How to check if a business idea is good?

How to check if a business idea is good?

15 Dec

How can you check if your business idea is good? Do you dream of your own business and have had an idea in your head for a long time, but it seems too risky to take on? Especially since you don’t have any business experience, a lot of money and a lot of time.

So how can you make sure your business idea is good without starting a business and big investments?

HOW TO CHECK IF YOUR BUSINESS IDEA IS GOOD?

I have good news for you – you don’t have to spend a lot of time and money trying to find out if your business idea will work. You can test your business idea by doing quick experiments.

Even if you don’t have any business experience yet, you can run cheap and quick tests. You can start with very simple experiments, not requiring too many resources, and slowly move on to more advanced ones. As you gain more experience and earn more from your successful projects, you can try to string the tests together.

Okay, but how to conduct such experiments? Where to start at all? And how to do it quickly and, above all, cheaply?

HOW TO CHECK A BUSINESS IDEA?

In a moment, I am going to walk you through the entire testing process to help you check if your business idea is good. You will learn where to start and how to choose the right experiments for your business.

A detailed description of the entire process with a library of over 40 tests can be found in the brilliant and beautiful book “Testing Business Ideas”. The authors of the book are David J. Bland and Alex Osterwalder. The latter is known for bestsellers such as “Building Business Models” and “Designing Value Propositions”. The book is a guide introducing you to the world of testing new business ideas.

Learn the steps that will help you test your business idea:

1. CREATE A TEAM

Wait a minute – I should start checking the idea of hiring people? After all, I don’t even know if this idea will work, so why should I risk it right away ?!

Take it easy. You don’t need to hire anyone (yet). A team of people who have the appropriate competencies will of course be useful in your company in the future. But you can start creating it with one person – yourself.

If you are thinking of a one-man business, you can safely run all the tests yourself. If the tests are successful, there is a good chance that your business idea will be successful and you will be able to slowly build a team, that will support the new business.

By the way – also note that you don’t need to hire anyone to get support. There are many people on the market who work as freelancers or conduct B2B activities based on business support. Such people can largely relieve you of tasks in which you do not have experience yet – whether at the testing stage or implementation of the idea.

Either way, even if you want to do everything yourself, it will be useful to know what competencies are needed to run the first tests. The ability to collect and use the data that will appear during your experiments will definitely come in handy. It would be good if you could be in constant contact with a potential client. Critical thinking and going beyond the box will also be useful.

During the tests, you take on the role of a researcher and watch your experiments with curiosity. This approach will help you distance yourself in the event of a test failure. After all, this is just an experiment, and if it fails, it will provide you with valuable … research information.

2. DESIGN YOUR BUSINESS

Before you start experimenting, however, first plan your future business well.

You can base your new venture creation on a design loop. The design loop consists of 3 steps: idea, business prototype and evaluation.

The first step in creating a business design is generating ideas. If you already have an idea, just think of its variations. At this stage, quantity is more important than quality, so you focus on creating the longest possible list of ideas and business opportunities.

The next step is to select ideas that can be turned into quick business prototype designs. You can create simple business prototypes using the value proposition template and the business model template.

Although these names sound super serious, you can draw such a simple business model on a regular piece of paper. You don’t need knowledge or business experience to do this – although if you do have them, they will definitely be useful. If you’ve never worked with business models, you will find detailed coverage of both model templates in the book “Testing Business Ideas”.

The last step is to evaluate the design of your first prototype. At this stage you check how the project fits the client’s needs. If the effect is satisfactory, you can start checking the design in the field. If not, you go back to improving it.

3. CHECK YOUR BUSINESS ASSUMPTIONS

Okay, you already know what competencies you will need to create a good business idea. Maybe you already have a list of people to help you see if your business idea is successful. You also have a preliminary draft of a future business. Time to test your idea.

If you want to test whether a business idea is good, you need to start by breaking it down into a list of assumptions on which it is based. You will confirm or reject all these assumptions during your experiments. Assumptions are a set of factors that can make your business project fail. Break them down into three different risk source categories:

  • ATTRACTIVENESS – in this category you will put all your doubts about the risk that customers will not be interested in your idea
  • FACILITY – here you can put your doubts about the risk that you will not be able to create a solution and deliver it to customers
  • PROFITABILITY – the last category in which you place your concerns about the risk that you will not earn enough on your idea

List all your assumptions, doubts and fears in these 3 categories on post-it notes. Then you put the cards on a special map of assumptions. This map will help you identify which of your assumptions are based on hard data. You will also quickly organize your business assumptions in terms of their relevance to the success of your project.

4. RUN THE TESTS

Thanks to the map of assumptions from the previous step, you know what assumptions are crucial for your business project. Pay close attention to those assumptions that are important to your business success, but you lack the data to verify them. These are the assumptions you will be testing first in your experiments.

Okay, but how can you check if a business idea is good? In the book “Testing Business Ideas” you will find a library of 44 different tests that you can run.

CHOOSE ONE OF 44 BUSINESS TESTS

In the beginning, it is best to choose a test that is fast and cheap because it will help you gather the first information from the market quickly.

Most of the experiments in Testing Your Business Ideas are cheap and fast. You practically do not need any funds to conduct an interview or survey with a person who may be your potential client. Analyzing search trends and web traffic will take up to an hour or two.

Each test in the “Business Idea Testing” book is described in such detail that you can easily implement it. You will find a to-do list for each testing phase: you will learn exactly what to do before, during and after the test. Each of the 44 experiments lists the cost, preparation and implementation time as well as competencies and other requirements.

The tests in the book are also labeled as assumed in 3 risk areas (step 3). So you can quickly check whether a given experiment will help you reliably verify your assumptions in a given area.

If you are experienced in testing, you can combine your tests into entire sequences. In the book you will find 8 example sequences and suggestions for their use depending on what you plan to sell.

5. COLLECT DATA AND MAKE A DECISION

After doing a test to test your business idea, you should gather some information. This data will have to be analyzed. The quality of the collected information may vary – it is worth dividing it into strong and weak data.

After analyzing the collected data, draw the most important conclusions from the experiment. These insights will help you confirm or reject the main assumptions on which your business idea is based.

All the collected data will help you take the next steps. You can choose at least 3 solutions:

  • Continuation of testing to collect additional strong data
  • Return, i.e. changing one or more elements of the idea
  • Resignation from an idea when the data analysis shows that the idea will fail

Most business ideas require not one, but a whole series of experiments to be checked. So don’t make important decisions based on just one test or a small amount of data collected. Try to collect more and more powerful data as it will dispel your uncertainty and reduce the risk of failure.

HOW TO CHECK IF YOUR BUSINESS IDEA IS GOOD?

As you can see, it takes just a few steps to check if a business idea is good. You don’t need huge investments, advanced tools, or months of testing. A modern approach to testing business ideas is based on cheap, simple and quick experiments. It is about quickly gathering reliable data on which you will be able to base your business idea.

Of course, the steps I have described are briefly summarized. I wanted you to convince yourself that checking if a business idea is good is within your reach. If you are interested in this topic, the book “Business Idea Testing” will provide you with detailed information on how to do this.

This is a great book if you are thinking of starting your own business. And if you run a startup or deal with the implementation of new business projects, it is even a must-read.

This book is also an investment that will keep you safe from losing your money on a bad idea. The pitfalls of running the experiment and additional tips are described at the end of the book.

The book “Business Idea Testing” is perfectly designed. It has a unique layout – it is divided into 4 color parts: design, test, experiment and mindset. It is beautifully presented: colorful illustrations, thoughtful graphics and diagrams are drawn on glossy paper.

It is a perfect gift for someone who dreams of creating something of their own without incurring unnecessary risk and costs.

 

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