Once you come up with a list of ideas, it is time to determine their suitability. Not every idea will be good for business. Pay attention at this stage and be objective in your evaluation, lest you end up with a stalled business. You need to ask yourself critical questions concerning the ideas you have developed. Do any of the ideas fall into your list of hobbies? Are you ready to pursue a hobby during your free time as opposed to going out with friends? Can you commit a minimum of twenty hours a week to build your hobby into a business? In pursuit of the hobby, are you willing to teach others to practice the same idea? Will you enjoy teaching them, or will it become a tedious exercise? In my case, I enjoyed establishing which products would sell better with the vending machines in different locations.
Understanding the shopping trends of a market was something I enjoyed doing. Besides, my dad showed me how to clean a vending machine, which is actually pretty simple. After some time, I learned how to service the machine. Fortunately, I also came to love it. Stocking up the vending machine was my best part, and I always hoped for good sales. You will be a crucial determinant of most aspects of your business. You can see that most things will end up revolving around you.
The question is, are you prepared? Starting a business comes with various administrative tasks, so you need to make sure that you can handle them comfortably. If you are unsure, try doing administrative duties around your hobby, which can give you helpful in-sights. As you continue figuring out the idea, have you come across people who need help based on the idea you are developing? How many people are willing to pay for your idea if you were to commercialize it? Such a number will determine your potential market. You can use the following table to help guide you toward an ideal business idea based on your circumstances. I have input random ideas for illustration purposes, though you can customize the table to your liking. Any idea is ranked on a scale of 0 to 5 being the highest. You would list your idea in the first column towards your left, evaluate each idea on a scale of one to five using different variables, and compute your total score. Your scoring may be subjective, but we are more interested in the trend in this case. Just give an honest estimate while scoring your ideas against the following:
What is the projected impact of your idea on your business and potential customers? Does it solve a problem that customers have been struggling with for a while? Do not go for an idea that will be unnoticeable by the market. Aim for high impact ideas.
How much time & resources do you need to commit to your business project? Try to quantify this and avoid being vague. An idea that needs a lot of time and resources will score the lowest on the scale; a score of five would mean little time and resources will be spent on the business idea.
In the long run, your business needs to make sense by generating profits. You can use various methods to determine the profitability of a business.
You will use the profit margin, which is a number that gives an insight into how profitable your startup business might be. Profit margins include gross profit, net profit, pre-tax, and operating profit margins. At this time, all income and expenses would simply be an estimation. In comparison to other ideas, how much can your proposal generate? Little profits will score one, whereas a score of five would imply high profits.
What is your vision as a person? Does your business idea gel with your vision in life? For instance, do you aim at attaining financial freedom? Deviation from the vision will score low on the scale, while compatibility with the vision will score high on the scale. In my case, I wanted to attain freedom in my work and be my boss. I simply enjoy making my own decisions.