Is your startup idea any good? 5 questions you should be asking to find out.
It’s no secret that 90% of startups fail. However, the reasons they do are often predictable... and avoidable. One of the best ways to determine the potential of your startup before you spend time or money is to ask yourself, “Is my startup idea any good?”.
We’ve put together 5 questions you should be asking to help predict if you’ve got a high-growth, profitable business on your hands:
1. Is my idea at the intersect of ‘that’s crazy!’ and ‘what a great idea!’?
Some of the best startup ideas sound crazy at first, but are actually a good idea. Think Airbnb before people came to accept that giving your house keys to strangers was actually OK.
If your idea is self-evidently good you’ll most likely be competing with hundreds of other startups working on something similar. If most people think it won’t work, but you have some unique insight that will make it work, then you could be onto something.
Test it: Do some competitor research. If there are 100 similar ideas out there, the idea might be perfectly good, but too obvious.
Having some competitors is generally a good sign – it validates that the opportunity exists and that there are customers who are looking for this solution. However, if you’re the 100th to market, you may have missed the boat.
2. Does your idea solve a hair-on-fire problem?
Will your idea address a serious pain point for your customer? Imagine their hair is on fire and your product is a bucket of water. You want your target customer to run towards your solution.
Test it: The best way to test if your idea is vital to your target customer is to spend time doing structured customer interviews to deeply understand the problem from their perspective.
Once you’ve done that you can build a solution that addresses their pain point. If you get it right your target customers will use your product, pay for it AND tell others about it.
3. Is my idea big enough?
Your startup should aim to serve as large a market as possible. One of the biggest problems faced by early stage startups is that founders are focused on too small a market, typically a narrow niche or a narrow geography.
Test it: If you’re using the language, ‘we’re the Australian version of…’ in your pitch, it could be time to re-think your idea.
4. Am I facing headwinds or tailwinds?
Does your idea leverage shifts in technology or consumer behaviour? The best ideas often benefit from “tailwinds” that help push them along – just as Uber benefited from a combination of ubiquitous GPS in smartphones and a growing acceptance of the sharing economy by consumers.
If on the other hand you are ahead of your time (think marketplace for quantum computing resources), you need to consider if you have the runway (ie. money) to keep paddling until technology and society catch up.
Being too late is also a tough gig. No sane person would start another Groupon-like daily deals business today. That business model has had its time.
Test it: Do some research to critically evaluate whether your idea will benefit from tailwinds or struggle in headwinds.
5. Is the business model scalable?
The internet is an amazing enabler of scalability because it allows startups to compete with much larger companies by removing the now unnecessary step of having to physically sell and deliver a product or service to a customer.
If your product or service relies on face-to-face delivery of anything (even doing in-person sales) this could be a major barrier to scalability and growth.
Test it: Ask yourself whether every step in your business can be automated so that its growth is not rate-limited by having to perform non-scalable tasks.
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Is your startup idea worth pursuing?
It’s certainly a hard question to ask! Our courses or coaching packages may be just the thing to help you figure that out. Subscribe to our mailing list to receive updates on our upcoming courses and news.
