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6 Steps to Deciding if a Great Idea is a Business

Deciding if a Great Idea is a Business

I have a certain friend who called me a while back, all excited about his latest revelation. “What if you could go to a web site and find all the recipes you could make today, with just the ingredients you already have in your kitchen? I’m going to start a website to offer this service!”

I’m sure you all realize that there could be quite a distance between a great idea and a great startup. But many people don’t have a clue on how to bridge the gap. So, trying carefully not to rain on his parade, I suggested to my friend that he complete the following analysis as due diligence on the idea before spending his life savings (and others) to roll out a solution:

  1. Competitors are few. Use Google or one of the many other search engines to search for existing solutions to this problem. A search argument like “recipes from the ingredients you have on hand” might be the place to start. If you find ten competitors who already have this offering, it’s probably not worth going any further.
  2. No known patents filed. Maybe the solution hasn’t yet been commercialized, but a patent has been submitted by someone else, putting your idea in jeopardy. Another series of searches on Google Patents and the US Patent Office site and Free Patents Online is in order at this point. Of course, you could pay a Patent Attorney a few thousand dollars to do the same search.
  3. Large and growing market. Investors will expect market analysis data from a “credible unbiased third party” – that means a nationally known market research firm like Gartner, Forrester, IDC, or many others. Hopefully, you will find, with your favorite search engine, something like the “Cooking Sauces & Food Seasonings Market Report 2015.”
  4. Real customer pain and money. Your own conviction that if you love the product, everyone will love the product, doesn’t count. Customers may “like” a product, but will generally only pay for things they “need,” physically or emotionally. Talk to experts in this domain (chefs, home cooking fanatics), and listen for hidden requirements and challenges.
  5. Whole solution viability. Many products fail because of “dependencies” and hidden costs. Auto engines that burn hydrogen are “easy,” but getting service stations around the world and new safety legislation takes decades. Make sure you understand all costs, sales channels, marketing requirements, and cultural issues.
  6. Motivated and qualified team is ready. The most critical step is to decide if you really have the passion, experience, and team for creating this solution and business. Startups are tough on even the most dedicated and passionate founders – others will likely fail, and definitely be unhappy. No idea is worth that.

I’m sure that many of you could add additional “idea due diligence” items, from bitter experience, that I’ve neglected to mention. By the way, if team experience and resources are the only limitation, it is better to give your idea away to a qualified group, rather than selfishly sit on it, or run it and yourself into the ground trying to make it work. Nobody wins with that approach.

In case you are wondering what happened to this recipe idea, try the search I suggested and you will find a dozen sites that already claim this capability. Needless to say, after I did the work, my friend decided to quit talking about this one.

But he will be back, he always is, and one of these days he may find an idea that someone can make a reality. It won’t happen for him, because just talking about an idea doesn’t start any business. Am I the only one with a friend like that?

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Original Publication DateApril 18, 2012
Related categoriesNuts & Bolts

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  • Zoe Alexander

    Marty this is truly an excellent 6 point check list. In fact I tweeted it immediately to my followers because it is too good to miss!  I have friends like you mentioned who have no experience but are always full of “good ideas” that either have no substance or very clearly are not thought through because if they were they wouldn’t be suggested!  I have to say when conversion rate is disappointing following a launch you need the right ppl around you with constructive suggestions to give you proper advice!

  • Head_exposed

    This is definitely a great article for those who want to start being an entrepreneur. Reality bites all the time especially in the business world. I agree that there should be a broad perspective on things and you could only achieve this with the right people and the right state of mind.