You might have lots of ideas for a new small business or a new offering for an existing small business, but not all ideas are equal. Some ideas are worth pursing and some simply are not.
Being passionate about your small business is important, as too, developing something you love. Small business can be tough sometimes and love and passion will help you stick with it, but you are in business and what you offer needs to make money. You also need to make sure what you are investing your time, energy and money into has a good chance of being successful and profitable.
Forget the ‘build it and they will come’ mentality. You want to filter and test your ideas first to check you are onto something that has the potential to create a thriving and sustainable small business.
Here are 5 tips to help you work out which small business ideas are worth pursuing
1. Let go of the emotion
You need to be free of emotion when analysing which business idea to pursue or not. People can get quite attached to an idea, but your business decisions need to be objective and strategic based on facts and data rather than on emotion. Now of course that doesn’t mean you totally give up on something you are truly passionate about, but it should be your passion project rather than your small business offering.
2. Filter your ideas down
Start by doing a brain dump of all your ideas, this can be for a new small business or new offering for an existing business. Next you need to filter your ideas down. It’s not possible to pursue all your ideas even if they are good ones. Go through your list and ask yourself the following questions, to help you work out what ideas you will eliminate and what you will keep on your list for now.
- Is the idea aligned with my small business values and goals?
- Do I have (or can get) the resources, people, technology to pursue this?
- Do I have enough time to invest in this?
- Is it a fad which will fizzle quickly or will it be around for a long time?
- Will it provide value, fulfil a need or solve a problem for my customers?
- How big is the competition? Are they making money? What can I do differently to the competition?
- Do I believe in this?
Feel free to add more questions that are relevant to you and your small business to help you filter down your ideas further.
3. Check your target market size and their eagerness
First things first, don’t make the mistake of thinking you are selling to everyone. The entire population of the world is not your target market. Get specific. What group of people are most likely to purchase your business offering, and are there enough people in this group to buy your offering? The size of your target market doesn’t need to be large, you can have a very niche small business and be hugely profitable, you just need enough people willing to part with their money for your particular product or service. In addition, you want to determine how eager your target market would be to purchase your offering? If your small business offering will solve a problem or fulfil a need or desire, then you’re more likely to have some very eager customers.
4. Crunch the numbers
Before you launch a new venture or new product or service you need to analyse the numbers to check that from a financial perspective your idea is really worth pursuing. You want to have a really good sense of how much your idea will cost to get up and running, what the ongoing costs will be and how much you need to price your offering for it to be profitable. You might have an incredible idea but production costs may be way too high for it to ever be profitable.
5. Test it out
Select your best idea, scale it down and test it out with real customers. This is a low cost way to validate your idea and check that it will actually sell. You may need to tweak your offering based on feedback, or sometimes you have to let an idea go and move onto something else. Far better to find out early on something won’t work as hoped before you invest lots of money and time. Once you have tested your scaled down version and the results are positive, then and only then, invest fully into your big idea.
Do keep in mind, that while you might have a great small business idea, sometimes that idea just isn’t meant for you.