Good Ideas vs Good Businesses: Which One Do You Have?

I find for most entrepreneurs I meet they feel it is very hard to stop having business ideas. Once you go down the road of deciding to do your own thing and see how making a business out of solving a problem can lead to a very rewarding business it is hard to then stop having more ideas.

I know I personally have to make a significant mental effort to give my ideas just enough space to write them down and then think them through for a few hours and then move back to what I am supposed to be doing.

If I don’t, they can take over my thoughts and practically force me into starting something else that I won’t have enough time or focus for and will become only a half-baked side project that falls by the wayside. I’ve gotten better at this over the years, but it can still be a struggle.

What I’ve also noticed though is a lot of entrepreneurs still have a hard time telling a good business from a good idea. And that’s a super important differentiation!

If you have a good idea that would also be a good business, then moving ahead with it might make sense if it isn’t going to pull you away from something you’re already doing that is a more lucrative and rewarding use of your time.

On the other hand, if you have a good idea that would be a terrible business to start, but you don’t realize that, then you could definitely waste a lot of time, energy, and funds in trying to get something going that just isn’t likely to work – at least not the way you’d like.

For example, I’m currently sitting on an idea now (it’s so good!) that I am really trying to put aside for “later” when I have time but it’s a challenge for sure. The problem is it checks all the boxes I know make for a good business to start:

  • It won’t cost much to launch a minimum viable version
  • There is existing market demand (lots of people already paying for a very similar thing)
  • I can differentiate mine and explain why it’s better and different enough to either also buy or switch from what customers are currently buying
  • I am personally interested in the topic so I’ve got an added interest in seeing this come together from an “I would be a customer myself” standpoint

As good as this is though, my full-time day job (growing CapForge!) is a better, more sure thing to use of my time and in my spare time I have lots of other things to do that I value more than launching another business. So I’m OK with putting this one on the back burner for when CapForge doesn’t need me as much anymore and I can invest some time in launching this other thing. It will keep!

So how do you know if your business is a good idea but NOT a good business to start and avoid all the headaches that come from going down this road?

A business idea that may be a good concept but is hard or even practically impossible to start successfully is one that has any of the following characteristics, in no particular order:

  • It requires government approval or buy-in at any level
  • It requires more capital to see through to completion than you can personally provide comfortably
  • It requires potential customers to be educated about the topic before they decide if they want to buy
  • It’s very hard to identify or find or get access to people who would make the decision to buy
  • It requires supporting infrastructure to also be available
  • It only works with widespread adoption
  • It requires that it be fully built and proven before you can determine if a customer would even be interested
  • It will take a year or more to go from idea to launch
  • There is no market for it currently that you can take market share away form
  • There is nothing unique or differentiated about it – anyone can copy the concept and produce the same results or better in little or no time after they hear it

If you test your idea against the requirements on this list and find it has one (or more!) of these that it needs to succeed then you probably should move on from it. Of course, there are stories of people who overcame these kinds of hurdles but for each one that did there are ninety-nine more who didn’t.

To push through these kinds of obstacles you have to have a nearly fanatical passion to see your idea through. If it’s just an idea that seems like a good way to make some extra money or have another business, you’ll never survive all the hits you’re going to take along the way.

Here’s an example of an idea like this. I recently got my private pilot’s license and one of the things you learn how to do with that is talk to air traffic control and airport towers on the radio. Here’s the thing with that – using a radio for this is 100-year-old technology! The sound can be bad, only one person can talk at a time, you have to say your ID each time so no one is confused about who is talking and the directions aren’t as standardized as you’d expect at all.

What would be much better is a system where most communication was done via coded messages with each one containing all my info and where I don’t have to wait for a clear spot on the radio to say my message. The controllers would be able to send messages to many planes at once and get acknowledgment back quickly with much less chance for screwed-up transmissions and a way to see the history of the call.

For example – if they tell me to “squawk 5472 and then hit Ident” I might miss the number and have to get it repeated. With a digital system, even if I didn’t hear it, I could read the number they sent me and comply.

It would be a much better system. And there are hundreds of thousands of planes and thousands of airports that could use this. It’s a $250M per year idea at minimum. But I’d need the FAA (Federal Aviation Administration) to agree to this new equipment and the standards everyone would use. Pilots and airlines would want to chime in. Other companies would want to get in on building these systems, too. It will take $100M just to get to the trial phase. It will take 20 years to get everyone on board with whatever the final version looks like. And if only some people use it and some don’t, it doesn’t work nearly as well.

It’s a good idea and long overdue. But I’d never in a million years try to pull this off myself.

Now this example probably seems pretty obvious. But you’d be surprised at how many seemingly pretty simple and easy ideas turn out to be extremely complicated and difficult to pull off. If it doesn’t pass every single one of the bullet point tests above then it’s a good one to let someone else have! There are a ton of other good ideas out there that you can do successfully with just your own bankroll and efforts so keep looking.

Don’t give up and don’t decide to go all in on one of these if it can’t really be done unless it is truly your one and only obsessive passion. In that case, best of luck, and try to make the most of the journey because it’s going to be a long one! 

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