How to decide if you have a good business or idea

I've been working for ca. 33 years now. The last 18 years of which wearing the entrepreneurial hat. During that time I have started numerous businesses, some successful and many - really many - not. In fact most of the business ideas I played with failed, mostly because they didn't pass my internal tests to assess if I should continue investing my time in them.

As deciding whether we have a good business idea is so difficult I thought it might be useful to share my approach in the hope it helps you in your own journeys.

As with all my posts, please remember to take them with a pinch of salt as these are approaches that I have finetuned over time for my personal style and character and so work well for me but may need finetuning for your own personal circumstances. Take these posts as inspiration rather than "how to" guides.

... as as always, I have added totally irrelevant pics from my recent work travels to make you completely envious. Or to inspire you. You can decide.

Ok. Ready?

One in a a hundred

Publicly you might know a few of the businesses that I've started or co-started. A healthcare company that became a case study used by MIT, Harvard, Stanford, etc., a tech company that was featured by NASA, another company that runs the online academies of over 413 cities and organisations, etc.

But what you do not see are the hundreds of business ideas (sometime they are standalone business ideas and sometime add-ons for existing businesses) that I look at, test and then quietly drop without much fanfare.

But starting (and growing) a company requires a lot of time, energy and effort (let alone capital, though much less than people think).

So how do I go through so many businesses and still manage to stay standing? How do I decide which ideas to pursue and which not to?

My first trick: learn about the dynamics of falling in love

Whenever we "discover" an idea it helps to know how we are wired as human beings. As much as we would like to pretend to be rational and logical and all that, we are very likely to start developing biases and preferences, often very similar to what happens when we fall in love.

When we fall in love:

• We can't really see the faults in the object of our love.
• We fantasize about all the positive long term scenarios
• We get a chemical kick inside our body (think lust :-) that puts our energy into overdrive, a level of enthusiasm and energy that is not sustainable in the long run,
• People see how much we are in love and generally don't try to be be negative about your new found relationships. This is a lovely trait and means you are surrounded by people who like to see you happy, but not ideal regarding your business.

I think you can draw your own conclusions from the above for your own circumstances. For me personally I use that awareness to remind myself that I will be a little blinded by that initial falling in love so that I might not see my new idea in perfect clarity. The way I ground myself is by seeing what kind of interest it gets (e.g. lots of people liking it = zero interest to me. Lots of people asking to have a call about the service/product = more interesting to me).

It does however get much easier over time, kind of similar to someone who has been in many relationships. They approach the new flame with a little more perspective. That doesn't mean you shouldn't enjoy the feelings! Just be aware of them and that they may not last. This is in part why the evidence shows that the most successful entrepreneurs are those who have a lot of experience behind them and have been around the block multiple times and know how to separate the emotional buy-in from the rational perspective (they are often also the ones that are a little more cautious of just being wildly enthusiastic about every idea or opportunity that lands on the table).

A little hack: surround yourself with retired business people as mentors or your informal board... they can add incredible value in getting perspective during a very emotionally exciting period

Listen to the hype...

When we fall in love (with a person or a business idea) or bring to market a new service or product I think the Gartner Hype Cycle is an immensely useful tool to keep a little perspective. Am not going to explain it in depth (there are tons of awesome short youtube clips about this - keep in mind the cycle can be drawn around many different industries) but it essentially is a powerful reminder of how a business often develops and how it goes through various phases, incl wild enthusiasm and excitement as well as a inevitable falling out of love phase before slowly taking the form of a real business idea.

Another tool that is insanely useful that I only discovered recently is www.sparkrockets.com , a free tool developed by Scott ford in Canada to help him decide which businesses to invest in and which not. The tool is literally a bunch of clever AI integrations: you put in your business idea and it spits out pros, cons, competitors, strength of business idea, canva, swot as well as points to think about, social media pages, description of the idea to use for websites and introductions and even does webpage for you if you need it. All in a few seconds. It is ridiculously good.

So how do I tackle new ideas (or sometime just add-ons to an existing business)?

One of my strengths is that I've learned how to compress the timeline axis to literally a few days or weeks. So when I look at any idea I run it through this model to test a few thoughts, specifically:

• Once my initial love for the idea cools off, will I still have the energy, time, interest and desire to continue investing resources in this?
• Do I have enough resources (time and money) to carry this idea past the through phase? I.e. 18 months onwards…
• Am I the right person to grow it and do I have a clear and practical idea of how? If there is one thing I've learned is that starting something is EASY. Getting that initial traction is EASY. Growing it is HARD, especially past your circle of friends and acquaintances that generally support you at idea phase.
• Does this idea require a bit of work setting it up and then the workload dramatically reduces or does it require constant work? For example, creating an online course and publishing it is pretty much a once off exercise. Creating webinars is non stop work. Not arguing for either as they have their respective advantages and disadvantages but just to make a point.

An idea may be a stepping stone to the next one...

Something I've learned which has helped me enormously is the realization that whatever idea I have might not be the final idea. So I welcome it, test it, tweak it and have absolutely no issues with dropping it safe in the knowledge that the processing I just did might turn out to be the foundation to build on for the next idea. So I am not looking to get married to the idea but rather to go out on a date and see if there really is a match. This makes it much easier to let go of things. The wonderful people around me, including my amazing wife Tamar, have learned also to accept that I go through a brainstorming process out loud so they aren’t trying to shoot the idea down but rather help me think it through. I learned over time to preface my sharing/discussing ideas with the “I’m thinking of an idea and just want to bounce it off you for brainstorming…”. This little preface helps them not to worry that I’m dropping everything to pursue this but rather than I want to bring it in the open and see it on the table (often just the speaking about it out loud clarifies many aspects of it).

Dating analogies goes rogue...

To the risk of taking the dating analogy too far, one date isn't enough to know for sure if she is the one. So I often introduce my idea to friends and my network, sometime one on one and sometime seemingly more formally but launching a free website, a bit of publicity (a few posts etc) to test how people react to it. Do they? ignore my date? Do they compliment me on the excellent choice of companionship but that's it or do they show a real interest (the difference is sometime measured in something like "York: I saw your post about XYZ. am very interested as we were thinking about this. Can we have a discussion and see if we can't work together?"

Now... some of you might be afraid to share your ideas to the wider world. And that's ok. One day you will lean that how little value ideas carry and how much execution matters. I can't tell you how many times I've shared how our model at The StartUp Tribe works for others to copy who then never do. And even if they did, do you think once you start growing your competitors won't copy you? Your ONLY defense is clients... make that, HAPPY clients.

YOUR COMPETITIVE MOAT IS THE SERVICE YOU PROVIDE TO YOUR CLIENTS.

(the good news with the above is that you can technically launch me-too services that already exist and just deliver them with much better customer service and support).

Sometimes your idea will turn out to be really bad (like my deciding to buy this mask to wear during zoom calls). Sometimes your idea will be dissected and you will keep only elements of it. Sometimes - and this is my personal favorite approach - I actually ask our clients and partners what they think of my idea (here’s looking at you Dave Wilson , Marc Ashton , Loyiso Nxumalo etc).?

The thing is that even ideas you think are really really good will over time morph into something you never imagined. When we started our academies (both 1583 and startuptribe) never in a million years did we imagine what we are doing today. The logo might still be the same, but that’s about it. But we would never have reached who we are today if we hadn’t started and perhaps more importantly hadn’t REALLY listened to what clients and partners told us.

But what about persistence?

There is a ton of literature around stories of entrepreneurs who stuck it out and then succeeded. The reality is you'll go broke - financially and energetically -before you'll make it through the trough.

Depending on your industry, sometime the adoption timelines require you to stick around with your service offering as it just takes TIME for clients to trust you and buy into your offering. However, most of us will not have the resources to pay the overheads to just stick around for the time it takes (think B2B sales cycles of 11 to 18 months or more).

Here's how I decide if to stick it out....

1. How much of my businesss idea can be setup so it appears "real and ready" with once off effort vs continuous effort? For example, I might decide that investing 3 months intensive energy and time is a good investment to get the idea up and running and that then there is literally very little running costs to it. I did this with the StartUp Tribe. Took me 3 months of hardcore time investment to setup the academy, create the courses and get to a few thousands of people signing up. Then I just parked it there and once a week or so did a post etc just to keep it alive in the public eye. It took 9 months for a contact to approach me and discuss a way to use what we have in their community. It took another 9 months before other cities saw this and asked what it was and how they could use it. 18 months from idea to a little real traction. But it was 18 months at very little financial expense (apart from my time, real expenses where around USD 150 a month).
2. I constantly listen to what people I chat to are saying and then tweak my description of what I offer accordingly. Today we have 4 very clear value statements (here's an example if you're interested: https://www.thestartuptribe.org/pages/municipalities ) based on WHAT our CUSTOMERS told me the value is, and NOT what I thought it was.
3. I am hyper aware of the energetic and financial costs of committing to adding features. Much easier is to list all the features in a trello board and keep them there as a roadmap to customers to show them where your product will go over time (there are awesome free sites where you can create public product development roadmaps that can be shown elegantly to customers). Resist at all costs the temptation that "if only I had this more people would come".
4. I religiously only look at things that can be scaled. That doesn't mean they will. But they need to be technology enabled. So for example, I stay clear of doing live webinars with experts in our 417 academies around the world as it would require enormous time in coordinating, promoting and managing these events (though I am warming to the idea of evergreen webinars... google it!).
5. I spent - roughly - 5% of my time on the product/service and 95% on the access to market challlenge. To be very clear: the 5% puts us really at world class standards (today we are ranked #1 on google for our 417 online entrepreneurship academies - try google for example Cape Town Entrepreneurship Academy), but having a great service or product in this day and age is almost a nice to have. You need to invest in your go to market strategy. This is very personal by the way... I come from a philosophy that believes in the power of collaboration with partners to develop long term powerful win-win relationships vs transactions so partnerships for me are a natural place to go to and thus I look constantly for partnerships. In your case you might have different preferences.

Learn to love variable overheads

Most of my businesses have very small margins. That's in part because I want to work with our clients for a long time (if you understand how expensive and time intensive it is to acquire customers you'll understand this really well) so have a very transparent approach with them, including also setting limits to what we offer so that we don't have to build in too much buffer for the occasional requests that are not our core and can rather discuss the pricing of these individually). These pricing models also make it easier for clients to renew their relationships with us.?

One surprising thing is that I often ask our clients to tell us the pricing they can absorb. In my dealings I’ve found my counterparts to be really mature in their expectations (obviously there is a discussion around what we can do and what we can’t at each price level). This has had the enormous advantage that our relationships last much longer as the company suggests a price that is sustainable for them for the long run (trust me: no company wants to launch a service and then have to cut it after a year or so because it has become too expensive). We offer companies 3 and 5 years pricing deals (with a 1 month cancellation option). This works really well so far. It allows clients (in our specific case) to really invest in the launching of the academies for their employees, the families of their employees, the communities and their citizens knowing they will provide this service for a long time and it is affordable to them).

(oh.. yeah. I forgot to tell you: one of our offerings - using our academies as a employee wellness program for employees and their families and friends - came out of brainstorming discussion with Guy Cohen, Linda Smith and others. A classical case of testing an idea out loud. Today even small companies (20 employees) can offer a full employee wellness solution at less than the cost of a lunch per month).

Final words

Sometime you will really not know if you cooked something good. My best advice I can give you is not to drop everything just because you thought of a new recipe but rather to test it out in your kitchen, play around with the ingredients, invite friends over for dinner to try it, etc in your semi-spare time. Some dishes also take a loooong time to be ready and sometime the market just isn’t interested in the flavours you developed yet. So if you can figure out a way to keep it alive for a long time you’ll start seeing that people start warming up to your new dish, start trusting it (we live in an age of fly-by-night service providers which makes a lot of clients hesitant to buy from you in case you won’t be around a year or two from now to support the service or product). Brand and service awareness is generally not something you can rush. People aren’t stupid when you make lots of marketing promises but your track record doesn’t support the perception that you’ve been around the block and are reliable.

I hope this article helped. As always, it is meant to stimulate discussions and ideas and not to be taken as an absolute truth.

Happy entrepreneuring!