Five Signs That You Have A Great Business Idea
It may come to you while you’re working late, travelling to the office, or even when you’re struggling to sleep at 2 a.m., but there’s no mistaking the amazing feeling that hits you when you believe you’ve just come up with a great business idea– the “game changer," as it were.
The question is, how do you know whether it’s as good as you think it is? In the words of business authors Edward Hess and Charles Goetz, can you tell the difference between a good business idea and a good business opportunity? Good ideas are exciting, but good opportunities are scalable. They’re implementable plans with a customer base that you can access and build on.
Great business opportunities fill an ongoing need– they offer something new or different and, crucially, they allow you to make a profit and grow your business.
In January this year, new UAE legislation was passed to expand the role of venture capitalists, who already play a crucial role in getting small UAE businesses off the ground. But how would you convince them your idea is the big one?
It’s a good start to be certain yourself, so here are five key signs that your idea is a great one.
1. It solves a problem Chindogu, the Japanese art of inventing ingenious, often highly complicated gadgets to deal with everyday difficulties might be seen as "solving a problem." But it’s a good illustration of exactly what you’re not looking for in this case.
Because solving a problem means delivering a solution that makes a sizeable number of people’s lives easier. The problem doesn’t have to be one that nobody else is tackling, it can just as easily be a problem no one has dealt with effectively. Virgin CEO Richard Branson notes: "The reality is that very few businesses invent a market for their products and services. Many, however go on to reinvent markets by filling gaps with standout offerings."
Take Uber, the app-based taxi service that revolutionised the way we think about getting from A to B. You would have found horse-drawn carriages for private hire on the streets of London and Paris way back in the 17th century. The key is that for the next few hundred years, the method of hiring them would stay the same.
What Travis Kalanick and Garrett Camp found in 2008 was an easier way– as fate would have it on a snowy night in Paris. They saw an opportunity to harness new technology (smartphones) to provide a fresh, very effective solution to an existing problem. Crucially for their business model, it’s a problem faced by people every day, again and again, all over the world. Uber now operates in 524 cities with more than one billion connections.
2. It’s scalable SMEs are big business in the UAE– Dubai government figures suggest they account for 95% of the total enterprise population. But if they’re to prosper in the future, it’s vital to understand and ensure "scalability."
Scalability is the potential of your business opportunity to grow and be applied to an ever-increasing market. Whether it’s actually ready to scale depends on you building this into your business plan and investors are likely to look for both the potential and the readiness. After all, returns on investments come from the ability of those investments to grow and prosper in the years ahead. Can you expand on your idea, make it flexible and resilient, monetise it throughout and remodel it if necessary?
The founder of Garson Claxton LLC points out that "Scalability is a mind-set. It’s about constantly making decisions that create bridges, not barriers, to growth." Truly scalable ideas are low-cost, high-profit models. The gold standard here is Facebook, a platform used by 1.86 billion people all over the world.
But it wasn’t always that way. In 2004 Mark Zuckerberg and his college roommates launched "Facemash" to Harvard students. When it became a success, they expanded to the universities of Columbia, Stanford and Yale, then in time, to universities across the USA and Canada. It wasn’t until 2006 that the Facebook we now know was available to the world and only in 2012 did they open it up to advertising. It’s now worth around US$321 billion.
All ideas start small. They achieve scalability through understanding potential, grasping how an idea can grow and planning ahead.
3. You can sell at an attractive price and make a good profit Finding the right price for the goods or services you’re providing is essential, because no matter how good the idea or how well it solves the problem, if the price isn’t right, people won’t buy.
James Dyson famously reinvented vacuum cleaners in the early 1990s, albeit after many years and countless prototypes. By 1995 the Dyson DC01 was the best-selling vacuum cleaner in the UK. According to Forbes, Dyson is now worth $4.2bn, but he didn’t always get it right. In 2000 he introduced his "Contrarotator" washing machine to the market. Revolutionary in every sense, the washing machine found a way to tackle an existing problem more effectively. Unfortunately, from a pricing point of view it missed the mark. With high production costs to cover, the washing machine retailed at GBP1,200– far above anything else on the market at the time.
Even at that price, the company actually lost money and by 2005 it was discontinued. Reflecting on what he calls an "educative failure," Dyson himself told Bloomberg: "As a washing machine, it was a great success. As a business, it wasn’t. We made a washing machine that was too expensive; it had too much technology."
Make sure that understanding your market runs throughout your planning. Be certain that you can develop your offering and bring it to market at a price that makes sense, both for your profit margin and for the customer.
4. It isn’t easy to copy Coming up with something truly unique is difficult enough, but keeping it that way is even harder once other people hear about it. There are plenty of cases of companies filing lawsuits about similar products and services, whether it’s smartphones, taxis or vacuum cleaners and while some have managed to corner the market almost entirely, its often down to shrewd strategic moves. Microsoft’s omnipresence can be largely traced to an historic 1980 deal that saw Bill Gates’ operating system shipping with every new IBM PC, while leaving him free to market the software to other manufacturers too.
While making your idea the only one of its kind may be wishful thinking, there are steps you can take to at least make it harder to copy. They inevitably centre on taking preventative legal steps. The good news for companies operating in the UAE is that since 2010, the innovation support program "Takamul" has been aiding small businesses (that qualify for help) with big ideas through the long and costly process of filing a patent application.
Like patents, copyright law also works to protect your intellectual property. The difference is that applying for a patent requires your idea to have an "industrial application" aiming it at tangible products– inventions. Copyright on the other hand requires a work to be "original/creative, in the literary, artistic or scientific domains and be expressed." The "be expressed" part is important, you can’t simply copyright a brainwave.
5. Trust your gut, but not at the expense of your head: Finally, one of the keys with any new idea is really to be honest with yourself. If you have a flash of inspiration followed by a handful of nagging doubts, it’s easy to set them aside because they don’t fit with the version of events you prefer. You need to be honest though. Conviction is important, but blind conviction is dangerous.
If you don’t trust yourself, try pitching it to other people. Explain your idea in a sentence and see how they respond. Einstein’s apocryphal quote -that if you can’t explain it to a six-year old, you don’t understand it yourself– applies here. If the other person looks puzzled you may need to rethink. After all, that person could be a potential customer and their reaction will help you gauge whether you have a real business opportunity on your hands or just an idea.
Steve Jobs, in a commencement address in 2005 at Stanford University, said "Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work." But being satisfied that it’s great work is about opening up to feedback, even if it’s negative. It doesn’t necessarily mean the idea isn’t a winner, but what it does mean is that you can act on that insight to iron out any flaws in your plan before taking it to market.
Like a heavyweight boxer looking for one big punch, expecting a flawless idea to arrive fully formed and catapult you to meteoric success isn’t realistic. Even with the best opportunities, you’ll need to dodge, weave and regroup along the way.
But if the idea is good enough, it’ll duck, weave and regroup along with you.
Neil Petch actively assists over 300 entrepreneurs and startups to conceive, plan, and build their businesses on a monthly basis.
After launching Virtuzone as the first private company formation business in the region over 10 years ago, Neil has led the company to set up more than 16,000 businesses, making it the largest, fastest-growing and best-known setup operator in the Middle East.
As the chairman of the holding company, Virtugroup, Neil also leads VirtuVest, an in-house angel investment vehicle; Virtuzone Mainland, a provider of directorship services, corporate sponsorship and facilitator of local Dubai and Abu Dhabi company setups; and Next Generation Equity, a citizenship-by-investment firm. Virtugroup has invested in and supported the growth of multiple companies and delivered passports in over 10 different jurisdictions. Virtugroup also enjoys partnerships with Dubai FDI, the Chamber of Commerce, Dubai Holdings (ARN), VFS, Regus, Etisalat, KPMG, Aramex and Beehive, and has received awards from Arabian Business and Entrepreneur Magazine, among others.
In addition to starting up businesses, Neil has held leadership roles in several companies. He helped establish ITP, the largest media publishing house in the Gulf, which he oversaw growing from two to 600 employees. At ITP, he spearheaded the launch of over 60 digital and print titles, including Time Out, Harper’s Bazaar, Arabian Business, Ahlan and Grazia.
As Managing Director of ENG Media, Neil launched the Coast FM radio station and numerous magazines, including MediaWeek. For the last seven years, Neil has also served as Chairman of GMG, the world’s first interbank financial brokerage based out of Dubai, with offices in DIFC and London. Due to his extensive knowledge and expertise, Neil has been appointed a member of the ‘Ease of Banking’ panel organised by the Chamber of Commerce.
Having lived in over a dozen countries and with a career spanning over 25 years in the UAE, Neil has the ability to merge astute cultural insight with fresh thinking, leveraging his seasoned business acumen, intuition and black book to repeatedly bring ideas to living, breathing success stories.
Neil has appeared in BBC (Dubai Dreams) and ITV (Piers Morgan) features on Dubai, as well as programmes on BBC World and Sky. He has participated as a judge on the radio programme Falcons’ Lair, an entrepreneurship reality show loosely based on the BBC production Dragons’ Den, as well as a similar TV competition hosted by MAD Talks. He now hosts Starting Up on Dubai Eye 103.8FM, the only national weekly show for the startup community in the world’s startup capital.
Neil also lends his in-depth market insight to fellow entrepreneurs and helps cultivate Public Private Partnerships as a Task Force Member of the Advisory Council, a coalition of key decision-makers and prominent movers of the UAE business landscape, led by EMIR and the Ministry of Economy.
He is also a regular speaker, panelist, and economic commentator, specialising in the SME sector.