In this blog post, we are sharing the 4 business idea criteria you can use to help you estimate the viability – or potential profitability – of a business idea you have before you actually set it into motion.
Every now and then, you’ll have a great business idea that you feel could be a million-dollar idea – but without judging it against these 4 criteria, you won’t ever truly know. If you try to begin a business without first evaluating it’s potential profitability and viability, you are very likely to end up sorely disappointed – and deeply in debt.
Instead of taking that route, you can simply remember the acronym AIRR to evaluate your next business idea – which stands for:
A dvantageous Idea
I ndustry Involvement
R equired Resources
R eady Customers
If a business idea has these 4 criteria, chances are, it’s a smart move. But how do you discover if an idea is advantageous, in the right industry, has access to the right resources, and an existing market to sell to?
Following are questions that you should ask yourself as you address each of the 4 business idea criteria.
Advantageous idea. Just how beneficial is this business idea to the customer you would be serving? How advantageous is it to you?
Industry involvement. Does the industry your idea falls under have any special rules or regulations that would make it more difficult to participate? Do you have a solid understanding of the industry yet?
Required resources. Do you know yet what resources will be required to run a business like this? How will you get those resources? Can you ensure your business would have access to all the required resources?
Ready customers. Can you identify any market segments that would be interested in your idea? Can you conduct a small, informal survey to find out who is interested in your idea? Do you know anyone who specifically says they would be a paying customer for this idea or product?
If you use this list of business idea criteria and go down the list answering each question, you will have a solid readout of how viable this business idea is likely to be down the road. If there are any questions you could not answer due to a lack of information or knowledge, fix that.
Find out the missing information so you can fully evaluate whether your idea is ready to move into the action phase. Identify any weak spots you see through your comparison to the business idea criteria and work on strengthening those spots before attempting to build a business.