What makes a good business idea a great idea? I am fortunate to be a facilitator in Pitch and Polish, a national competition helping entrepreneurs to better pitch their business.
I am somewhat perplexed though, as many of the competitors believe their business idea is scalable and will easily warrant investment.
It is not too difficult to come up with an idea, but is it a great idea?
What constitutes a viable idea?
How can you develop a good idea into a great one?
Here are three “tests” to see if your idea is… great.
The grandma test
Are you able to easily share your ideas with say… your grandmother?
Your business may solve a complicated problem, but you should be able to explain it in simple terms so that anyone can understand it, said Kris Duggan, CEO of BetterWorks.
Duggan suggested using what he calls “the grandma test”.
“When you typically hear someone pitch their idea, it’s often full of buzzwords that rarely makes sense,” Duggan said.
“When you think about your new business idea, ask yourself, ‘Can it pass the grandma test?’ In other words, would your grandma understand what you do? If your idea is easy to understand, chances are it’s more likely to succeed with prospective customers or investors.
The viability test
Does your idea offer real solutions to real world problems, and will people be willing to pay for it?
When you’re first considering a new business idea, skip the formal business plan and start with a one page business model canvas. At a minimum, you’ll want to cover the following:
Why are you doing this? What’s your mission?
All new businesses need a sense of purpose. Are you trying to improve people’s lives in some way?
What are the core differentiators of your business that set you apart from the next person trying to build a similar business?
What problem are you solving? You need to be solving some sort of real problem that exists in the world. If you aren’t solving a problem for potential customers, then how will you get people to buy your product or service?
Who are you solving this problem for?
As important as having a problem to solve, is having customers that have this problem. Knowing who your ideal customer is and how you can find them is critical to starting a successful business.
How are your potential customers solving their problem today? This is where you want to write down a few notes about your competition. What choices do your customers have today? How is your solution better?
The talk test
Have you tested your idea with both friend and stranger? Have you been willing to engage with those who think your idea soars and those who think it sucks?
Shockingly, talking to potential customers about your new business idea is the step that most entrepreneurs overlook.
Not talking to your potential customers raises your chances of failure substantially, so head out the door and start talking to people as soon as you can.
When you interview your potential customers, you’re trying to validate your key assumptions that you documented in your business pitch.
Do they actually have the problem you assume they have? How do they solve their problem today? What do they think of your idea?
As you bounce your business idea off friends and family, it’s easy to end up only hearing positive feedback.
Even potential customers might not want to hurt your feelings and not give you their completely honest opinion.
This is where finding a few naysayers is important.
Find people who don’t like your idea and get them to poke holes in it. Why do they think it’s going to fail? What do they see as your weak points?
By hearing comments on your product that come from a broad range, you are more likely to bring out your first product or service with greater success.
Poster and Pitch Competition
Graduates of False Bay College can win one of four prizes for a viable business idea. There is a gold prize of R15 000 and three silver awards of R10 000. If you have been waiting for an opportunity to showcase your creativity, now is the time. For more information, you can contact firstname.lastname@example.org
Wise people learn from other people’s mistakes. Success breeds success. A Success Summit platform has been created by the Centre for Entrepreneurship in partnership with Nedbank and the Cape Chamber of Commerce and Industry to showcase two successful township entrepreneurs and their journey to sustainability.
Join Luvuyo Rani and Lufefe Nomjana – the “Spinach King” – at the success summit tomorrow, Thursday May 26, at the False Bay College Khayelitsha campus in Mew Way Road.
Registration is from 9.30am to 10am. Contact Yondi at 021 7006401 for details.
* Steve Reid is the manager of the Centre for Entrepreneurship at False Bay College. His column will appear once a month. You can email comments or questions to Steve.Reid@falsebay.org.za