How to Evaluate Business Ideas

How can you tell if a business idea is good or bad? And how soon should you abandon the bad ideas? Here are tips for evaluating business ideas and separating the good from the bad.

Ideas are a dime a dozen. Everyone gets them. Some of them are good, but most of them are bad. In fact, Alfred Noble once quipped, “If I have a thousand ideas and only one turns out to be good, I am satisfied.”

The curious nature of ideas, however, is that good ones often follow bad ones. It may take a little massaging, but that’s what ideas are for. And that’s why you should never ditch a bad idea.

How to Evaluate an Idea

One of the most important things for a business person to learn how to do is evaluate an idea. How will you know if an idea is good if you don’t analyze it, kick it around a little, and learn what it’s made of? Perhaps the bad idea you see on the surface is the outer shell of a good idea waiting to be revealed.

Before you do anything with an idea, first do a little research to see if anyone else has come up with that idea. This is how great innovators operate. Professional inventors spend a lot of time evaluating products that are already on the market because the exercise can often lead to a moment of discovery where the problems solved by the products already in existence leave a void of unsolved problems that need a solution.

Where there is a problem without a known solution, there is an idea waiting to happen.

Some patented products never make it to market because inventors and manufacturers realize before it’s too late that those ideas don’t really solve a problem, or the opportunity passes to solve a problem and newer innovations solve them better. A little research can reveal this before you get too vested in your idea.

If an idea has been thought of multiple times before, that may be a sign that it has merit. It just needs to be improved upon.

However, if there is no record of your idea existing before, then it may be that others have discovered its weaknesses and chose not to pursue it. That’s why you should spend some time evaluating your ideas before adopting them, but don’t ditch the bad ones because they still have some usefulness.

Before getting too far with your idea, try talking to a few people to see if they have the problem you are trying to fix. This alone can save you a ton of time and money. If no one has the problem you want to fix, your idea may not be so good.

The Purpose of an Idea is to Solve a Problem

Good ideas solve problems. If your idea does not solve a problem, then it’s time to look at the nuts and bolts of that idea to determine why it doesn’t address a real problem. Try this exercise:

  • Write down the three things you like most about your idea
  • On a separate sheet of paper write down three things you like least about your idea

For each of the things you like about your idea, list why you like it. Just get your thoughts on paper. Don’t worry about whether they are right or wrong, silly, or absurd. Just put them down. Do the same thing with the three things you don’t like about your idea. After that exercise, you should have a pretty good list of raw thoughts associated with your idea. These should help you delve deeper into the idea to determine why it’s bad idea.

How to Find Problems That Need Solutions

One of the best ways to find problems in need of solutions is to think of your own pain points. What ails you? What tasks take you too long to complete? If you could change any one thing about a product that you use regularly, what would it be?

Another way to find problems in need of solutions is to ask other people. Find people in similar situations as you and ask them what their biggest problems are. Do you see any similarities between yours and theirs? You should write all of this down. Keep a journal. Once you collect the information, compare this list of needs or problems to your bad idea list of things you like and don’t like. Do you see any common ground? If so, jot it down.

This process is known as free association. It’s been used in psychoanalysis since Sigmund Freud experimented with it late in the nineteenth century. The reason it works is because it frees the mind to associate ideas without blocks or mental biases.

Every now and then, go back and look at some of your bad ideas, the ones you didn’t use. There was a reason you didn’t use them. However, things change. You may have discovered new information since then that allows you to reevaluate the idea from a different perspective. Another thing that has changed is you. New experiences, new knowledge, new skills, and new acquaintances can all have an effect on how you perceive an idea, evaluate the idea, and even feel about it. Then, of course, there’s the market. It changes too.   

The surest way to identify a good idea and to know a bad one when you see it is to keep an open mind. Revisit your bad ideas from time to time and allow them to speak to you in a different way. You may be surprised at what you’ll find.

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