Is it a problem people are conscious of? This might seem like an odd thing to say, but sometimes people don’t realize that they actually have a problem. That’s not to say that they can’t be made aware and won’t then go onto to buy a solution. Take the iPod, for example. Until it arrived on the market, there were plenty of other portable music players on the market. But it was when the iPod launched and it was simple to use, looked good and integrated with a music store that millions of people began to realise that it was what they wanted.

Is the idea business worthy? Not every problem solving idea is the basis of a good business. Good ideas are exciting, but good business ideas are opportunities to offer real value to people and make money in the process. An idea is also more business worthy if it is scalable, meaning that it is low-cost and can be sold to a wide audience with a high-profit margin. Can the idea be expanded upon in the future? Can it be adapted for new markets?

Will people pay for the solution? You need to be certain how much people would pay for the value you are offering. Take the company Dyson as an example. They reinvented vacuum cleaners and tried to do the same with washing machines when they launched a product called Contrarotator. It was truly revolutionary and its technology was a significant improvement on existing washing machines. Unfortunately, it was expensive to manufacture and consumers were not prepared to buy it in sufficient numbers with its price tag being £1,200. James Dyson, the founder of the company was quoted as saying: “As a washing machine, it was a great success. As a business, it wasn’t. We made a washing machine that was too expensive. It had too much technology.”

Is the timing right? Some ideas are brilliant, but the world is just not ready for them when they launch. For example, we now take watching video via the Internet on our TVs for granted. But back in 1996 Microsoft launched an interactive TV product called WebTV which flopped. It failed because other technologies hadn’t caught up and consumers saw the TV and the computer as separate products.

Can you reach the people with the problem and can you convince them to buy? In other words, are your ideas for marketing as good as the idea itself? You need to give this issue as much of your attention as you give to the idea itself because you’re marketing strategy has to be spot on.

What do potential customers think? It’s staggering really, but talking to potential customers is a step that many entrepreneurs don’t take. Not testing out your idea raises the chances of failure significantly. Do a drawing or mock up a prototype. Check out your assumptions. Do they have the problem that you think they have? Is the problem important to them? Talk to as many as you can and get lots of different points of view.

Finally, is the idea right for you? Starting a business is a very large commitment in terms of your time, energy, money, courage and patience. So are you passionate enough about it? Can it give you satisfaction? Steve Jobs once said that the only way to be truly satisfied is to do what you believe to be great work. Will you be able to bring in the help that will be necessary to make it work? Are you the sort of person who is prepared to take advice and feedback because being closed-minded is a business killer?

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