At next week's Entrepreneurs Unpluggd, Chicago entrepreneurs Jill Salzman (Founding Moms), Matt Matros (Protein Bar), and Emerson Spartz (Spartz Media) will discuss how they came up with their business ideas, and how they were able to qualify and execute on the good ones. I'm sure their feedback will be different, but here's a filter I use when thinking about potential business ideas:
1) Is there a need? More importantly, will people pay for it? Apps are cool, social networks are fun...but how many actually make money? The goal for a business at the end of the day is to make money and if you can't think of a good monetization strategy up front, you may struggle to come up with one down the line. When we hear of out of the part successes like Instagram, we're tempted to follow the no monetization path, but it's important to realize that those are complete outliers and for every Instagram there thousands of Colors that flounder from the start.
2) Are you passionate about solving this problem? Sure, you may have found a great problem to solve and people demonstrate wanting a clear solution to this problem, but are you the person to start a business to fix it? Businesses are financially straining, emotionally draining and you must LOVE what you're doing to make it work. When I was part of FeeFighters, people often asked me, "how can you care so much about something as mundane as credit card processing?" The answer always was that FeeFighters at its core was about building transparency for business owners to help them make better, more informed decisions. That is something I can get behind at any time of the day or night...credit card processing was just the first problem we tackled.
3) Is it the right type of business for you? Something most people don't consider is the TYPE of business they are going to build right when they have the glorious inspiration moment. Venture backed, high growth startups are fun and exciting. However, they demand a lot of time, technical skill, and ability to scale quickly against all odds. Are you at a point in your life where you can dedicate this much of yourself to the business? Jason Fried makes great points about this in his book Rework. There are many different types of businesses and the "lifestyle" ones shouldn't be knocked...they can be hugely profitable as is the case with 37Signals while still allowing every member of the team to pursue other interests.
To learn more about how successful business owners qualify their ideas, check out next week's event. Today is the last day to buy early bird tickets!
