Q: I want to start my own business. I have tons of
business ideas that all sound great to me, but my husband
is not so sure. He says that we need to figure out a way to
test my ideas to pick the one that has the best chance of
succeeding. I'm ready to just pick one and go for it. What
is the best way to determine if a business idea really is
as good as it sounds? -- Hannah C.
A: Heather, I know you probably don't want to hear
this, but your husband is right (first time for everything,
huh): before you just pick a business idea and go for it you
should test the feasibility of your ideas to make sure they
really are as good as you think they are.
Every business idea, no matter how good it sounds while bouncing
around inside your head, should be put to the test before
you invest time and money into its execution. Success lies
not in what you think of your idea, but what the buying public
will think. Many entrepreneurs find out too late that the
public's opinion of their idea differs greatly from their
own. Wasted time and money aside, the last thing you want
to do is hear "I told you so!" from your husband,
so take a deep breath, slow down, and let's look at the ways
you can test the feasibility of your idea.
There are many ways to test an idea's feasibility, though
some ways are not nearly as effective or accurate than others.
Most people start out by asking everyone they know what they
think of their big idea. This is a good way to start the wheels
turning because you may get feedback that you have not considered
before, but be warned: this is not the best way to test the
true feasibility of an idea. Never start a business simply
based on what your friends and family think.
There are two things that will happen here. First, your mother
will tell you what you want to hear and your best friends
will be equally kind. No one who really cares for you will
want to rain on your parade no matter how insane your parade
might be, so take the wisdom you gain here with a hug and
a grain of salt.
On the flip side, your coworkers and casual acquaintances
will probably tell you the opposite of what they really think.
If they think your idea stinks they'll tell you it's great
and if they think your idea is great they'll tell you it stinks.
Please don't preach to me about human kindness. Human kindness
is often bested by human nature and we humans, by nature,
are an envious lot. We hate to see anyone doing better than
we are doing and we hate to see anyone who has the potential
to leave us behind. Go watch the movie "Envy" and
consider this: why would someone who is broke or stuck in
dead-end job with no other prospects want to see you succeed?
They wouldn't. End of story.
Instead of conferring with friends and family you should run
your idea past a number of neutral third parties who are knowledgeable
about business and will give you an honest opinion. Contact
the local Small Business Administration (SBA) or The Service
Corps of Retired Executives (SCORE) offices and ask to speak
with someone knowledgeable who has time to listen to your
idea (don't run it past the receptionist). Or speak with the
small business liaison at the Chamber of Commerce. Or seek
out a successful entrepreneur who is willing to listen and
give you an honest opinion about your idea. Just remember,
opinions are like belly buttons: everybody has one and they
are all different.
A more accurate way to judge the feasibility of an idea is
to create a SWOT analysis. SWOT stands for Strengths, Weaknesses,
Opportunities, and Threats. A SWOT analysis will not only
help you gauge the feasibility of your idea, but also help
you build on your idea's strengths, identify and correct the
weaknesses, and spot ways to take advantage of potential opportunities
while avoiding potential threats.
Here's how to perform a simple SWOT Analysis. On a piece of
paper draw a vertical line down the center of the page. Then
draw a horizontal line through the center of the vertical
line. The paper is now divided into four quadrants. Label
the upper left quadrant "Strengths." Label the upper
right quadrant "Weaknesses." Label the lower left
quadrant "Opportunities" and the lower right quadrant
"Threats."
Now fill in each quadrant based on what you see as the strengths,
weaknesses, opportunities and threats of your business idea.
You should repeat this process for every idea you have and
each quadrant should have something written in. If you can
think of no strengths, weaknesses, opportunities, and threats
for a particular idea, that means that you do not have enough
information to complete the SWOT analysis, which means you
also do not have enough information to effectively execute
that idea.
Strengths are those things that make your idea a strong one.
Strengths can be personal or product-oriented and may include:
prior business experience and success; sufficient funding
to start the business; having a customer in hand; having a
unique product or service to offer; having an established
market; etc.
Next list all of the weaknesses of your idea. It is important
that you are honest with yourself and list as many weaknesses
as you can. Don't pretend that your idea doesn't have any
weaknesses because every idea does. You will hurt no one but
yourself if you pretend that your idea is bulletproof. Weaknesses
might include: lack of capital to start the business; lack
of business or management experience; a crowded market place;
large competitors; etc.
Opportunities are those things that you can tap into that
might fast track your business idea. We've talked about opportunities
before and how smart entrepreneurs seek out new opportunities
rather than waiting for opportunities to come to them. Opportunities
might include: a potential partnership with someone who sells
products in the same market; a prime storefront location that
is coming available; a competitor going out of business, leaving
a hole in the market that may be right for you; etc.
Threats are those things that threaten the success of your
business idea. Threats might include: uncertain marketplace
conditions; strong competitors in the market with lower prices;
possible laws or taxes that may impact your idea; etc. Like
weaknesses, it is vital that you are honest when it comes
to identifying threats.
Once you have filled in all four quadrants, you should have
enough information to begin testing the feasibility of your
idea. Do the strengths of your idea outweigh the weaknesses
or do the weaknesses outweigh the strengths? Are the opportunities
available to you ample or nonexistent? Are the threats many
or few?
With this information in hand, you can move on to the most
accurate method of testing your idea and that is the creation
of a detailed feasibility plan, which we will discuss next
time.
