12 Questions to Ask Before Acting on a New Business Idea
“Eureka” moments can hit entrepreneurs hard. After all, it’s natural to see opportunities where others don’t. But before you decide to act on that new business idea, you need to make sure it’s not just a flash-pan plan. In order to help you decide, ask yourself the following questions:
A. Is it a product or a business?
A lot of great ideas out there make great products, but creating a business is quite different. Whether your idea is a product or a business changes the way you should proceed. For products, focus on getting the product to market and maximize sells. For a business, think about the bigger picture of putting together a growth strategy, building a team and creating a defensible position. – Andy Kohm, VendOp
A. Have I done the research?
Doing the research and talking to your potential customers now before you start is much cheaper than after. A lot of work actually needs to get done before you officially start acting on your next business idea and research is the bulk of it. So before you dive head first, ask yourself: Have I talked to my potential customers? Is this something they want? – Christopher Swenor, East Coast Product
A. Is there value in solving this problem?
Business ideas are a dime a dozen, but successful businesses aren’t built on ideas alone. The idea has to solve a real problem and the solution has to create enough value for people to be willing to pay for it. Make sure the value is there before you waste time, money and opportunities building castles in the air. Lack of product-market fit has caused the demise of many a startup. – Vik Patel, Future Hosting
A. Am I ready for the sacrifice and risk?
Assuming you’ve already validated your idea, being an entrepreneur comes with big sacrifices which can undermine your success if you’re not ready. You have to sacrifice time with family and friends, and the security of that regular paycheck will be gone. Oftentimes I think about the early struggles when I started my first company. I never had to beg, borrow or steal until I became an entrepreneur. – Tim Maliyil, AlertBoot
A. Can I scale?
The core business idea will be the single-most important step in building a successful business. An OK idea will only take you so far, but a great idea will set you apart from the rest and offer true returns on your time. Asking yourself if your business can scale will be a litmus test to identify if you are onto a great idea or not. The more scaleable a business is, the more you can succeed. – Diego Orjuela, Cables & Sensors
A. Who is on the team?
It’s easy to find opportunities. It’s even easy to map out a business plan. It’s difficult to understand who else is needed for a new business idea to succeed. Successful entrepreneurs realize they can’t do everything by themselves, and often the cost of doing so is too high anyway. You have to factor in your expertise and then bring in partners who can complement what you don’t know. – Krish Chopra, United Medical Rotations
A. What’s my competition?
Competition is not a reason to discount a business idea. Disrupting existing niches and executing better than the incumbents is the game we’re in. But entrepreneurs should ask themselves what the real cost of being better is and whether they can build a product so much better — or cheaper — that users will be motivated to switch, especially if there are established players with deep pockets. – Justin Blanchard, ServerMania Inc.
A. Would I buy my own product?
Would I buy this myself? If you aren’t willing to be a customer of your own products, then you have no business selling them to someone else. If you’re on the fence, resolve your own objections to win over yourself, and by doing so, you’ll be proactively resolving objections that your actual customers may have. – David Ciccarelli, Voices.com
A. Is this what I want my life to be about?
Before starting your next business venture, ask yourself the overarching question: Is this what I want my life to be about? How does this build the life that I want? Does it fit into the vision I have for myself? If it doesn’t fit into what you want your life to be about, ask yourself if it’s really worth the sacrifice. – Rachel Beider, Massage Greenpoint, Massage Williamsburg
A. Am I thinking big picture or instant gratification?
It’s important to step back and decide whether this is just something that you want right now or something that will benefit your company as a whole in the long term. Sometimes you get lucky and those right now desires pan out in the long run, but usually they’re short-sighted and a waste of everyone’s time. – Kevin Conner, Vast Bridges
A. Do I have the time and resources for proper execution?
We as entrepreneurs are always on the go, and we’re constantly thinking about our next great idea. Before you act on your next idea, ask yourself if you have enough time and resources to devote to the project. Nothing is worse than a half-ass job. If you truly believe in your idea but don’t have the time and resources, take a second and give it some thought and planning before you get started. – Dave Nevogt, Hubstaff.com
A. What’s my contingency plan?
Once you’ve done your research and are ready to move, you still need a contingency plan. Nothing in business is linear. One minute, for all you know, you’ve created a workable prototype, have backers, and a ripe and ready market. The next, your product is being scrutinized and found to be completely unnecessary. What’s your contingency plan when something like that happens? – Cody McLain, SupportNinja
These answers are provided by the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
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