Five Ways to Identify a Great Business Idea
Based on my personal experience I am sharing some insights that can help for better possibilities.
Conduct Some Market Research
Have a very clear definition of opportunity or the problem that you are trying to solve. Check how many others are solving it, if none, then it may mean you are too ahead of your time or lucky to step on an awesome contemporary opportunity. There is one more possibility - there may not be such a problem or opportunity at all (trust me, it's better to know beforehand).If you find that there are already some players solving it, then find out how you can be better and simpler than them. Your business needs to have its unique selling points. Find out if the existing market players are organized or there are just small unorganized players, and whether you canreally beat them. Identify your prospective customers, try to connect with them and find out if it really is a problem that they want to get solved and would be willing to pay for it, or if its free-mium model would they are ready to use it on a regular basis. You should be open to critical feedbacks here. Your solution should be focused and should cater to the niche market. If it’s technology-based, can you start with a small core team? It is always better to start small and grow team according to the market response.
Whether you will be able to sign the long terms deals and agreements, this may not be applicable to the early customers, but this is an important indicator for long-term business viability
Assess the Market Size
Check the Market Size for now and for the next five years. Are there indications for it to grow, can you become the market leader in that growing market? What would you require to become a leader in such a market? You need to have clear answers to these questions. The business idea should cater to the needs of good market size to make the profit out of it. Your idea must be at the right place and at the right time to serve the right set of audiences.
Marketing and Promotions
The success of a business depends on how well you can market and promote it. You should assess the marketing efforts that you will require to reach out to your potential customers. You need to answer a couple of questions such as - How socially impactful your idea is for virality? How easy and economically viable is it for you to reach out to your potential customers? What is the total purchase of your customer over the lifetime (one purchase or multiple purchases)? Is it less or more than the amount you have to spend to convert them?
Length of Sales Cycle
You should know the approximate sales closure cycle for your business. If the sales closure cycle is short, then you should be able to meet the post-sale support and modifications. If your idea will need longer sales cycles, then will you be able to sustain and have patience? Longer sales cycles also require endless follow-ups. You should know how long and approximately how many meetings it would take to close a sale and your readiness to handle it most efficiently. If your product has longer sales closure cycle then your product must have stickiness in it, i.e., customers should repeat the purchase.
Whether you have bargaining power or your customer? Whether you will be able to sign the long terms deals and agreements, this may not be applicable to your early customers, but this is an important indicator for long-term business viability.