I wrote this content for BudgetTracker in January 2013.
Over the course of a lifetime, many people have one or two great ideas. But the distance between a great idea and a great business is a very large one. So, how do you know when your idea is just a good idea, and when your idea is your next entrepreneurial business? Here are five questions to ask yourself before taking the plunge:
Do other people think it is a good idea?
Start talking up your idea. Do people stop what they’re doing and seem interested? Is this meeting a need that a number of people have? While a better gauge would be a full market survey, you can get a decent idea of your brainstorming efforts by pitching it to the people around you.
Would other people pay money for this item?
More importantly, is your idea something that people would pay money for.? Or, is it something interesting enough to draw enough attention that advertisers would get behind it? Even if something is a good idea, the unfortunate truth is that to start your own business you need to be able to profit from it. Make sure there is a need and a want for your product before you take that leap.
Do you have 8-12 months of savings and a reasonable level of financial security?
In the best case scenario, your idea will get attention and start to make sales. But even if you meet your sales goals, that’s no guarantee that you will turn a profit because of your initial investment! Make sure that you have eight to twelve months of savings and a general feeling of financial security (for example, perhaps a spouse who works full time or a fully-funded retirement account) before you risk your future on starting your own business.
Do you have good credit?
While it is commendable to begin a business without the help of a bank loan, most entrepreneurs need seed funding, or alternative funding, to start their business. So, you need to make sure that your credit score is good enough to warrant a bank’s trust. This means a long history of paying your bills on time and managing your credit wisely.
Do you need a lot of sleep?
This question is a little tongue-in-cheek, but it is a fact that entrepreneurs and risk-takers end up working overtime on their companies. Sometimes that means performing so many roles in a given day that you end up with a schedule more like twelve hours per day than the standard eight hours per day. Be sure that you are willing to make the sacrifice of time to get your business off the ground. Because nothing is worse than working late nights and early mornings on something that you are not passionate about!