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.
Credits // Author: Emma Chapman, Photography by: Elsie Larson, Emma Chapman, Sarah Rhodes and Float Away Studios.