At our business, one of the toughest questions we ever face is whether an idea (be it product, venture, etc.) is strong. If it's not, this could lead to lots of lost time, money, and resources.
Over the years, Elsie and I have tried a bunch of different business ventures. We opened a local vintage shop, started a catering business, sold advertising on our blog, launched our own independent (handmade) dress line, collaborated with larger companies on products (like clothing, accessories, camera bags, shoes, etc.), published books, self-published e-courses, and released an app for the iPhone and Android market. All of these business ventures seemed like good ideas to us at the time. Some made a lot of money, some made basically none (or we lost money doing them). Some of these projects we absolutely loved working on, and some turned out not to be what we expected. We've learned a lot over the years, making plenty of mistakes along the way! As we work to grow our little company and attempt to be savvy business ladies, we're still faced with choices all the time on whether a business idea is strong or not.
Sometimes you can fall head over heels in love with an idea before you evaluate if the idea is strong. This usually makes us really attached to the idea, and it can then be very, very difficult to let it go if it's not the right fit or the right time.
5 Tips for Evaluating a Business Idea:
1. Risk—What do you have to risk in order to make this idea happen?
In my opinion, this should always be your first question that you ask once you've formed your idea. What will it cost to produce? How long will it take to bring this idea to life? Will you have to give something else up? Will you have to add any additional overhead to your business (e.g., will you need to rent space to house the product, build a website, hire an employee, etc.)?
Business is risky. Always. It is pretty much impossible to predict the outcome of any business idea you may have. A big reason for this is because it can be very difficult to predict human behavior (how customers will respond). You could take a survey of all your friends and ask if they think a business idea is good, and 100% of them could say yes (and mean it). But then when you actually take your idea to market it completely flops. Did your survey respondents lie to you?! Probably not. It's more likely they are just like you, unable to guess how they will behave all of the time. If you are the type of person who really doesn't enjoy risk, starting a business is probably not for you.
Assess how risky your idea is. Now, I bet you think I'm gonna say, "If your idea is too risky, it's a bad idea." And you're half correct. 🙂 Risky ideas should be something you try once in a blue moon.They aren't bad, they're just… well, risky. If you have a great idea that isn't very much risk, now that's something you should probably do. Why not?
2. Audience—Do you have one? Will your audience love this product?
No matter how awesome your idea is (it could seriously be the next iPhone), if you don't have anyone to sell it to it doesn't really matter. First thing's first. You need an audience/marketplace to take your product to. Think about it. Where do you see your product being sold? Who would love your product? Where are they?
You have two options here. You can take your product to a marketplace, or you can build one where you are. Our blog is kind of like our marketplace. It's filled with readers (like you!) who are interested in all sorts of things: crafts, fashion, photography, food, etc. If we have a strong product, we can develop it and bring it to you. And, fingers crossed, hopefully you'll love it. If you're a blogger, you can (or already did) cultivate your own audience through your site.
What if you don't have a platform? Where can you go? I highly recommend beginning to create a platform, in whatever way you want. But, there are also plenty of marketplaces already out there. A great example is Etsy. If you have a great idea for a handmade product, you should consider joining the Etsy community. It's a ready-made place filled with other handmade-loving customers. People could easily discover you by using the search function on the site, or you might even get featured on the home page or the Etsy blog. This represents a much stronger way of bringing your idea to market rather than creating your own independent website to sell your products (where customers are less likely to stumble upon you).
3. Demand—Is there space in the market for your product? Could there be a demand for it?
There are many different versions of consumer demand. Some things we buy because we need them (e.g. parents of newborn babies need diapers). Some things we buy because we want them (e.g. big screen television). And some things we buy because we need them AND we like them (e.g. clothes, your favorite brand of bread or favorite vegetable, etc.). Consider where your idea falls. How can you make your idea more in demand? It can be a need, want or full-on luxury, but make sure there is space in the market for it. Is someone else doing something similar? What makes your idea better answer the demand? If the demand doesn't currently exist, can you create it?
4. Sustainability—Will this idea work in the long run? Can you sustain the amount of work or cost?
This is an especially tough question to ask yourself sometimes since the future can be so unknown! Think about your idea. Does it rely on very specific resources that might not be available in the near future? Is your idea so time-consuming, from a production standpoint, that you don't know if you'll be able to continue to produce at that level for many years to come (or grow if your idea takes off)?
Can your idea be scaled? Meaning, can it grow without breaking the bank or your back? If you start a catering company, let's say, at what point do you anticipate you'll have so much work that you'd need to hire additional help? Would you be able to afford extra help at that level (meaning you're making enough money to pay someone a fair wage to help and you still are turning a small profit)? If the amount of work has to double or triple before you could afford help, that might not be a good thing. Consider this before you dive headfirst into a business venture, as you could end up burning yourself out quicker than you think.
5. Love—Do you love the idea? Would you buy this product? How much would you pay for it?
Most people start with this question. And while I wouldn't start here, I do think it's an important one to ask. The truth is, if you wouldn't buy your product or use your service, etc., then what makes you think anyone else will? Good ideas are born out of passion, love, and hard work. If you've already gone through the first four questions but then find that you're not absolutely in love with the idea, it might still be a good idea, just not the right idea for you. Save your resources for your passions.
xo. Emma
Credits // Author: Emma Chapman, Photography by: Elsie Larson, Emma Chapman, Sarah Rhodes and Float Away Studios.
Wow … this is exactly what I needed.
Since venturing down a new career path and starting my blog this year I have so many different business ideas running through my mind. I focus on one, then change my mind and switch to another. Think I might sit down with all of them and run through this checklist 🙂
Thanks for sharing,
Jessie
Thanks for the tips, I have a lot of ideas for my blog, I will evaluate each one before I move forward…
Greetings from Mexico!
Clau!
http://clobyclau.blogspot.mx
Wow thanks for your open-hearted advice. It’s really confusing on whether an idea is good or not and even more worrisome if we should make it come to life. Thanks for your info!
Regards,
Miss Eliza WonDerland
http://www.misselizawonderland.com/
Great advice, thank you! I confess I often struggle with the business side of well, my business. I get so caught up in creating that I tune out all the other important aspects like really thinking about my audience and business goals, marketing, investment and risk and such. I admire you so much for combining both the creativity and the business sense!
All really great advice for starting a business in any industry. Thank you.
Loved this! It’s easy to say that just because you’re passionate about something everything’s gonna work out for you. But it’s so important to be smart about it! Thanks for the reminder. 🙂
This was a great piece. Loved it. I am actually thinking or on the road to opening my own business. Absolutely helpful. And all the answers to those questions were positive! 🙂
I love this post. I have dreams and ideas that I’m always considering whether or not will work out — and this helps me evaluate them! Thank you!
I really connected with tip #5. I don’t think I would put enough effort to even move onto consider the other 4 tips if I don’t have the passion for what I’m working on.
Thank you for the tips! Very helpful:)
Hi Emma,
Soooo funny you post about it, I’m right now where I’m asking myself: do I try or not? I do lot of crafts… many, and so many people told me to do it as a job. But I was true to me: 1rst I knew they told me this but wouldn’t buy it, 2nd I could not only live with a job that may grow. Now I guess I’m ready to try: I’m different that any other (french but definitly in US mood), I have good taste, I love cute BUT useful products, I can work at home, I guess I answer most of your question, just the platform one is tricky as I don’t really want to sell overseas for now.
Thank you so much for this helpful post.
XOXO, Lilou from France ^_^
A great post and thank you for sharing your thoughts and experiences.
Thank you so much! This was really helpful
I’ve been thinking about starting a business and haven’t really known where to start or whether or not it is even a good idea
Justice
http://www.toastandroses.com/
I want to point out that a big consideration in the “risk” category is the risk to your personal life and relationships. Maybe it will be a great business, but is your family excited to come along for the ride? Will you make money, but lose a friend or even a spouse in the process? As someone going into business with my husband and a friend, I consider and talk about this often! I’m sure you’ve had to work through this process as well being in business with friends and family. It’s wonderful to see you all work together so effectively and watch your business thrive.
I think demand and sustainability are critical. If it’s going to work for 3 months, then it’s probably not the right product or service.
Thank you for these posts, your little company is really inspiring!
Good luck with everything 🙂
Xo, Belen
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Perfect timing, Emma! 😉
xoxo
Taylor
Such sound advice as always. There’s such a generosity to the words & value you bring to your readers lives, regardless of whether it’s important thoughts on growing a business. A new DIY idea, or even cocktail hour. Thank you for sharing each & every wonderful aspect of your lives & brand!
I LOVE <3 <3 your A Beautiful Mess app! I don’t know how I would live without out it now 😉
Your are by far my favourite website!
~Samantha
I love this article! Thank you for sharing!
What an interesting read! I love the tips you have shared… I’ve entertained starting a side business to earn a bit of extra money, and this gives me some more ideas to think about 🙂