A Startup Guy

I’ve been thinking a lot lately about business and product ideas. Probably because I’ve spent a ton of time working on new ones for myself.  I wrote a post recently about how ideas are a dime a dozen. Then a few days ago I heard an episode of a podcast named Entrepreneur Myths in which the podcaster took exception to the concept that ideas aren’t worth anything. He made a valid point that a good idea is definitely worth something. I agree, but try and sell one and you’re probably going to be disappointed. As I said before, it’s the execution of a good idea that pays off.

The hard part isn’t coming up with ideas. I’ve got a friend who keeps all of his ideas in a spreadsheet. He’s literally got hundreds. In the last week, I’ve started filling a page with a good number of ideas myself. But what makes up a good idea? The criteria for a good business idea can be both general and personal. Here are a few.

General:
Your idea should fill a need. There are a lot of product and service ideas that are cool, but they’re a solution in search of a problem. Find a pain point for people and then solve their problem.

The idea must appeal to a sizable audience. There are a few products that you can get rich off of by selling just a handful. But for the rest of us, our products need to appeal to a large group. If I come up with a widget that solves a problem, but only 10 people have this problem, it’s not a good basis for a business.

Your idea must be worth paying (enough) for. Say you’re sick of Twitter’s fail whale and you decide there’s a need for a reliable Twitter-like service. But you decided to actually have a revenue model; you’re going to charge people $5 a month for it. It’s unlikely that you’ll succeed. Most people just aren’t willing to pay for what they can get free, even if it’s a bit more reliable. Or if you develop a new widget that truly solves a problem millions of people have, but the cost of development and production is $45 million and your marketing plan projects you can sell 5 million units, but only if you charge $2.50 each. Bad idea.

Personal:
Your idea should revolve around something you have an interest or passion about. This isn’t a hard-and-fast rule, but it’s a great idea. You’re going to be spending LOTS of time with this idea. Make it something that can hold your attention. I’d have a hard time doing a bank startup. It just doesn’t interest me.

It should be something you have (or can get) the money to start. I think a healthy fast food restaurant is a great business idea. Someone’s going to get rich on this idea some day. However, it won’t be me. The cost of startup is too steep for me to afford and I refuse to borrow the money.

You may have lots of great business ideas. That part is not nearly as hard as getting a few good business ideas that are right for you.

What are your criteria for a good business idea? What are your criteria for a good idea for you?