Good business idea can hit you at any time but you have to be ready for it. It may come to you while you are observing a process, watching a TV documentary or news, analyzing data or business scenario or while in deep thought. It may also come in any unconventional means such as while staying late at work, driving to the office or home, or even while struggling to sleep at night. However, one thing is bound to happen, you will be so sure that a thought capable of changing life and materializing into an amazing business has just hit you– the “game changer” as it were. So how do you validate the idea as being indeed “great”? Below are some of the signs or litmus tests that you have got a great business idea:
1) It solves a problem
Your business idea or concept being able to solve a particular problem within your environment is single-handedly the most important part of any business. It is imperative that your business idea solves a particular problem or satisfies a need because that would mean that there is a market for whatever you are looking to provide/sell. If you have an idea in mind, there are two fundamental questions to ask yourself:
Question 1: Does the idea solve a problem within my environment (or satisfy a need)?
Question 2: Is the problem/need fundamental or pressing enough for people to be willing to pay for the solution?
Answering these two questions is the starting point to formulating any great idea. Your idea needs to deliver a solution, so sought after, that it satisfies a sizeable number of people (“sizeable” is relative and dependent on your target market).
For example, WhatsApp identified communication gap across mobile platforms and decided to invest in a solution. They are saw in gap in the SMS concept and decided to make text messaging instant and in real-time unlike SMS. Google satisfies our thirst for information at our finger tips delivered instantly and Nigerian Breweries Plc satisfies the large demand for alcohol in Nigeria. All these businesses are successful today because the core of their ideas was based on solving a problem and satisfying a need.
2) It’s scalable
Scalability is the potential of your business idea to grow and be applied to an ever-growing market. To scale a business means to multiply or expand beyond its current form. For your idea to prosper in the future, it needs to be scalable; and scalability is achieved through understanding the potential of your idea, identifying avenues for growth and planning ahead.
If I was to visualize scalability, I would depict it as a round core (•) that spreads out and increases in size as the business grows and gains customers. In order for your idea to be truly scalable, you will need to clarify what your ‘core’ is i.e. What the focus of your idea is and what exactly your idea is trying to achieve.
For instance, Facebook’s underlining business concept and selling point has always been centered on connecting as many people as possible around the world. Facebook started off connecting Harvard students and local communities then expanded to the universities of Columbia, Stanford and Yale, and subsequently to universities across the USA and Canada then in time, to communities around the world. Facebook today, is the gold standard for scalability with over 1.86 billion monthly users.
3) It’s easy to understand
Your idea may solve a complicated problem, but the easy with which it can be explained to other in the simplest way possible is what makes it a valuable idea. Andrew Hersch, Co-Founder of City Lunch Club, once said – “A key to knowing if you’ll be successful isn’t so much whether others like your idea, it’s if they can easily understand it with minimal explanation”. Being able to answer questions about ‘what your business idea is’, ‘why it exists’ and ‘what value it provides’ is a key element to attracting prospective customers and investors.
4) It’s hard to copy
Not every great idea needs to be one-of-a-kind; some successful businesses are based on old ideas already in the market but re-invented/rejigged for more value add. Whether your business idea is innovatively new or not, it is imperative that your execution pattern and strategy is unique and packaged in a manner that will be difficult for your competitors to copy or prototype. The execution of an idea is just as important as what the idea is; in fact, two businesses could be based on the same idea and perform very differently simply due to different execution strategies.
For instance, Apple and Lenovo are both smartphone companies but Apple has the 2nd largest market share, in a stiff battle with Samsung which occupies the top spot, while Lenovo lies below them in probably 9th position. Apple’s success can be attributed to quite a few business strategy and execution prudence but one major advantage Apple has over its competitors is its propriety iOS technology, which is unique, closed and hard to copy. The harder it is for others to copy your execution, the more unique and valuable your idea and eventually your business is.
5) It’s fundable
This is where things get real. It is possible for your idea to meet all criteria earlier mentioned above but still fall short of attracting potential investment funding. The true test of its feasibility and success potential is its ability to attract and land investment funding no matter how small. Someone most be willing to put their funds down for you, which is an evidence of trust/confidence that your business has the potential to do well in the market. Bringing your idea to reality usually requires some amount of money, depending on the nature of the idea and what scale you want to achieve. Below are some of the ways through which you can secure funding for your business idea among others.:
- Through personal finances – This will probably require saving up over a period, but it is the safest and most advisable way to fund your business idea so that you won’t pressure in short term.
- Equity Investment – It is the process of selling a percentage of shares in the business in exchange for operating capital. Letting other to make equity investment in your idea can help in easily scaling the business.
- Through crowdfunding – This will involve pitching your idea (usually online) and raising capital from contributions from a large number of people.
- Through loans – Loans from a financial institution or even from close friends and family can be used to fund ideas. However, you are advised not to go this route because there are too many uncertainties when starting a business that does not worth the pressure loan repayment obligation. Except you are able to get longer moratorium for the loan, which will avail you longer time before repayment obligation are due as such, provider adequate time to break even and bring the business to profitability.