Criteria #1: Can I clearly define the market and direct my advertising efforts to target the prospects with laser-like precision?
Most business and product ideas are vague and it’s a classic mistake of new entrepreneurs to think that their great product should appeal to everyone. Even worse, it’s easy to assume that great products sell themselves. I assure you, that doesn’t happen.
Great products can languish while mediocre products become blockbusters so long as the mediocre product has a clearly defined audience who is easily reachable through measurable advertising.
Criteria #2: Does the idea solve a real problem?
In 2010 alone it’s estimated that venture capitalists dumped $1.67 billion into social media companies. I don’t have any major objection to social media companies, but I have a hard time seeing how most of these companies solve any real problem.
When you’re adding value to the world and solving real problems, it’s generally much easier to come up with a worthwhile strategy to make money.
This all reminds me of 1999 and the ‘dot com bubble’. I was there in the trenches and made several huge mistakes which ultimately cost me everything I’d accumulated up until that point. It was a humbling learning experience for me, but a great reminder that as an entrepreneur my primary objective is to create value by solving real problems.
Criteria #3: Is it scalable?
As a child with entrepreneurial inclinations, I looked around for things I could sell or services I could provide. Not knowing where to start, I went for the low hanging fruit by trading my time for money. Kool-aid stands, paper routes, selling little crystals from a broken chandelier to my classmates ($.10 each or 3 for $.25).
The ability to scale means you have obvious leverage. You don’t have to do all the work and when you do, you’re efforts are multiplied significantly. That’s one of the things I like most about the publishing business. It takes about the same amount of energy to communicate with 10 people as it does 1,000,000.
Look for businesses that can be systemized, grown through good marketing and with large enough target markets that the whole exercise proves worth the effort.
Criteria #4: Is there a special advantage I can leverage?
People are often surprised that I’m not a competitive person. I don’t care if you’re better at something than I am. I do, however, care deeply about outcomes and objectives. For whatever reason, there are certain things I want to see happen and the fact is, I prefer to take shortcuts to reach those objectives.
I ALWAYS look for ways to gain a special advantage in any new opportunity and you should too. I would never consider adding this product to the existing business if I didn’t have a special advantage up my sleeve. In this case, we happen to have a very close relationship with a pair of high ranking, well respected university professors who are already in this space.
These folks are at the top of their game with all the credibility in the market we could hope for. Leveraging their massive credibility and expertise makes this particular opportunity so easy it really does feel like cheating.
When evaluating your opportunity ask yourself these questions:
-How can I leverage my current customer base to support this new opportunity?
-Do I know anyone who has unique expertise that I can leverage to make this a home run?
Criteria #5: Does it fit within my core objectives?
After losing everything in 2000 my primary objective was to rebuild and add to my wealth. I started a marketing company built around generating leads online. The business grew quickly from there and branched off into software development where we created and marketed our own products.
Today, however, there is no way I could pursue projects like that simply because my core objectives are fundamentally different then they were back then. Making money is important to me, but I have other objectives that override that one all the time.
Before I launch any new business or product I ask myself if this product fits within the vision I have for my life. Is this how I want to spend my time? Does this get me closer to my medium and long term objectives?
Criteria #6: Can I build an immediate feedback loop by defining and watching key numbers?
I’ll probably never be the guy that comes up with an idea that changes the world or builds a business that revolutionizes anything. That’s the downside of Criteria #6. Fortunately, the upside makes up for it.
Our time is the most valuable asset we have. The worst case scenario for an entrepreneur is to waste their time and priceless energy on a business that will not succeed.