Over the years, I have had many ideas that I thought could be turned into a business. From creating a special type of chewing gum and selling it at my school when I was 16, to trying to license an idea I had to various alcohol companies, I’ve always had the simple mentality of “would people like this idea?”
But I’ve learned that is simply not the right way of approaching a business idea. So I’ve come up with a set of personal guidelines that I follow for deciding whether an idea should be pursued or not. The first two rules are required, and the rest are ideal. Here they are:
- Must change a world for the better – It doesn’t have to change the world, but the idea has to change someone’s world.
- Must be able to illustrate the idea with a crayon – I got this from a VC that I met a few months ago. The benefits of the idea have to be easy to understand.
- Should be a highly replaced item – High volume and easy to manufacture are key. One thing I always keep in mind when coming up with an idea is: the people who got rich during the gold rush were the ones selling the tools, not the ones digging for gold. Give a niche market a tool they can use.
- Only target emerging markets and/or desperate buyers – Best way for guaranteed growth is to ride a trend. Best way to guarantee the market will support your business is to target desperate buyers (e.g. hospitals will never go out of business because the customers are desperate to have their problems fixed). If you are entering a static market, then disrupt the hell out of them. Like the Bubble Calendar is doing for the calendar market.
- Should be able to automate the process – This is a personal goal of mine. I want my business to create a passive income so I can travel.