What Makes a Good Business Idea?
Show Notes
How do you know if you have a good business idea? Before we rush to market research, trends, search volume, competition analysis, we need to do some basic identification.
A good business idea can be identified by 7 traits (some traits you won't hear mentioned elsewhere):
Passion
Persuasion
Peace
Product
People
Profitable
Perpetuation
Resources
Quotation: Michael Dell of Dell computers said, “You don’t need to be a genius or a visionary, or even a college graduate for that matter, to be successful. You just need a framework and a dream.”
Show Notes
Quotation: Michael Dell of Dell computers said, “You don’t need to be a genius or a visionary, or even a college graduate for that matter, to be successful. You just need a framework and a dream.”
Application: There is a lot of truth what he said. Especially, if you’re prone to think, “Who am I to start a business?” But, listen to this: “You just need a framework and a dream.” Do you have a dream or an idea? Does your dream or idea have a framework? That’s where the magic happens. When you can dream and plan and act.
Today, we’re going to discuss a framework to run your business idea through. We’re going to answer the question, What makes a good business idea?
What Makes a Good Business Idea?
Business ideas come and go. I mean, I have had so many that it’s impossible for me to count. I have journals full of ideas, several domains I’ll never use, and my wife calls me “The Idea Guy.” And some of us are like that. And if that’s you, relax, you’re normal. You’re just creative.
But how do you know if you have a good idea? Do you try to get a spot on Shark Tank and pitch your idea? Do you just ask friends or family? Or do you just take a stab at it?
Some of us are constantly coming up with new ideas, but maybe you’re different. Maybe you have one idea and you’ve had it for a long time. You just want to know if it’s likely to succeed. Or maybe you want to have a business idea, but you haven’t quite come up with one yet, but you may have a hunch.
Whichever person you are, we still have to answer the question, What makes a good business idea? That is, are there some traits that we can identify that tell us this is a good idea?
I believe there is. And before we rush to market research, trends, search volume, competition analysis, and all the other exercises-we need to do some basic identification.
I’m huge proponent for doing internal work first. We need to look inwardly before we look outwardly. And we need to consider the people we love.
Because the truth is, there have been countless people who have built financially successful businesses, but they have forfeited meaningfulness, significance, and a thriving home in the process. I don’t want that to be you or me.
So today, we’re going to look at the 7 traits of a good business idea.
1. Passion
A good idea involves passion. But we need to take a closer look at passion because it’s thrown around so much today.
According to Merriam-Webster’s Dictionary, the essential meaning of passion is: “a strong feeling of enthusiasm or excitement for something or about doing something."
Obviously leads to the question: Am I enthusiastic or excited about my idea? That’s a valid question and you may say, “Yes” and you’re ready to move on.
But, what if you have an idea, but you’r not enthusiastic or excited yet? There could be many reasons for that: false starts, ideas that haven’t worked, or you’ve thought so much about what should be your passion that you’ve actually gotten worn out by the idea.
Passion is multi-faceted. You’ll hear many well-meaning people say something like, “Get started with your passion.”
But there’s another question you may want to ask besides, “Am I enthusiastic or excited about my idea?” And it goes like this, “Is it possible for me to get enthusiastic or excited about my idea?” Ah, that changes everything.
Someone has said, “Passion is more often developed than it is discovered.” That is, most people explore their ideas, try something new, get good at it, grow in their understanding, and passion begins to develop. People usually don’t just wake up one day and say, “Hey, I just discovered my passion.”
So if you have passion about you’re idea-great! If you’re not sure-is the potential there?
2. Persuasion
Every good idea carries with it, persuasion. Are you persuaded that your idea is a good fit for you and your family. Do you have some confidence in your idea? Do you believe in the potential of your idea?
It’s hard to persuade yourself of a good business idea if it is going to require you to use all of your life’s savings to get started. That kind of idea will require some prayer, counsel, and significant conversations.
But as you consider it as a side-business, are you persuaded it fits you-that is your gifts, abilities, personality. Does it fit your family? How will it contribute financially or to their well-being.
If you find yourself questioning your idea regularly, you’ll struggle to believe it will work. After you think about how it fits, you may need to make a decision. Proceed or change.
You have to have some belief in your idea. Which naturally, leads to the next trait, Peace.
3. Peace
In the midst of excitement and opportunity, peace needs to be present. I’m currently listening to an audiobook by Andy Stanley, and it’s an excellent book, it’s call, “Better Decisions and Fewer Regrets.” He made the statement which so helpful. He said, “Good ideas rarely have to be justified.” Think about that. We have all had moments when we have tried to justify an idea to ourselves and to others. But good ideas rarely need to be justified.
If you have a business idea does it “sit well with you”? Here’s a big one that’s important as well, in fact it’s necessary, “Does it sit well with your spouse?”
When you bring up your idea to your husband or your wife, what kind of response do you get? There have been times when I have proposed an idea to Jenny and in nano-second I can begin to sense if she approves, disapproves, or has reservations. And I bet it’s the same way between you and your spouse. And we have to have those conversations.
Because the idea we choose will impact very relationship in our family. It will impact our marriage our relationship with our kids, whether for good or for bad. So not only do we need to have peace about our idea, but so does our spouse and potentially our children.
We bring our children into many decisions and we’re actually learning to do it more. When we moved into our home a few years ago, we began to visit different churches. So we would have discussions around the dining room table about the church we visited-what were our thoughts, what was our experience, what’s the potential?
Bringing your family in on your idea will show them how much you value them and can give you a perspective you have not considered. When you and your spouse, or your family, are in agreement, then you can move forward with peace.
4. Product
Alright, now we get into some basics. You’ve looked inwardly, now let’s look outwardly. Your business idea needs to have a product to offer. Now that can be a physical product, like amazing cakes or a digital product like an ebook.
Your product could also be in the form of a service. You could offer health-coaching or tire shop. The point is, you have to have something to sell.
A few years ago, I had another podcast that I really enjoyed doing. It was called “The Life Coaching Show.” And I discussed topics that related to everyday living and growth. And it was really broad. It was fun, but it lacked focus. It allowed me to connect with some amazing people. In fact, I had a list of about 100 different coaches who applied to be on the show.
I loved it. But, it wasn’t a business. I could have gotten creative and monetized it, but I needed to do something that more focused. I needed a product to offer if it was going to be a business.
Next, your idea needs…
5. People
People have to want or need what you have to offer. Your idea needs a market. There are many ways to research and find out if your product or service has a market, and you should do your best before you invest your time and money.
We have to be able to answer the question positively: Do people want or need this product?
If people have a headache they may feel like they need an aspirin. That is a product that is solving a problem. It’s providing a need. If the customer is more in favor of natural remedies, that product may be Lavender Oil. It’s still solving a specific problem for a specific person. People need it.
But, don’t disregard people’s wants. Some business teachers always talk about solving a problem, but we’re people who have desires too. We have wants.
So I’m a hand-lettering nut. I like all kinds of styles and mediums: pencil and paper illustrated pieces, hand-painted pieces, digital pieces done in Adobe Illustrator, and on and on. I even love letter press from previous generations and one day, I want a working Letter Press in my office. But do I need an antique press? No. Do I need all the books and courses and tools to create beautiful lettering pieces? No. But I want it. It fulfills a God-given desire to be creative.
I don’t need $20 pencil to draw with. But I wanted one, so I bought one.
It may be that your idea is something that people want in the way of desire. Maybe they want their trees and shrubs trimmed in a unique way. Maybe they want a beautiful watercolor painting of their daughter. People want products and services that make life more enjoyable.
But whether it’s a want or need, do the research, and make sure there are people who want what you have to offer.
6. Profitable
Just like your car needs gas to run, your business needs profit to run. Some people have started a business on passion alone and find out that there is no market and no profit and so it fizzles out.
What is profit? Technically, there is a difference in definitions for profit and profitability. What I’m talking about here is the ability to generate positive cash flow.
For example, if you sell a health coaching package for $900 that is not likely to be your profit. You have to account for the money you spent on ads, tools, and any other resource you paid for to get that client.
Your profit is the amount of income that is left after your expenses. It is your total revenue minus your expenses.
So if your expenses were $100 to secure a $900 transaction, then your profit is $800.
Here’s a caution. Always know your numbers. Many people are self-employed or have a side business and they make sales and see cash come in. But, they never account for expenses! You would be shocked to know that this happens all the time. And if they sat down, and looked at the numbers, they would actually see that they are losing money. They are actually in the red, and paying their market to be in business. You can have that.
Your business idea must be profitable.
7. Perpetuated
To perpetuate is to keep going. In your business, you need to have repeatable processes that are profitable.
If you think about a manufacturing processes you get the idea. Hot-wheels makes thousands of a certain car. The process to create that car is repeated over and over, as efficient as possible. All manufacturing follows a repeatable process. The idea, the concept, is perpetuated.
Your idea requires the same trait. If you have to create a new process or system before each sale, your business won’t survive.
That’s not to say that you can’t be creative and experiment with different marketing methods and messages, but at some point you have to land on something that works and it can be repeated and you adjust moving forward.
When I used to offer graphic design services online, I had a process for proposals. I would start with reading about the scope of the project, have a conversation and share a brief or a form to gather additional details, start a concept, submit for review, revise as needed, send files, collect payment. And the process, the idea of freelance design, was perpetuated.
It was a system: read, talk, share, revise, get paid. Over and over again. Were there variations in the process? Sure. But fundamentally, it was the same.
Your idea, what it may be: a cleaning business, design business, Amazon business, needs to be perpetuated.
Recap
Hopefully this list of traits will help as you consider your idea. If you get hung up in one, try to think of someone in a similar market who apparently had a solution. Remember the 7 traits of a good business idea. It involves passion, persuasion, peace, a product, people, profit, and perpetuation. I know that’s a lot to remember, so, I’ll include this list in the show notes at sidebusinessschool.com.
As we wrap up, I want to remind you of what Michael Dell said, “You don’t need to be a genius or a visionary, or even a college graduate for that matter, to be successful. You just need a framework and a dream.”
You don’t need to be what someone would call a genius, a visionary, or a college graduate. You just need to be you.
Closing Question
Before I go, would you mind leaving a rating and review? It helps the show gain traction and help more people. You can rate the show using your favorite podcast app. Thanks for joining me, have an amazing week.