- Narrowing the field
With any luck you should have several spreadsheets by now, each covering a different idea that has its own goal, customers/audiences, business/price models and intersections.
Working with too many ideas from this stage forward is counterproductive. Ideally, you want to narrow your list to the three that are the most promising. Don’t throw the others out quite yet. They may come in handy down the road.
Start by asking yourself some questions related to each main idea:
- Do you have relevant experience in the industry?
- Do you know people who are already in this space that can tell you the advantages and disadvantages?
- How well does the model/customer align with your original goal?
- What is the upfront capital cost to enter the space?
- Is it worth it in terms of the return on the investment?
- How big is the market?
- How unique is your approach compared to your competitors?
A word about the competition: First, don’t be put off by the fact that you have competitors. It’s actually a good sign as it means that the model and customer mix is big enough and profitable enough to attract more than one business to the space. Also, there are plenty of stories about a new player that replaced a dominant one, and this is particularly true as the economy resets itself and is ripe for disruption. Does anyone remember MySpace or Altavista?
As you think about competitors, don’t think too narrowly. If you want to open a Mexican restaurant, the other Mexican restaurant in town isn’t your only competitor. Taco Time, Taco Bell, other casual dining restaurants and even home delivery, takeout and home cooking may also be your competitors.
When you’re done with your initial ideation and have your top three ideas, test them with some friends or colleagues. See which ideas rise to the top and seem to be the most promising. If you want to, stack rank your ideas based on your own passions, goals and the feedback you receive.
Some additional help…
Washington’s Department of Commerce has an excellent tool to help you assess your model and customers. With SizeUp you can run various scenarios to your heart’s content using cost and revenue projections, location, customer segment and marketing strategies as variables. At each juncture, you can dive a bit deeper with associated resources or adjust the numbers until they meet your needs or align with regional and national averages.