Choosing a business idea
April 14, 2018on
It’s choice – not chance that determines your destiny.
― Jean Nidetch
Choosing a business idea is hard.
It’s a decision that will heavily impact your life whether you go a full-fledged or an MVP (Minimum Viable Product) way.
Personal Failure – Choosing a wrong idea
In 2009, I started an online buying and selling marketplace for paintings in India. These were the early days of e-commerce in India. Forget painting, it was a time when people were not even buying mobile phones or pen-drives online. There was actually no probability of selling paintings online.
But I was fascinated with the idea of creating a combination of Etsy and FineArtAmerica in India. It looked like a unique idea to me back then and since I was technically competent to build it I got obsessed with the idea.
I built the portal with 6 months of efforts and self-funding. The portal managed to get some initial traction from seller side. However, after few months, I started realizing that I am a complete misfit to lead the portal. I was neither a painter nor an art connoisseur. I had no experience of selling fine arts. I was a complete nerd. The portal was a complete mismatch to my profile. It was a clear case of Product-Founder mismatch. I started hating the project myself & I shut it down in 2012.
My first attempt at business failed because I made a major mistake of jumping into a business with the very first very idea I thought off. Before selecting an idea, I should have validated the idea itself with some basic framework.
I have realized that even before building a mini-prototype or an MVP, it is better to validate the idea based on few rational parameters. This is required because there is a time & opportunity cost to the startup you are building now — it’s the other startup you could be building.
Choosing a business idea
A simple way to make sure you’re building the most valuable startup for you is to ensure you leverage the skills and knowledge you already have. Choose an idea where you have an unfair advantage compared to others; the idea where you know more, or have better skills than other founders. In the world of business, it is called as the competitive moat.
Here are few points that you should take care off:
- Try to have at-least 4-5 business ideas.
- If you are running short of ideas, a quick Google search for “Simple business ideas in 2018” will give you more than a million results. If you are in need of ideas with a little bit of execution already done, you can check the list of companies on websites such as Ycombinator, 500 Startups, Techstars etc. for inspiration. For example, Ycombinator lists more than 1500 website on their companies’ page (https://www.ycombinator.com/companies/).
- Once ideas are finalized, make a comparison chart of your ideas with the below table.
- Take help from your friends, mentors or online community.
- Once an idea is finalized, take the plunge. Put your heart and soul into it. Too much of thinking will lead to Analysis-Paralysis.
Framework to choose an idea
|Rate each idea on a scale of 1-10. 1 being lowest and 10 highest.|
|#||Points||Idea 1||Idea 2||
|1||Is the idea really solving a genuine problem? Do I know 10 people personally facing the problem?|
|2||Is my product/service really solving the problem?|
|3||Is my product/service really scalable?|
|4||Can I make a small quick MVP to validate my idea?|
|5||Do I have the necessary skills and knowledge to run this business?|
|6||Can I work on this idea for 10 years?|
|Product & Market Validation|
|7||Is the market big enough for the product?|
|8||Can I build multiple products/companies in this market?|
|9||Does my product have sufficient unique offering? Can my product be easily replaceable by a new player?|
|10||Does it have a sustainable business model?|
|11||Is the idea/solution easily marketable? Does it have a predictable lead generation channel?|
|12||Can I acquire customers with less cost than their lifetime value?|
|13||Can I sustain the business for 12 months in absence of any revenue?|
|14||Do I have a great team or can I hire a great team to bring my idea to market?|
Note that this framework won’t be applicable to your business idea if you plan to develop a revolutionary product with a patented technology. This also won’t be applicable to you if you are Elon Musk. This business validation framework can also be proven wrong by entrepreneurs with extreme resilience, perseverance, and resourcefulness.
However, for a majority of you who are confused between launching an e-commerce startup or a restaurant, this framework will definitely save hours and dollars. It will definitely help you in refining and to understand your idea and product.
At the end of a day, business is nothing but identifying a gap in the market and creating a product of use to fill that hole and make you’re as well as people’s lives better.
Have anything to share on this framework? Do you have some interesting insights, comments or suggestions for it? Do let me know in the comments section.
(Link to Excel file download: http://localhost:100/wp-content/choosing-a-business-idea.xlsx)