MBA2573 Q&A Wednesday: How Do I Know If My Business Idea Is Worth Pursuing?

0:00Did you know that 42 % of startups fail because there's no market need for their product or service? That's nearly half of all businesses. That's according to CB Insights. The good news is you can avoid becoming part of that statistic by validating your business idea first. Today, I'm going to show you how to figure out if your business idea is worth pursuing before you invest too much time and money into it.

0:29Welcome back to the$100 MBA show. I'm your host, Omar Zinhome, where I show you how to start, grow, and scale a business three days a week, Monday, Wednesday, Friday. Today's Q &A Wednesday, where we answer a question from one of our listeners, one of our viewers, one of our community members. If you've got a question you want to ask, go ahead and send us your question over at 100mba.net slash Q. Today's question is from Steph, and Steph asks, how do I know if my business idea is worth pursuing? Steph, this is a question every entrepreneur faces. I've asked this question myself several times in my journey, and the best way to find out is to test it, is to figure out if it's really a good idea in the real world.

1:09In today's episode, I'll share with you a step-by-step framework you can use to validate your business idea quickly and effectively, and it won't break the bank. So let's get into it. Step one is to identify the problem. Every successful business does one thing, solves a problem. If your idea doesn't address a specific pain point, it's not likely to succeed. So why does this matter? People pay for solutions to their problems, not for ideas that sound cool. And by the way, fun is a solution to cure boredom. Luxuries are a solution to feel significant. It doesn't have to be like a pill to solve a pain.

1:51For example, when we created Webinar Ninja, we identified that there were many people that were struggling with clunky, overcomplex webinar software. My solution was to create a user-friendly, all-in-one platform so that they don't have to hodgepodge and Frankenstein all different pieces of software together. So your action step is to write down, right now, the problem your business idea solves. Then ask yourself, is this problem something that people are willing to pay for to solve? Are they willing to part from their hard-earned dollar so that you can help them solve it? If so, you have a winner on your hands.

2:29Step two, define your target audience. You can have a great product, but it has to be given to the right audience. Who are you solving this problem for? A great business idea aligns with a specific group of people who need what you're offering. For example, if a business offers top-notch Wagyu beef steaks delivered to your home, My target audience are not vegans. They're not vegetarians. They're people that enjoy and love great quality steaks. And it's also not people that look for bargain steaks at Costco. So just to drill this home, let's again understand why does this matter? If you try to appeal to everyone, you'll appeal to no one.

3:12This is just the fact of life and business. Focused targeting leads to better results because you're talking to somebody specifically and that person is going to feel like, hey, you're talking to me. You get me. You understand me. For example, at the$100 MBA, our audience are entrepreneurs who want practical business lessons without the fluff. People that are getting started, want some traction, don't want a bunch of jargon. They want an action plan. They want something that they can do to move forward. We're tailored to those types of people, People that want to study business theoretically and they just love the intellectual stimulation, we are not for them.

3:53And knowing your target audience makes it easier for you to create the perfect solution for them. So as an action step, create a simple profile of your ideal customer. Write it down right now in your notebook. Include their pain points, their goals, and where do they spend their time online? What sites do they visit? What types of other products or services do they buy? How do they spend their time offline? Create an avatar, create a profile of your perfect customer. Step three, test the market demand. Now it's time to find out if there's actual demand for your idea. And you want to make sure you have enough demand to make it worth your time and effort.

4:33Why does this matter? Because without demand, even the best idea won't succeed. You need proof. You need factual evidence that people are actively looking for what you have to offer and are paying for solutions like yours. This means there might be some competition, but your solution, your product, your service is going to do a better job at solving the problem. And that's why they're going to choose you. Right. But the fact that they're looking for a solution, even if that solution is not that great, means there's demand. For example, before launching Webinar News, your software company, we created a landing page and we sent people to it and pre-sold the software to see if there's actual demand.

5:15People are willing to put down some money in the promise that they will get a great solution to this problem to run more effective, easier webinars in a few months when we deliver the software. If people were willing to part with their dollar on that promise and pre-buy or sign up for this early adopter sale, then I knew for a fact that, hey, these people are going to love my product. I have a good product on my hands. I think people are going to love this even after the launch and for years to come. So your action step is to start validating the interest. You can even do this by using tools like Google Trends or there's another one called Exploding Topics.

6:00And you can research your solution keywords to see if people are searching for these ideas, for these solutions. You can create a pre-launch page with a simple landing page and just gauge interest. You can even just gauge interest by asking them to leave their name and email address to get a launch discount and get on the waiting list. Step four is to create a minimal viable product. Minimal Viable Product basically is exactly what it sounds. It's creating a product that's just good enough to solve the problem. It's not perfect. It's not everything. It's just the version one of what your solution is going to be.

6:37This means you don't want to spend months or years perfecting this idea before you put it out on the market and test it. Start with a simple version of your product or service and just give them enough to deliver on the core value. This matters because an MVP allows you to test your idea in the real world with minimal investment before you put a lot of money and effort into something that people don't want. For example, when we launched our software webinar Ninja, we had a beta version and it looked very, very basic. It didn't really do everything it does today, but it shouldn't because it's just getting started.

7:16When we started, we just did live webinars and it was a very simple version of live webinars. Today, Webinar Ninja does all kinds of stuff, automated webinars and hybrid webinars and courses and a whole bunch of other stuff. And we have so many features. It's crazy. I say we still, but we got acquired after 10 years by ProProfs, a big company, and we built a great valuable product. I'm very proud of the acquisition. But the point I'm making here is it all started with a very basic version and then we iterated and improved over the years. So as an action step for you right now, identify the most crucial feature or service your idea offers.

7:52Build a basic version of it and start selling it. Start putting it out in the world. This is the real world, the reality of your product's future. Step five is to gather feedback. Once you have your MVP out in the world, you get your product out there, you got to listen to your customers. Your first customers are gold. They're going to give you feedback that you need so you can iterate and improve your product. So you're going to want to get in touch with your customers, sending emails, get on video calls, get them to fill out surveys. All information in any form is going to be useful. This is really important.

8:25This matters because feedback helps you refine your product according to your customers needs. aligns with their values and what they actually are willing to pay for. It's going to be very hard for you to predict this before you actually give them something in their hands to use or to experience if this is a service. Anytime I launch any kind of product, whether it was our software webinar ninja, or it was a program or a course like the$100 MBA, the first time I put it out there, I am glued to my inbox, getting on calls with my customers by doing free coaching just to figure out what am I doing right with the program, with the product, with the service, and what am I doing not so great, how I can improve it.

9:06What are the small little changes I can make that can make a huge difference? So as an action step for you, set up a simple feedback loop. Choose one and get started, whether it's to ask your first customers to email you and say, hey, can you give me three things you love, three things you don't love so much, and I would love to learn more. That's simple, an email, or you can just email all your customers to say, would you like to grab a time 15 minutes, 20 minutes on my calendar? I would love to get your feedback and learn more how I can improve this product for you. Again, ask them what they love, what they would change and what they would add.

9:41Step six, evaluate the results. After testing your idea, take a step back and evaluate. Are people paying for your solution? Are they coming back for more? If the answer is yes, you got That's something worth pursuing. It's pretty cool, right? If not, it's okay. You can pivot. You can change the product, change the audience, or move on altogether. Here's the truth. Not every idea is going to be a winner. Not every product you put out there is going to be amazing. I know this because most of my successes started out with a failed product, right? Failing fast is better than failing slowly. That's the worst where you're working on something that's just a total dud for years.

10:24And there goes a whole bunch of years of your life and a whole bunch of money and a whole bunch of effort. And that's really demotivating. So if you can figure out if you have a winner or a loser on your hands as quickly as possible, that's the best thing you can do. So you want to analyze the results action step, by the way, this action step, analyze the results. If your idea, shows promise, double down, keep going. If not, don't be afraid to pivot or to start fresh. One easy way to know, and this is kind of a metric I use, is the 5 % rule. If you email 100 people on your email list for every 100 people and 5 % of them buy, meaning they spend money no matter how much on that product or service, you have a good winner on your hand.

11:09That's something that you double down on, right? Anywhere around that range, three to 5%, I would say is a winner. So in conclusion, Steph, who asked today's question, the key to knowing if your business idea is worth pursuing is testing it right in the real world, identifying the problem, defining your audience, testing demand, creating an MVP, gathering feedback, and then evaluating. And remember the best ideas are the ones that solve real problems for real people in the real world. So don't overthink it. Get out there and test. Thanks for tuning into the$100 MBA show. If you want more valuable business lessons like this one, just hit subscribe, hit follow on your favorite podcast app.

11:50If you're watching on YouTube, hit subscribe and you'll get our next episode automatically. We publish Monday, Wednesday, Friday, and that way it's right there in your feed and you can continue to grow and move forward in your journey. Thanks so much. And I'll see you in the next episode.

12:08We'll see you next time.