Do you have several business ideas but aren’t sure which to start first? Many successful business owners struggled with selecting their first launch idea too.
The following evaluation criteria will help you decide the right business idea to start working on now. Answer each question for your multiple startup ideas to determine the best business idea to launch first.
Questions to Evaluate Your Business Ideas
Just remember, there is no one “best” business idea. Your best business idea is one that is BOTH well-suited to you and is genuinely needed in the marketplace.
This business idea criteria list is divided into two parts; the first is to consider YOU and your situation, and the second about marketplace viability.
First, Consider You The Entrepreneur
Because becoming a business owner is a lot of work, requiring tons of time, energy, and capital investment, you want to be sure that you are selecting a business idea endeavor that is right for YOU.
- Consider your strengths – Are you creative, a people person, a craftsman or craftswoman, tradesmen, technically oriented, or good at sales. Your most successful company will be built using your strengths.
- Acknowledge your weaknesses – Do you find financial management difficult? Are you an introvert and find talking and selling challenging?
No worries, everybody has flaws. Don’t let them stop you; however, you need to be aware of your faults so that you don’t select a business idea that depends heavily upon the characteristics you are lacking.
- Think about your values – What is most important to you, time, freedom, money, creativity, connection, philanthropy, mission. Use your passions to decide your company vision.
If money is your primary motivation, focus on high-profit industries such as these. If freedom is more essential to you, select an idea that gives you location independence and schedule flexibility, such as starting an online store or blog.
- Reflect on your motivation to start a business – What is the main reason you want to start your own business and become an entrepreneur? Is it to explore a passion, enjoy your creativity, create financial independence separate from a corporate job, build a legacy for your family to inherit, or develop inventions to help humankind?
The answer to this question will motivate you and give you the energy to fuel you during the hard times of all entrepreneurs.
- Who and what do you like to work with – What types of people do you want to work with, scientists, artists, chefs, salespeople, programmers? These are the people that you will spend most of your waking hours with so you will want to enjoy their company and work well together.
Similarly, ask yourself what items you like to work with food, fabric, hair, words, computers, or animals? I started my successful cosmetic company because I loved to play with makeup! You too? Check out my list of profitable beauty business ideas here.
- How will you spend your time – As this type of business owner, what will your workday entail, working in an office, on a computer, laboring outside, doing physical work, in a kitchen or a lab. Will you happily spend your days like this?
- Respect your physical limitations – Take into consideration your health, energy level, physical location, lifestyle, commitments, schedule, and business experiences – that will affect your business idea choice.
- Judge your financial situation – Respect your current financial needs. Do you need to generate income now to pay for your necessities? If so, choose a business idea that will quickly generate revenue than one that requires much more capital investment or a more extended timeframe to profitability.
What financial resources do you have or can you obtain for startup costs. Check out my list of proven startup funds and list of startup costs (with tips on how to reduce capital funding needs).
- Ease of launch – which of your ideas is simple and would be easier to launch? Startup businesses with straightforward steps can be excellent starting points for beginner entrepreneurs. Here is my list of easy business ideas and my list of ideas with lower startup costs to get you inspired.
Don’t burden yourself with an over complex startup business idea for your first entrepreneurial venture. Begin with a simple moneymaking venture as your initial foray into becoming a business owner. Because if you’re like most business owners, your first business will not be your last. A successful first launch will get you started on the road to becoming a serial entrepreneur – like me!
Second, Consider Your Business Idea and The Marketplace
After analyzing yourself with the criteria above, it is now time to study your business idea and how it fits (or does not) into the marketplace by reviewing these questions.
- Does your business idea solve a real problem? – Your endeavor MUST solve a pressing issue for a specific set of people or companies they WANT to solve.
Just because people have a problem and you have a solution, it doesn’t mean that people will pay for your (or any) solution. Do they want to solve their problems?
Startup experts recommend that your business idea should solve “hair on fire” problems. These problems are prioritized above all else and create great urgency to be solved. Here is Harvard’s product development expert Michael Skok description of hair-on-fire problems characteristics:
- Unworkable – this problem thwarts people’s businesses or lifestyles, and thus their processes and ambitions are unworkable.
- Unavoidable – Often, businesses are subject to changing regulations, which create issues they need to solve, which are unavoidable.
- Urgent – these problems are painful enough that people cannot live without a solution, and thus they will take a high priority.
- Underserved – face less competition by focusing on demographic groups and industries with problems that other firms are not addressing. Your product will have a more substantial chance of success in a less crowded marketplace.
- Is market size sufficient? – Is the market size large enough to accommodate your new company? More significant markets are more advantageous due to the greater number of customers, plus sub-niche markets that are less competitive, making useful entry points for new firms such as yours.
- Growing market? is the industry growing, and has it demonstrated past growth over the years. While innovative markets can be exciting long-term business stability is best gained in robust growing industries.
- Definite customer demographics -can you identify a specific type of target customer? The more detailed your potential customers’ identification, the more effective and cost-efficient your advertising and promotional campaigns will be.
Instead of just developing a product that would be attractive for women, rather focus on an exact segment. A well-defined segment for high-end skincare products and facials would be professional women suffering from acne over 35 years old and in the upper-income bracket.
- Technically feasible – Your business idea might be brilliant but is it possible? Is it technically feasible to manufacture your products or perform your services at a market-acceptable price in a realistic time frame?
- Startup idea Fundable? Can you develop your idea into an actual business with your current financial assets, your partner investor capital or bank loans? Check out my list of 17 proven startup funding sources here
- Financially viable and profitable? – Will your business idea make a profit? A business that does not make profits goes out of business. Carefully review all your startup and operating costs to determine your profit margin. For help, check out my list of business startup costs here.
- Scalable Growth potential – An essential criterion for your ongoing business sustainability is scaleability. Can you introduce new products or services, open new locations, franchise your company, or partner with other firms for growth and expansion.
- Lower risk – when choosing between multiple business ideas, risk factors are a significant consideration. Startup businesses are risky ventures and if possible, decide to start with a lower risk idea. Do so.
Now is the time, my entrepreneurial friend, to make a decision. You have considered each of your business ideas using the criteria above. Now you have a much clearer picture of which is the right idea to initially pursue and develop into your own small (or big) business.
The right time to start a business is right now.
From your changing mindset to grand opening day, the road from business idea to a profitable company can be a long one. So, get started today by deciding which business idea to launch now.
I wish you good luck and Godspeed on your entrepreneurial journey.
Stay in touch and check out my resources to help you start your own business.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.