These days it seems like everyone has an idea for the next big startup. There are even contests you can enter to win seed money. Of course, you might have a great idea, but that doesn’t mean you should quit your day job. So how do entrepreneurs know if they’re onto something good?
We asked Josh Melick, founder of Broadly and serial entrepreneur, what he looks for when assessing whether or not an idea is worth pursuing.
1. You’re Obsessed with It
A great product idea will get in your head and won’t let you go. “It’s like a disease in there,” Melick told us. That’s because when you truly believe in the value of something, seeing other people use it is gratifying. In the same way, having other people use your product should be a reward in itself.
2. You Can’t Stop Talking About It
If you can’t stop talking about your great idea, that’s a good sign for two reasons: One – if it’s that important to you, then others will eventually see it; and two – talking about it will help you flesh out the details. Addressing your great idea in conversation with friends, family, or even strangers on the street is an excellent way to learn what needs improvement.
3. You Think There’s Financial Opportunity
“I’m not sure why this isn’t talked about more often, but there is nothing more convincing when pitching to investors than having a potential financial upside,” says Melick.
4. The Problem is Big … But Not Too Big
The problem you are solving should be significant enough that people are willing to spend money on it, but not so much that the market becomes too broad for one company to dominate. “You don’t want to be in a market that is too broad because the opportunity for profit will be significantly reduced,” says Melick. “The opposite can also be an issue where there’s not enough of a market need, so you’re looking to develop something for just a small niche of people.”
5. You Can’t Think of Any Other Way That This Problem Might Be Solved
When you find an idea for a product that is unique, then the problem it solves is probably big enough to make into a business. “If somebody can’t think of another way your idea might be attacked or solved, then you should take note,” says Melick. “You are likely onto something.”
6. You’ve Talked to Potential Customers
Talking to potential customers is a must if you want to make sure your product idea will be useful. “I think it’s important to know who the customer of your product is and I like asking these two questions: What problem does this solve for you? How much time and money would solving that problem save you?” says Melick.
7. You’ve Talked to Potential Investors
Talking to potential investors is also a must because it helps highlight the value of your idea and product. “If you can’t answer ‘Why now? Why this?’ then the investor may think you don’t have much conviction in your own idea,” says Melick.
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