So, I am back again. After learning about investments and screening hundreds of business proposals from work, here is a list that I composed for all the entrepreneurs out there. Many of us have thought of starting a business, and we know those ideas address certain issues. However, is it a good idea on the business side? That’s the issue I will resolve for you.
Feasibility or viability. Is your idea doable? 2014 is a year with many technology limitations. This question is self-explanatory. Is your idea harvesting gold and diamond from another planet? Is your idea a ring that makes you invisible? Or is your idea making the train go at the speed of Mach 5? Yes, many of those ideas are great and often possible in the near future, but they will cost you billions of dollars in R&D before you can even launch a pilot experiment. Give your idea a second thought. How much money do you need? How long is it going to take? Those two are important questions that you should consider.
Business Model. In short, “how do you make money?” Of course, this is a totally different story for non-profits, NGOs, and many other companies. For a typical, small, personal business, you have to think about this. I once knew a small company that had 80,000+ regular users, but it was making money on only 49 of all the clients. Is this a bad business? No. Can it do better? Yes. Think of ways you can make big money. Overall, you need money to buy that Red Bull tonight! Here are some gateways of getting money: ads, partnership, service fee, subscription, and commission. There are many more channels to make money, and you just need to think about it thoroughly before tossing in $20,000 to make a minimum viable product.
Scalability. What is the size of your market? You don’t just want to have a niche such as female, age 25-27, live in Lincolnshire, Chicago, and love Jennifer Lopez. This is bad because you have a very specific sector to get into, and you won’t be able to sell to other clients outside of that circle. On the other hand, what you want to do is enter a market that has the entrance size as small as the head of a pin (aka high barrier of entrance), yet, the market size as big as the sky. For example, automobile GPS system. It is very difficult to enter that industry due to technology, but one you’re in, you can expand to the entire world. Always think about scalability.
Think about those three before making commitments. If you have a green light on all three, start doing your research, and good luck!
If you would like to discuss about the list, feel free to contact me via my personal email wewa@umich.edu, or connect with me on LinkedIn, www.linkedin.com/in/weiwang800.
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