You’ve always had an entrepreneurial spirit. Maybe you have family members or friends who’ve started successful companies.
You’re realizing a hobby you enjoy could bring in money if you made it a business. Diversifying streams of income is something you want to pursue.
There are lots of reasons starting a business is on your mind.
While some entrepreneurs know what business they’ll start right away, others have varied skills and passions to consider.
If you fall into the latter group, you might get “analysis paralysis” and never start your company. Likely because you can’t answer a question endlessly replaying in your head.
“Which of my business ideas is best to pursue?”
Read on for important questions to ask yourself to narrow down your business ideas and determine the best one to go after. (Hint: just because you’re in love with an idea doesn’t mean it will make a good business or create a successful enterprise.)
Whittling Down Your Business Ideas
One of the first steps to take when trying to decide what business concept to start is to imagine how it would look in your life.
If you’re dreaming of a new fancy breakfast joint, and you’re a night owl, chances are it’s not a great fit.
Or if you’re an extrovert and enjoy being around people, an online business you conduct from home might not be optimal either.
So, start with writing down your ideal workday. List the where, when, and how you will conduct your daily business. Note how this will fit in with family, friends, and any other commitments you currently have.
It might be helpful to write this down in stages as well. While you might be okay working numerous hours now, what about in 12 months, three years, or 5?
Things to ask yourself:
- Location. Do you want a physical location-based company or a virtual business?
- Hours. Will you have set business hours for customer interaction?
- Team. Do you want to work solo or with a partner or employees?
- Customers. Will your client interactions be in-person?
- Travel. Will you be traveling for business purposes? How often?
- Time. What hours will you personally be available in your business?
- The Work. What actual work tasks will you personally be conducting?
Once you complete the above, you may immediately start crossing ideas off your list. For those business ideas remaining, answer these next set of questions.
6 Questions to Consider for Each Business Idea on Your List
There are things you can do to increase the chances your company will be successful – and being proactive is one of them.
Select one of your business ideas and answer the following questions. And be honest with yourself.
Take time to reflect and do research if needed. Then, repeat the process with all of your additional ideas.
Answering these isn’t something you have to do in a day, a week or even a month.
Try to steer all of your excitement and energy into planning rather than running with your favorite business idea to get it launched. It can really pay off.
1. Does the idea align with your values?
If you value creativity, family, growth, and community, does this concept support those values?
When you use your core values to help guide your decisions you can make better choices.
Ideas aligning with your values will help you stay inspired and pointed in the right direction.
2. Do they want it and will they pay for it?
If you’re starting a company, you need to focus on your potential customers and making money. Look at your business idea and ask yourself if people already want or use this product or service.
Do you want to sell a food product, a book or course, jewelry or clothing you made, or offer tutoring services? You already know people use those products and services and pay for them.
If you have an idea for a new product or service you haven’t seen advertised before, ask yourself if people need it or would want what you plan to sell.
Ask your friends, family, and co-workers, and even strangers for honest feedback too.
They might like it, but don’t forget to ask them:
- Would you pay for it?
- How much would you pay for it?
Also, consider whether you would be able to pre-sell it to determine if there is a market for the product or service at the price you want people to pay?
3. Is it something you know and can do?
Ideally, you have business ideas that can put the knowledge and skills you already have to use. Saving you time and energy you can put toward your new business.
You don’t want to make the mistake of assuming starting a business similar to your current job will be easy though. There’s a big difference between being an employee and an entrepreneur.
The more familiar you are with ‘all the things’ your business requires, the more confident you’ll be as you move forward.
Additionally, while learning new things is always good, you should assume everything you’ll need to do for your business will be harder, take longer, and cost more than you anticipate.
- Do you currently have the knowledge and skills for the business?
- Can you quickly and easily learn what you need to fill any gaps in your knowledge base or skill set?
- Do you have the financial resources necessary to start-up the business and cash flow it for months?
- How will you keep up on your personal expenses while growing your business?
- If you don’t have the funds yourself, how feasible is it to get them elsewhere?
- Do you have and are you willing to commit the time and energy this project will require?
4. Why will they pick your service or product over others?
Don’t think you have to come up with a new product or service to have a successful enterprise. Not that you can’t, it’s just challenging to come up with an idea someone else hasn’t already.
- How can you stand out?
- If someone buys a similar product or service from elsewhere now, why should they support your business instead?
- How will customers find you?
- What makes your business offers unique, special, or better than what already exists?
5. How will you build relationships with your customers?
Finding new customers is a challenge, but keeping them and making them repeat clients will significantly affect your profits.
If the products or services you are offering aren’t something people buy more than once, will they refer other people to you?
Building trusting relationships with customers is critical. But it takes a lot of work too!
- How will you market your business to gain clients?
- How will you find out what customers want?
- Will you listen to them?
- What problems can you help your clients solve?
You won’t know if you don’t connect with them and understand their needs.
6. Will this business idea still excite you in a few years?
Unless you plan to make money fast and sell off your business, you’ll want to consider the answer to this question carefully.
The chances of your business being an “overnight success” are slim. And in our busy connected world, “shiny object syndrome” can lead many entrepreneurs astray.
Small businesses take more time and effort than many entrepreneurs first predict. To reach the level of success a new business owner initially believes they can achieve often take years.
Will you still be excited about this business after a year? What about three years? Or five?
Even if you find success and can hire help for some different parts of your business, you’ll still need to have a high level of involvement in it – or you’ll need to pay someone well to maintain and grow your company.
If you know your interest in a project wanes quickly and that your motivation might also, ensure the business idea not only aligns with your values but is something you’re super passionate about and interested in too.
What Are the Odds Pursuing the Business Idea Will Work?
While you may have heard or read that most small businesses fail in the first year, Forbes reported a Small Business Administration’s (SBA) Office of Advocacy claim that instead, close to 80% of companies survive the first year.
Good news for entrepreneurs, but unfortunately, those rates don’t hold well over time. After five years, only about half of businesses survive – and some of those aren’t making a profit. The SBA suggests only about a third of small businesses last ten years.
That’s why it’s essential to do some homework before investing too much of your time or money into a business idea.
Understanding why you want to create a business at all and specifically pursue this idea is just one of the many things to consider before starting your company.
Which Business Idea is Best to Pursue?
Whether you have one business idea or more, take time to go through these crucial questions. Then discuss your answers with a loved one, trusted friend or mentor.
Being passionate about your company concept is essential, but you also have to be honest with yourself before you put in all the work, money, and time required to get a business up and running.
Talk with people who run small businesses about their successes and challenges and begin building your business network. Most entrepreneurs are happy to share lessons learned about building their enterprises.
One thing you might discover is that some small business owners pivoted to a different business idea after starting their first business.
Even though you may believe in one concept right now, your original business idea may not be your best idea in the end.
Also, remember that hobbies are great if you enjoy them, but it isn’t a good business idea unless you can make money.
Vicki and Amy are authors of Estate Planning 101 – a Crash Course in Planning for the Unexpected -coming soon from Adams Media.