What makes a good business idea?
Content supplied by Barclays
Is your business idea pure genius - or actually a bit rubbish? Barclays asked Julie Meyer, online Dragon's Den investor, and founder and chief executive of Ariadne Capital, to help you spot the difference.
How do you tell a good idea from a truly awful one?
A good idea is generally one that provides a solution to an identified problem and you know instantly there'll be a market for it. The idea though is really just the tip of the iceberg. Every company has to go through five stages of development - the concept, product development, business model validation (where you can prove that people want to buy what you sell), scaling (whereby the product is rolled out) and sustainability, whereby the company generates enough revenue to support itself. A truly great product or service will work at each of these stages.
What gets you excited about an idea?
When an entrepreneur says, "Have you ever been in this situation?" and then goes on to describe a common problem and a genius solution for it. If I find myself thinking, "Yes, of course!" then I know it's going to change consumer behaviour and that's exciting.
Do I have to have any skills related to my idea?
Sometimes, being new to a particular sector can work in your favour - you bring a freshness of vision. Business partners Brent Hoberman and Martha Lane Fox had no experience of the travel industry, but it didn't stop them turning lastminute.com into a multimillion pound company. That said, you do need to make it your business to get to know the industry you're entering inside out. Ultimately though, the most important skills are business ones. You also need to be incredibly persistent and prepared to work long hours - most entrepreneurs average 70 to 100 hours over a seven-day week.
Do I need to run it by anyone or should I keep it a secret?
It's a good idea to talk your idea through with other people. Ideas need oxygen to grow and other people's feedback can be incredibly valuable, especially potential customers. Obviously, be careful about who you talk to and beware of putting anything on the internet. It's worth remembering that the idea is a teeny per cent of the ultimate value - the rest is pure graft.
What if it's been done before?
This is not a deal-breaker, but you have to offer something extra to what's already out there. Look at Google - it was a late arrival in an already crowded search engine industry and it's now dominant, thanks to a superior business model.
How fully formed does my idea have to be?
It could simply be a seed of an idea, but it's unlikely an investor is going to part with their hard-earned cash if you don't have a business plan in place. For somebody to invest in you, they'll want to know that they're going to get a good return on their money.
What's been your best idea yet?
Alastair Lukies came up with Monitise Monilink, which allows users to check their bank balance and make payments via their mobile phone. It wasn't even so much the idea, but the steel in his eyes that sold it to me. I could tell instantly that he would go far. The company is now worth £150m on the stock market.
Barclays can help with more information on what makes a good idea and guidance on how to do your research.
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