How do we know if our new business idea is a viable one? Most people will do some research, write out their plan, but the critical mistake is thinking from the top down instead of the bottom up. You’ve heard it before – “If I can sell to just 1% of the population in China, I’ll be a millionaire!” – Some of us laugh, but people with ideas really do think this way! Bottom up thinking is the exact opposite – What will it take to get just one customer? How about five customers? Fifty? One hundred? And so on. You create a strategic plan on how exactly you are going to get the business off the ground, and how you’re going to get customers and make money.
Like all entrepreneurs, I come up with ideas almost daily. I write them all down in my “idea notebook” (it’s a notebook I carry with me to jot down notes and ideas when the come to me) – then later, when I am deciding if I should move forward with them, I run the through this filter to determine if it’s worth pursuing.
- Create your value proposition
Why would the customer want to buy from you? What additional value can you provide them that they don’t already get? Many buyers don’t necessarily buy on price alone, so being the lowest price doesn’t guarantee business - Figure out what your core competency is. As you are doing this, make sure it fits with #1.
What is the one thing you want to do better than anyone else? Focus the business and everything you do around this core competency (Think Southwest Airlines – every decision they make is made sure it’s consistent with their core competency – The lowest priced airline) - Figure out who the potential client is, and how the market is. Look at #1 to make sure it’s consistent and fits
Who are you going to sell to? How does this affect your marketing efforts? - Figure out what your product or service is. Look at #1 to make sure it’s consistent and fits
- Figure out how your distribution and sales will work. Look at #1 to make sure it’s consistent and fits
Who is going to sell? How will distribution, shipping, invoicing, etc. work? - Do you solve an existing problem? Make sure you’re not creating a problem, and then solving it
Is there a problem you see in the industry or market place that you can solve? People are always looking for solutions to their problems. Be careful not to create a problem that doesn’t exist, then trying to solve it
This simple filter, if you stay honest to it, will help you create a solid plan for viable ideas, and weed out the ideas that aren’t worth pursuing, thus saving you time, money and effort that you can dedicate to the ones that do pass through the filter.
