📈 10 Ways to Gauge the Market Potential of Your Business Idea

🧠 Here’s a short thought exercise I like to do when considering business ideas.

I came across this years ago in the amazing pages of Josh Kaufman's “The Personal MBA,” which everyone interested in business should read.

Rate each of these ten factors on a scale - (0) being low potential, (10) being high potential.

If in doubt, try to be conservative. You are likely very good at fooling yourself - I know I am.

Here we go 👇

1. Urgency

➔ How bad do people want or need this right now?

💡 Renting any old movie is low urgency. Attending the premiere of an opening movie is high urgency.

2. Market size

➔ How many people are actively purchasing things like this?

💡 There is a massive market for cancer cures, but a marginal market for underwater weaving courses.

3. Pricing potential

➔ What is the highest price a typical purchaser would be willing to spend for a solution?

Lollipops sell for $0.5 - while aircraft carriers go for billions.

4. Cost of customer acquisition

➔ How easy is it to acquire a new customer? On average, how much will it cost to generate a sale, in both money and effort?

💡 High-traffic interstate restaurants spend little to bring in new customers, while government contractors can spend millions landing a major deal.

5. Cost of value delivery

➔ How much would it cost to create and deliver the value offered, in both money and effort?

💡 Delivering files via the internet is almost free. Inventing a product and building a factory costs millions.

6. Uniqueness of offer

➔ How unique is your offer versus competing offerings in the market, and how easy is it for potential competitors to copy you?

💡 There are many hair salons, but few companies offer private space travel.

7. Speed to market

➔ How quickly can you create something to sell?

💡 You can mow a neighbor's lawn in minutes, but opening a bank can take years.

8. Up-front investment

➔ How much will you have to invest before you're ready to sell?

💡 To be a housekeeper, all you need is a set of inexpensive cleaning products. To mine for gold, you need millions to purchase land and equipment.

9. Up-sell potential

➔ Are there related secondary offers that you could also present to purchasing customers?

💡 Customers who purchase razors need shaving cream and extra blades. Buy a frisbee, and you won't need another unless you lose it.

10. Evergreen potential

➔ Once the initial offer has been created, how much additional work will you have to put into it in order to continue selling?

💡 Business consulting requires ongoing work to get paid. A book can be produced once and then sold over and over as is.

🧮 Added up

When you are done with your assessment, add up the score.

💈 If the number you’re seeing is 50 or below, consider moving on to another idea. There are easier paths to riches.

🏅 If the score is 75 or above, you have a very promising idea - full speed ahead.

🥉 Anything between 50 and 75 has the potential to pay the bills, but might not be a home run - so plan accordingly.

Hope this helps 🎯

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