Garage Entrepreneurs

by garage Tags: business idea, business ideas, gut check, lululemon, smell test, summer business

Apr. 8^th 2009

Hopefully last week’s Ideation Post got you thinking about your next big business idea, or perhaps your first big business idea. But now, the next, most important question: How do you know that this idea is going to work? How do you know that you can take this idea and run with it and turn it into something great? You need to find a ‘fit’.

The first (and perhaps the most important) check is the ‘gut check’: Does it match with your personal values, and does it make sense to look into this idea a bit more in-depth? To make an assessment at this stage, perform three tests:

Smell Test: Does it seem good conceptually? Have you put some time into thinking this through? Is this something that you can genuinely see working?

Fit Test: Is this something that you can devote most of your time and energy to? If it’s a great idea, but you aren’t passionate about it, how long will it be before you run out of steam? For example, in the Summer Business Ideas Post, starting a photography business could be a great idea, but I’m not personally passionate about photography- it doesn’t pass my ‘fit’ test.

Mom Test: Is this something that you will be genuinely proud of doing? In other words, could you brag to your mom or dad about what you’ve accomplished?

The ‘gut check’ is all about setting your own criteria, and comparing the business idea them. If you’ve got limited time available, maybe you can’t start the next Lululemon, but you can start a small, local clothing design company. Come up with your own criteria and apply them to other businesses in your area. Are there business that ‘fit’ with what you’d like to do?

Although the ‘gut check’ is extremely important, there are a number of more in-depth, strategic questions you should ask yourself when looking to take your idea to the next level. Although this list is not exhaustive, it could be a good way to determine if your business idea is worth taking to the next level.

Take your business idea (or one from the Summer Business Ideas Post) and rate each of the below questions from 1 to 5 (low – high):

1. Is this new? (1. Not at all – 5. Never been done)
2. Will the market buy it? (Maybe – They have already bought some!)
3. Does your customer benefit? (Maybe – Definitely improves the lives of customers)
4. What are the margins? (<15% – >50%)*more on margins in later posts*
5. Will customers buy more than once? (Once only – Yes, predictably)
6. Is there a long-term need? (It’s just a fad – Not ending any time soon)
7. Are there sufficient resources? (Very limited – Tons!)
8. Can it be copied? (Easily – I’ve taken/researched ways to prevent it)
9. Is there waste? (Very inefficient, poor management skills – Very efficient)
10. Is there supplier power? (You can only get parts from one company – Many sources)
11. Do you have the expertise? (You have no experience in the industry – You have specialized skills)

What did you score? By answering these questions, you`ll begin to see if this is a viable business idea that you might want to take to the next level. In addition, you`ll be able to see what areas you are weak in and potentially improve them. Take the time now to rate your business idea.

Perhaps the single, most important test to run the idea through is the ‘passion test’. If you are not excited about your idea, no one will be. You need to have the passion to work on this idea when you`ve heard “this isn`t going to work” a hundred times. Can you live it, breathe it, eat it, and sleep it EVERYDAY?

See the next post in this series, Validating Your Idea.