I'm just like most other entrepreneurs I know – I have at least three new business ideas before I get out of bed in the morning. And the ideas just keep coming throughout the day.
Thankfully, after years of trial and error as an entrepreneur, I've learned to evaluate my new ideas carefully to determine if they are actually an opportunity, instead of just an idea. Even more important, I've learned to evaluate if it's a good opportunity for me and the lifestyle I want to create for myself.
I do that evaluation by asking 12 questions that I've found are critical to determining if a business is right for me. If I have more than a few "No" responses, I can immediately cross the idea off my list and forget about it. If it's all "Yes" responses, I know I have an idea with real potential.
Here's the list of questions, with my thoughts explaining why each is important to me:
1. Will this business support the lifestyle I want?I work to live, not live to work. I also love to travel and have flexibility in terms of when I get my work done. That immediately disqualifies many businesses.
2. Is there proven demand for the product I am going to sell?Creating demand is hard, slow and expensive. I'd rather capture my share of an already existing demand.
3. Is there a clear value proposition that will make my product unique in the marketplace?Business is no fun if I don't have some sort of competitive edge.
4. Is there a clear way to market and sell my product or service through existing channels?Leveraging existing sales channels is the fastest and easiest way I've found to get a business off the ground profitably.
5. Can I leverage online marketing and social media to grow this business?These are two of the most powerful business-building forces of our time – I want to be sure to take advantage of them.
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6. Will this business have gross margins of at least 50 per cent and/or net margins of at least 20 per cent?At the end of the day, a business has to make money.
7. Can this business become a sellable asset?The big win often comes from being able to sell and exit your business when you are ready, but not all businesses are easy to sell.
8. Can I automate the majority of the operations of the business?I try to take advantage of as much automation as possible to reduce the overhead of operating a business.
9. Can I easily find someone to successfully run the business for me?Eventually, I'll likely want someone to run the business for me. Is this a business that can easily be handed over to someone else, or does it require my specific knowledge and talents?
10. Is this a business that I'll find fun and interesting to run today?Yes, life insurance is very profitable, but it's not fun. Profit is not enough. I want to be in businesses that I actually enjoy.
11. Is this a business that other people will find fun and interesting?I've found that it's much more enjoyable to be in a business that other people think is fun and interesting.
12. Is this something I'll still be willing to run seven years from now?The reality is that most businesses don't grow as quickly or as profitably as I'd like. If I am still running this seven years from now, will I still find it enjoyable?
You should be able to answer "Yes" to the majority of the questions. If not, drop the idea and be thankful that you didn't invest your time and energy into something that ultimately wouldn't fulfill your entrepreneurial dreams.
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