Entrepreneurs are constantly preoccupied with ideas. They live and breathe it. They seek it. More importantly, they turn it into a reality. Between the conceptualization and execution stages, however, every business owner experiences a common struggle: Knowing if a business idea is worth pursuing. Add here the dilemma of shiny object syndrome: the disease entrepreneurs catch when they feel the urge to go after the ‘shiny’, brilliant ideas, instead of focusing on one. Don’t put your eggs in one basket, they say. However, in the end, they kickstart a lot of things, without seeing them through.
The thing is, what you need isn’t a lot of Eureka moments. What you should have is discernment: knowing which ideas among many will be the most profitable for you. How can you sift through them and land one that’s worth risking for? Let the following tips be your guide:
1. Define the exact problem your idea solves
At their core, businesses are problem-solving entities. Fast food restaurants solve consumers’ hunger. Online retail shops offer the solution to long lines at brick-and-mortar stores. Even home-based businesses such as room rentals and meal deliveries do their share to address specific market needs.
So ask yourself: “What exact problem does my business idea solve?”
To help you answer this, tap into the power of market research. Conduct market surveys and interviews. Engage with your potential market on social media and related online forums. The insights you’ll obtain from them will lead you to an enlightened decision.
2. Examine the competition
Inexperienced entrepreneurs carry a notion that no competition is the easiest way to success. This couldn’t be farther from the truth. On the contrary, having no competitors means you may have to spend a fortune on marketing, to educate your target audience and introduce your unique business concept to them.
If there are no other players in the industry you want to dabble in, it’s possible that market demand may not be there for the products or services you want to offer. In other words, the absence of competition should make you cautious, more than anything else.
On the flip side, too much competition can also spell bad news. In general, industry giants or big players get the lion’s share of the market, regardless of how trendy or market-forward your business idea is.
So, ideally, you want your business venture to have enough healthy competition. Once you identify your competitors, examine each one closely. Determine how long they’ve been in the industry; what they’re doing right, in terms of operations and marketing; and what market they’re catering to, for starters. With this competitor-sensitive approach to business ideas, entrepreneurship will be a lot less risky for you.
3. Crunch the numbers
If you’re in it for the profits, the best business idea worth pursuing is the one that makes the most money. For this, consider your funding and price point.
Funding requires a budget plan. It should address how much you’ll need for production, manpower, machinery and other capital-intensive aspects of your business.
More importantly, how will you obtain funding? Will it come from investors, crowdfunding, or a start-up business loan? Ideally, you’re looking to start a business idea with a low cost. Check out budget templates online to help you get started with your financial analysis.
In terms of price point, the best way to determine this is by having baseline data of people who are willing to pay for your product/s or service/s. These data would be the result of your initial market surveys and interviews. Use these to decide on a price point that will justify what your market is willing to pay.
If you have yet to conduct your market research, including pricing in your study.
4. Find a mentor
Seek advice from people understand your goals and struggles as a start-up business—people who will help you see opportunities and grow your entrepreneurial career. It won’t hurt, too, if they happen to be familiar with the ins and outs of the industry you’d like to get into. In a nutshell, find yourself a mentor.
Their insights about which business ideas to pursue will prove invaluable in making an informed decision. How do you find a mentor? Through networking.
Set your plan in motion by becoming active in your local business community. This will open up opportunities for you to meet thought leaders, established entrepreneurs, and business advisors. Make it a habit to attend networking events. Volunteer in organizing meet-ups, if possible. The more involved you are, the better your chances of finding like-minded individuals and possibly form a solid network of mentors.
Once you’ve identified potential mentors, reach out to them individually. Tell them about your intention to have a mentoring relationship right off the bat, along with why you chose them.
Once you find your mentor/s, seize every opportunity to learn with and from them and to grow.
5. Tap into your passion
After all has been said and done, passion can be the answer you’re looking for at the end of the day. What does this mean? Go for what your passion dictates, to decide on which business idea is worth pursuing.
Go back to the things that excite you. Or, dig deep into matters that frustrate you and which you can address through your business. These are all sources of strong convictions.
Say, you’re passionate about sharing your thoughts on blogs or YouTube videos, then perhaps a start-up online business is worth focusing on. Don’t rely on what’s hot in the industry, alone. A start-up built on a strong commitment will last longer.
6. Is your business idea worth the risk?
All successful businesses start with a brilliant idea. That’s why this part of entrepreneurial preparation is the most challenging, if not the riskiest. Nonetheless, given its high risk, it also presents a great gain. And a great gain is indeed a possible reality when you arm yourself with discernment. Now ask yourself, is your business idea worth taking the plunge?
Jason Garcia is a manager of a family enterprise, property consultant and a writer. He has a niche blog for property leasing and real estate investment. He has been writing articles advising readers on how to secure and invest in homes and business and also has a varied background in real estate brokerage.