How do you know if you have (really) a good business idea?

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This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

Opinions expressed by Entrepreneur contributors are their own.

Depositphotos.com

There are few things as exciting as listening to an entrepreneur talk about the initial premises of a business idea . If taken seriously, this intellectual exercise must evolve into a diagnosis of its feasibility, risks and capital needs to take the first steps, and it is partly because of this screening that not all ideas go to a validation phase.

However, there are many entrepreneurs who dedicate substantial time and resources to ideas that, in the past, lacked their own merits, or that were not adequately studied and reflected on. Just as there is the “feasibility” screen, it seems useful to have a previous screen, one that allows us to differentiate good business ideas from those that don’t seem so good.

When an entrepreneur talks about his idea, he is exposed to this previous screening, and whoever listens helps a lot when he questions and delves into the premises and merits of the idea. It is not idle to insist on this preliminary screening, for at least two reasons: (1) there are business ideas that are “feasible”, but in reality they are not that good, and the screening proposed here can help the entrepreneur to reflect on them and raise them better. ; (2) there are ideas that seem good, but their feasibility is questionable, assuming this fact and arguing it effectively, will allow the entrepreneur to defend his idea, even if the proposed solution is understood as very high risk.

So, here are the elements to differentiate good business ideas:

The problem or need : There are things that are worth it and others not so much, the same applies to the problems or needs that the business ideas address. There is a well-known saying in the world of entrepreneurship: “it is more important to focus on the problem –or need of the client- than on the solution”, and when the problem or need is something worth solving, things go much better . Business ideas with social impact are a clear example of this point: access to health, financial inclusion, access to education, are issues that are undoubtedly worth solving.

This does not mean that good business ideas have to focus solely on social initiatives, but it is important to explore beyond the mere function-transaction of value with the client and identify the contribution that your solution has with respect to the environment, the society, economy or country. A worthwhile business idea is easier to attract talent and capital that contribute to the feasibility of the business project.

“It is more important to focus on the problem -or need of the client- than on the solution” / Image: Depositphotos.com

The market : This element tests the magnanimity of the entrepreneur regarding the scope of his business idea. There are local business ideas that are very interesting, but they stay local. Whoever listens to an entrepreneur does well when he invites him to challenge the scope of his idea. A good business idea transcends the local when the problem or need, in addition to being worthwhile, does so on a regional or even global level. As the market of focus is counted in the millions of clients, the problem becomes relevant, and in the same way, the size of the opportunity grows.

The customer : The customer is a customer when they pay for something. The customer and the user are not always the same person, and now in the digital world, the user does not necessarily pay for the solution. How many cell phone applications would we stop using if we had to pay for them? A good business idea clearly identifies who is paying and their reasons for doing so, in addition to recognizing that this can be a person, a company or an institution, the famous B2C or B2B. When the entrepreneur has thought in depth about the implications of one or another business model, he is dressing his business idea in a good way.

Differentiation : This is the element that really clarifies the level of depth that the entrepreneur has made reflecting on his idea. Talking about the differentiation of a business idea does not end with making it clear what, how or why the idea is different. The important work involves identifying the relevant alternatives that exist to solve the problem or basic need of the idea, and who – competitors – are working on it. If the entrepreneur has not delved into his arena of competence, it is necessary to say it clearly and send him back to investigate and delve further.

We could say that everything is already solved, but what an entrepreneur does is identify a problem that is worthwhile, articulate a solution with powerful differentiators and be able to keep a slice of cake from that opportunity. Whoever listens to an entrepreneur in the initial phases of his idea, helps a lot if he invites him to “sift” his idea and dress it up as a good business idea.

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