If you are starting a business, the last thing you want is to spend a bunch of time on something that won’t work. While many business ideas may look very probable in our heads, they may not work as well in the real world. While fantasy can be lots of fun, its not fun to deal with the backlog of investing a whole lot in an idea that flops when you attempt to bring fantasy into real life. It’s the real life that matters most, so let’s talk about how to start your own business ideas and validate that they’ll work so we can save ourselves some money, heartache, and wasted time. Shall we?
- Whether the Problem is a valid problem to enough people
- Your Budget
- Your Schedule
- Your Income goals
- Your location
- The Market demand
- The Competition
- Your Competitive advantage
Each thing has to be taken into serious consideration because if one is a complete no-go, it could make the entire idea not worthwhile. Let me explain further…
- 1 Is your Problem Statement Common Enough?
- 2 Step One to Test Your Business Idea: Consider Your Budget
- 3 Step 2 to Validate Your Business Idea: Compare Against Your Schedule
- 4 Step Three to Test A Business Idea: Compare The Potential Against Your Income Goals
- 5 Step Four of Business Idea Evaluation: Observing Your Location
- 6 Step Five to Validate a Business Idea: Understand The Market Demand
- 7 Step Six to Test Business Ideas: Look at the Competition
- 8 Step Seven: Ensure You’ll Have a Competitive Advantage
- 9 After the 7 Steps: Deciding What To Sell
- 10 While Your Brainstorming Also Consider…Multiple Streams of Income
- 11 Final Words and Recommendations for How To Start Your Own Business Ideas and Validate That They Will Work
- 12 Now, it’s Your Turn…
Is your Problem Statement Common Enough?
Your business needs to solve a problem for enough people that the business can attain your financial goals. Surveys, focus groups, or informal asking can help you to decide whether your idea solves a common problem. You don’t want your idea to solve a very uncommon problem, or you may have problems finding the customers who will make the business thrive.
If you haven’t already taken the time to draft a budget or to track your expenses, stop right here. You need to sit down and calculate how much money you will have to work with as you implement this idea. You can download the Everydollar app and the Personal Capital apps (which I personally use), or you can choose an alternative that “tickles your fancy”. Regardless, it’s vital for you to sit down with your personal finance numbers, so you can put the disciplines in place that will be required to make this business idea work.
Sidenote: After you’ve done your budget, I’d recommend you automating your savings, so you make it a habit to set money aside for emergencies, financial confidence, and for your business. An app like the digit app could help with automating your savings. Check out the Digit app!
Now, with your budget, you should know how much money you can invest in your business. This insight about your budget can be compared against the business idea to see whether the idea is something that is attainable for you to fund right now.
If you have $100/month, it may not be attainable to buy loads of inventory for a retail store. You may need to save money for a period of time. Your budget will tell you some things about how quickly you will be able to invest in the business, and how quickly you will be able to scale it.
Don’t get discouraged if you are starting with a small budget, so did I. Brainstorm ideas that can be started with low overhead and low startup expenses like an online business. I can help you navigate starting an online business here. You can also check out my article, How To Start a Business with $100 or Less.
Step 2 to Validate Your Business Idea: Compare Against Your Schedule
You will want to list the vital tasks your business idea will require for success along with an estimated time requirement, and compare that with the time you have available on your schedule. The amount of time you will have to accomplish the pertinent tasks will tell you quite a bit about how quickly you can start or scale the business idea.
Step Three to Test A Business Idea: Compare The Potential Against Your Income Goals
What do you want to earn from your business and how quickly? Do you have knowledge of the requirements for success or do you still require quite a bit of learning? Do you have the time and money to make your income goals attainable within the time you’d like? Is there an alternative business model, mode of sales, or way to acquire the sales volumes to achieve your goal?
If your business idea cannot achieve your income goals in the time frame you’d like, it will be disheartening. You either want to choose an alternative business idea, or choose a business model that will enable you to achieve your income goals.
Step Four of Business Idea Evaluation: Observing Your Location
Starting a seasonal business in the wrong season, or starting a locational business in the wrong location could be tragic. You may not want to have a salt truck or snow plow business in South Texas, and you may not want to have a Fishing business in the desert. Some businesses can be very hot in certain markets, but when moved a couple hours north or south would be complete flops.
Check your phone books, search results, and ask around in your local market. Ask, “If there was (your business type) in this area, would you be interested in buying?”. If you ask enough people who are not sensitive to your personal feelings, then you can get a gauge of your local market. You want brutal honesty here.
You can also do keyword research using Jaaxy to see if there are online searches for your product or service type.
Step Five to Validate a Business Idea: Understand The Market Demand
Bottom line…if the market doesn’t want what you’re trying to make, the business won’t work. Getting a good measure of the market demand for your product or service could save you alot of blood, sweat, and tears. Without market demand, your business just won’t work. The truth is the truth, and a business without demand won’t work.
- You can set Google Alerts and track if there is a lot of buzz about the business subject matter.
- You can analyze large retailers like Amazon to see if there are comparable products or services. Then, you can analyze whether the products or services have good sales volumes by looking for review counts, social shares, and other correlating buzz.
- You can analyze social media sites to see if there are comparable social media pages and what their followings, shares, and likes are like. Are they getting engagement? If so, there may be market demand.
- You can use Jaaxy to do keyword research to see whether there is lots of searches and if there is high or low demand
- You can look for blogs in the niche of your idea and see if they offer solutions similar to the problem you plan to solve. You can also request a media kit to evaluate their audience, and get to know your target market better.
Step Six to Test Business Ideas: Look at the Competition
Do you have competition? Who is your competition? Having competition is a good sign for your business because if a competitor can thrive in the market, it is a sign of demand. Analyze your competition doing a SWOT analysis. What are their strengths, weaknesses, what opportunities do they leave you, and what threats might you face?
Step Seven: Ensure You’ll Have a Competitive Advantage
A bad idea can be a bad idea simply because you are pursuing it for the wrong reasons. Often times, when people are pursuing a business for the wrong reasons, they won’t have a clear competitive advantage.
For example, some people pursue ideas just because they think it will be lucrative, but they don’t have the primary skills required to make the idea work. Not having a competitive advantage is not a good idea. You want to spend some time making sure you have a competitive advantage.
After the 7 Steps: Deciding What To Sell
Deciding what to sell will be based on your market research that you’ve accomplished using the steps enclosed above. You want to sell something with high demand and low enough competition that there is plenty of market share for you to achieve your income goals.
While Your Brainstorming Also Consider…Multiple Streams of Income
Most products and services have hot seasons and low seasons. Having multiple streams of income can save you from experiencing large financial disruptions by diversifying your income streams. It can be very useful if you consider how to create multiple streams of income within your product/service niche while you are in the idea generation phase.
Final Words and Recommendations for How To Start Your Own Business Ideas and Validate That They Will Work
Hopefully these seven steps for how to start your own business ideas were helpful to you. I’d love if you could use them to brainstorm some very powerful ideas that could impact the world in a positive way. If you have more questions or concerns regarding how to start your own business ideas or validating them, don’t hesitate to leave them below, or schedule a consulting session. I’d love to help.
If you’d like help starting an online business, you can join me and 1,000,000+ on fire entrepreneurs over at Wealthy Affiliate here. We can meet, and I’d be able to help you build your business along the way!
Now, it’s Your Turn…
Have you analyzed successful business ideas before? Did you pursue an idea that flopped? What learning lessons can you share with us about your idea evaluation process?