How to Evaluate a Business Idea?

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So often people are working hard at the wrong thing. Working on the right thing is probably more important than working hard.


So, finally you, yes you, have got into your head an illuminating mine of gold you have been toiling for God know how many — weeks ,or likely months, or maybe even years — in search of, digging countless fields in vain and burning the midnight oil.

But finally you have found it, the mine of gold — Your business idea. The idea that would set the world ablaze, would change the trajectory of the human race for ever, get your name recorded in a history books, and would, of course, pour a $100 Billion right in your lap.

Everything is going the way it should, right?

Sadly enough, everybody, yes literally every freaking Homo sapiens who ever thinks of starting a business and has has got his idea, holds it such standards — that it is going to be life changing, for the world, at least of his.

This brings us on to your next quest — To actually figure out if your idea is worthwhile, which simply put means figuring out if — people want to have what you have got to offer, to know the ins and outs of your audience.

But the question begs, HOW?

Well let’s find out!

The 10 values of a Great Ideas

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Now rise, assume a tough position, throw your easy emotions towards yourself and your plan out of your head. Now question, measure your Idea against these factors on a scale of 0 to 10, with increasing attractiveness. Be conservative, for optimism will yield thy nothing except for false glory, as of now.

In his book “the Personal MBA”, Kaufman describes 10 Methods against which you can measure your ideas and the potential of the market it serves. The factors to measure your solution :

  1. Urgency : If you go down the street and find someone selling packaged water bottles, how likely are you to feel that, “O gosh, I need to get this now, or else, I would regret it later”. How would your answer change if I were to drop you off into the middle of Atacama? Still not feeling that way?
  2. Market Size : Ask yourself, how many people are willing to to subscribe to a course teaching them Latin? I doubt there are many. And its definitely not a great idea to try to enter a dead market.
  3. Pricing Potential : Hey, have you ever thought of spending a $1,000 dollars on a coke-can? I would assume you have not, (though I definitely encourage you to do so). Its a no brainer that the more the people want to spend to get what you offer, the better.
  4. Cost of Customer Acquisition : Would your ever want startup have to pay $100 dollars to acquire one customer if its producing soap bars?
  5. Cost of Value Delivery : If you ever were to start a venture, would you ever want to spend the hard earned money of your investor into purchasing machinery for your factories (If thy venture doth require one), or into hiring horsemen to deliver your letters of thanks to your customers? Ask thyself : “How much effort and money would need to be spent into making your idea a reality.”
  6. Uniqueness : Would you ever create an account on a twitter clone? Then why should your potential customers? The more uniqueness you pour into your creation, the better.
  7. Speed : If your idea would take more than a lifetime to ever become a reality, why work on it (unless you are building an equivalent of the great pyramids). Your customers, and you, would want to have your offer as quickly as possible.
  8. Capital : A business requiring a $100 investment can be started by literally anybody, one requiring $1,000,000,000, by literally a handful. The question is, how much would yours’s?
  9. Diversification Potential : Amazon offers firestick and prime-membership aside from, well, regular Amazon. Rightly said, the more you can diversify, the better.
  10. Evergreen : Start consultation and keep doing consultation. Write a book, never think about it again.

Summing up

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Now add up the scores.

Its less than 50 : then your idea is most likely not as bright as you might thought it may be.

Its between 50–75 : The idea would pay, but likely not as much as it would multimillions easily.

Its above 75 : Bravo, How does it feel to have a gold mine?

Lessons Learnt

People often get into the trap where they think that their once they have found an idea for their startup, they are gonna become a billionaire. This is completely a false premise. You do need to question your idea and assess it against metric.

You startup idea is like your soul. Before you begin the ground work, make sure the soul is pious and ain’t corrupted.


Thank you for reading.