How To Know If Your Business Idea Is A Good One

It is likely the most common question I hear: “How do I know of my business idea is a good one?”  That question is usually followed up with, “Would you buy it?”

That second question sucks, and hurts all too many entrepreneurs. No one knows how good your idea is except for the customers that pay for it, with their hard earned money.

The best way to gauge your concept and prospective customer interest is not by asking people what they think. Most people will say what they think you want to hear.  Instead ask for them to make a deposit on your idea. This forces people to make a financial decision.  And when it comes to an actual transaction, the truth will be told by their actions.  Do they quickly hand you some money, or do they quickly hand you dozens of reasons why they want to hold off.

Even if you are not in business yet (and are just in the idea stage) you can take check deposits made out to your future business and not deposit them.  The key is to get people experiencing the pain of departing with money in exchange for the gain (or future gain) they will derive from your offering.

Pitch it to your prospects by saying “I am going to be offering XYZ service.  I will likely charge $1000/month (or whatever is the number). But I want to bring on some early customers now and will drop the price to $200/month (or whatever is a big discount) for people who give me a deposit now.  Are you interested?”

Then wait to see what they tell you about your business idea, via their actions.

A business concept is just a concept. It only becomes a business when it makes money.

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