If you’re like me, you’re swimming in business ideas.
Once I nailed down the process of generating new ideas, I was quickly overwhelmed by the sheer number of problems, frustrations, and pain points I’d uncovered.
Everything from dealing with hip pain (a personal frustration at the time) to helping soon to be parents feel assured in their preparations for parenthood… all told, I had upwards of 125 potential business ideas in my list.
That’s a lot to deal with.
And what’s worse, they’re not necessarily complete ideas.
Sure, hip pain is quite literally a “pain point,” but what would the solution be? An affiliate site with reviews of pain killers? An ebook on hip stretches or strengthening exercises?
How do you evaluate an idea when all you have is the problem, but no solution in mind?
I had jumped off the deep end and found myself falling further down the rabbit hole of “what if…” and “I’m not qualified to do X.”
I was second guessing my every thought and questioning whether or not I really had what it takes to create a business.
Then I took a step back and had a deep breath.
I knew I had hit a temporary rut and needed to introduce a new ingredient to the mix to find clarity and direction.
I read Pat Flynn’s “Will it Fly” and searched the web for help — two days later I was back to my idea list with renewed enthusiasm.
Here are the 7 most effective ways I’ve found to narrow down your business ideas.
7 Ways to Narrow Down Your Business Ideas
#1 – Consider if this is a topic you could write 50+ posts about.
Many people have noted this as a top consideration when considering a new business idea, including Pat Flynn from the Smart Passive Income blog.
Regardless of what type of business you create, chances are you will want to attract prospects online, and one of the best ways to do that is with fresh, original content.
Is this topic something you could write 50 blog posts about? It’s OK if you don’t know what you would write about exactly, but would you care enough to figure out what you could write about for 50 posts? If you can’t even imagine writing 50 blog posts about a given topic, maybe you should look for something you’re more interested in.
Side note: This is really important, not just because blog posts are useful, but because this questions your interest and motivation. Back in 2013 I started working on a dog goody delivery service — I put up a website, social media pages, designed a t-shirt to wear, and ordered fliers (which I distributed throughout my neighborhood) — basically everything that a wantrepreneur would do right? And then once I got past all the easy-to-do stuff, I realized things were going to get harder. Once I started negotiating with product manufacturers and had to start pitching local pet shops, I suddenly lost interest and the project fizzled out. I didn’t own a dog and I simply didn’t care enough about the product to work through the real challenges.
#2 – Look at yourself from an investor’s perspective: why are you the one to do this?
In other words, what is your “unfair advantage?”
When an investor considers an investment opportunity, for example, an early stage startup, they ask, “what’s your unfair advantage?” They want to know why you are the right person for the job.
The world has plenty of ambitious, hungry, and passionate people, and chances are some of them are working on creating something similar to whatever you’re creating.
Why should a customer choose your product over theirs? What gives you a “leg up” on the competition?
For example, I’m investigating the market of people who have debt and want to get out of it fast.
My unfair advantage is that, unlike many of the financial gurus out there, I had a lot of credit card debt in 2014 and I paid it off in creative, uncommon ways.
Being able to say, “I paid off $25K in 4 months” is my unfair advantage.
If you have personal experience with the business idea you’re considering it can be a great advantage over competitors who lack it.
#3 – Think about the type of lifestyle you want to have for the next 5 years. If your business is successful, will you have the lifestyle you want?
Some businesses require a physical presence, like if you’re opening up a brick and mortar boutique fashion store.
At some point you might be comfortable having a manager run the operation, but at least in the beginning you’ll need to be present in the store to make sure things are going according to plan.
Other businesses allow a location independent lifestyle, like if you’re creating an affiliate website or information product business.
These enable you to work on the go and create value for your customers while living anywhere in the world.
Take a few minutes and think about your long-term plans, your life goals, and what you see yourself doing over the next 5 years. Your business ideas are just optimistic imaginings right now, but if one of them takes off, you might find yourself married to it for a number of years.
#4 – Examine the startup costs and time commitment required.
When trying to narrow down your business ideas, consider how much money and time each idea might require.
If you’re going to create information products, is your market full of well-established competitors? If so, you’ll likely need to devote more time to content creation, SEO, and marketing in order to get found amidst all the noise.
Most information-based businesses (niche sites, information products, etc.) will require significantly less startup capital than physical product based businesses, but it’s still worth considering your potential costs and making sure you can afford them.
#5 – Does the target customer have the ability to pay for it?
An easily overlooked but critical piece of the puzzle: do your potential customers have the means to purchase the product you might create?
If your business idea is targeting an audience that doesn’t have much money, how likely are they to want to part with their hard earned cash to give it to you?
For example, I want to help people get out of debt as fast as possible. It’s something I care about deeply and I know I can help people shave years off of their debt repayment time table.
But do people in debt have the ability to pay for a product that could help them?
Just because someone wants a product, does not mean they can afford it.
#6 – Would you be comfortable talking about your business?
Let’s say you move forward with one of your ideas, it’s a huge success, and now it’s your main source of income.
You’re out at lunch with friends you haven’t seen in awhile and one of them asks, “Hey so what are you up to these days? Weren’t you working on creating a business?”
Are you comfortable talking about your business?
It might not seem like an important factor now, but your answer to this question could determine how happy you are with your business later down the line.
If you’re considering a business idea that isn’t 100% ethical, or is in a moral gray area, you might want to keep narrowing down your list and throw this in the discard pile.
#7 – Can you become #1 in this specific market segment?
This is a controversial one.
Not everyone agrees with me on this point and your position on this depends on what you aim to achieve.
The question “can you become #1 in your specific market segment?” is an important one if you aim to achieve huge results by dominating your niche.
The dominant position gets the most attention, the most recognition, and in turn, the most revenue (generally speaking).
It’s easy for people to remember the #1 player in a market, but they typically won’t remember the #2 player.
Who’s the #1 brand in facial tissues? Kleenex. (You probably knew that)
Who’s the #2 brand? (Answer at the end of this post)
Even if you don’t care about being the most recognizable, top-of-mind brand in your market, there’s another reason to consider your ability to become #1 in your market segment: organic search rankings.
The first result on page one of Google’s search results will get about 31% of all the click throughs for organic searches of a specific keyword, according to Moz.
The 2nd result? Less than half that.
And the decline in clicks continues as you go further down the page.
This means that if you win the #1 spot in the organic search results, you get more than double the clicks of your 2nd ranked competitor… a sizable advantage.
However, maybe you don’t care about being #1. Maybe you just want to earn some cash to pay bills and enable a location-independent lifestyle.
If that’s the case, you can ignore this last step. Though if you are in a market where it would be difficult to be #1, you might consider niching down into a segment of that market to the point where a dominant position is attainable.
For example, Dave Ramsey reigns supreme in the debt space. He has a wildly successful book, a popular website, a radio show, and offers classes through churches all across the country.
It would be hard to compete with him one-on-one. But by focusing on a segment of that overall market (e.g., 20-somethings with high-interest debt) I can offer products that are better suited to these people and I open up the possibility of becoming #1 in this segment.
When in doubt, niche down.
Answer to question from #7: Puffs.