8 Ways to Tell If a Business Idea is Viable

Plus the best business to start today

We all have ideas. Some of these could be turned into profitable businesses while others are better left in the napkin and thrown away. How can you tell the difference between a viable business idea and a likely flop?

Here, I’ll try to answer this question.

#1. Entry barriers

How difficult is it for you to create and deliver your product/service to your end customer?

It should be hard but not too much. Why? Because if it’s too easy, you’ll have thousands of competitors the moment you succeed.

I went once to the Nyiri desert in South Kenya and I witnessed people selling sacks of sand…in the desert! Talking about low barriers! I wonder if they sold much.

Why would they buy from you when they could buy from anyone else? What added value are you offering that no one has? Why would they need you to pick up sand from the desert when they can do it themselves and save some cash?

If you don’t have good answers to these questions your idea is probably not viable.

#2. Trends

Riding trends is good but, what will you do when the trend is over?

Generally is better to choose products that won’t go out of fashion any time soon. Usually, businesses don’t make money until the second or third year, so if your idea is likely to fade away within that period then is not worth pursuing.

Some businesses do a flash sale, i.e. during the Olympics, and then close shop. You can make a quick buck this way but it’s not sustainable.

You want to think long term. Starting a business is a steep learning curve so you want to stay alive until you can reap the benefits of that know-how.

Can you see your business doing well in 10 years?

Would you start a business selling diesel cars now, keeping in mind they’ll probably disappear soon?

In 1998, I bought my first digital camera in Singapore, a Fuji-film MX-700. Everybody was very excited to see it but one guy told me: ‘Yeah, that’s very trendy right now but film photography is here to stay’. I wonder if he’s still developing films in a dark room. Some people just don’t get it.

#3. Scalability

You can start many viable businesses that are not scalable but ultimately you want something with unlimited potential.

If you sell your time for money like a dentist, a lawyer, or a car mechanic, you’ll never make real money. You only have 24 hours a day, multiply that for whatever you charge and that is the maximum theoretical revenue you can achieve.

Since you are going to work very hard, you might as well chose a business with an unlimited upside.

Scalability means that it cost the same to sell 1 unit as it does to sell 1,000,000. That’s what you want.

A book, a movie, an app, or an online course are examples of scalable products, once created they keep bringing revenue for years. This is not just limited to information products — an iPhone, a car, or organic tomatoes are also scalable — but anything that can be delivered over the internet will save you many logistical nightmares.

#4. Go niche

You also want to go niche, why? Because the smaller the niche, the less competition you have.

If you open a gym in NYC, you’ll have to compete with thousands of other gyms, but if you open a gym for single vegan mums and their mixed-race kids your competition drops to zero. (Ok, maybe I went too niche there)

The thing is, with the internet you have access to 8 billion people so, no matter how niche you go you still find a viable market and virtually no competition. The biggest challenge would be to reach those potential customers to let them know you exist.

#5. Online or offline

Online businesses have the whole planet as a market while offline ones are much more local. The good thing about a local business is that you get rid of most of the competition and you have a much closer relationship with your customers but, on the other hand, is harder to scale.

I would say nowadays you have to have at least an online component in your strategy because even the most traditional business will face online competition eventually. Amazon is already selling groceries after all.

#6. Regulations

The law is a huge obstacle when doing business on the edge. AirBnB, autonomous cars, and marijuana products have one thing in common, they can be destroyed by regulators overnight.

It’s worth considering if your idea is not only legal but if it will remain so for the foreseeable future. People like innovation but if your industry is not welcomed by the government then you don’t have a business.

Also, remember, you can’t make any money in prison so stay out of trouble.

#7. Differentiation

You wouldn’t try to sell ice to an Eskimo, would you?

Your product has to be different from the competition in order to succeed.

This is especially true when you are competing with Amazon, Walmart, Ikea, or any other giants. Why would anyone buy from you instead of Carrefour?

If you don’t have a good answer to this question, don’t bother.

Whatever you sell, you have to look for an angle to make it stand out. Either it’s marketing, distribution, customer service, or post-sale support, you have to offer something that no one is offering. The last thing you want is to become a utility where the price is the only differentiating factor.

There are thousands of smartphones out there and they all compete in price and have similar characteristics, but people buy iPhones, Google Pixels, and Samsungs, even though they are much more expensive. That’s what you want, to offer something so unique that people don’t care about the cost.

#8. Ethics

You could sell drugs, tobacco, gambling products, or guns but, is it ethical?

At the end of the day you have to face yourself in the mirror and answer this question: Have I help people improve their lives or have I damaged this world with my actions today?

To me, the choice is clear. There are millions of opportunities in legal, ethical, environmentally friendly products so, why bother with the rest?

Those who start a business with the sole idea of getting rich no matter what, often fail, and even when they don’t, they lead miserable lives. Remember, karma is a bitch.

You want to do something you feel proud of, leave a legacy, and make the world a better place. Money is just a side effect of creating value. Steve Jobs, Elon Musk, or Jeff Bezos don’t care much about money, that’s why they have lots. Focus on doing good and you’ll get what you deserve.

So, the best business to start is…

Teaching people how to make money online

There you go, the secret is out. Don’t tell anyone.

It’s scalable, delivered online, evergreen, with adequate entry barriers, legal, ethical, and very profitable providing you chose the right niche.

The competition is huge but the market is so big that there is room for everyone with a valid unique angle.

Money is made by those who help others make money. During the 19th Century Goldrush, those who made the most dosh were the vendors selling the equipment and not the ones who found gold. Think about that for a second.

Let’s face it, jobs are becoming scarce and the benefits of being an employee are shrinking by the day. Millions are eager for directions on how to start a side hustle and become independent. Just by sharing what you know, you can help a lot of people escape poverty. You might think you have no experience or knowledge in this area but, I disagree.

Regardless of your age, education, or background you’ve already experienced many situations and collected much wisdom. There are people out there who can benefit from your knowledge. For a start, you are reading this article in English so, 1) You can read, and 2) You know English. Do you realize how many millions would improve their lives by learning those two skills? There you go, another business idea. You’re welcome.

Furthermore, if you are a parent, have volunteered for a charity, or joined a club, you already have social, leadership, organizational, and planning skills. You know more than you think.

Every day you are alive, you are learning something. Whether is gaming, socializing, music, or math, there are people out there that would love to learn from you. Any skill can be taught and therefore monetized. I for one would pay a fortune to anyone who could teach me to play FIFA 21 to be able to beat my son at it. So, there you go. You’ve got yourself a business.

But even if you still feel inadequate (and this is probably impostor syndrome), you can learn. Start a side hustle, get educated, document everything, and then tell how it went. Even if you fail, (especially if you fail) your experience will be invaluable to others.

According to Kevin Kelly, you only need 1000 true fans to make a good living and that’s totally achievable providing you are genuine, honest, and provide value. After that, the sky is the limit.

Conclusion

You are unique, and so are your ideas. Don’t just copycat others or take the easy way out. Find out what only you can offer to the world and spend time refining your idea until it’s ready.

Practice daily generating ideas just for the sake of it. Quality comes from quantity. When you’ve generated thousands of ideas, select one of those and test it. Document the process and share it with the world. You are a genius and you know it.

Most people go to their grave with their music inside them

George Bernard Shaw

Don’t be one of them.