Good Idea VS Good Business

Recently, a friend came to me with what he called “a terrible idea” for a new experiment he was running. Why the heck would he preface his idea this way? Is it insecurity, or was he fishing for reassurance?

Either way, I quickly tried to set him straight with the following: a good idea and a good business are two very different things. I reassured him he had a solid idea that could genuinely help others, building on his personal experience. Whether it would make a profitable business? That’s a completely separate question. I had to call him out on dismissing the idea itself before even exploring its business potential.

Here’s the thing about ideas: they’re fragile. You must protect it as much as possible. You need to separate the concept’s merit from its business viability. A brilliant solution to a real problem might still fail as a business due to factors like:

• High customer acquisition costs
• Complex distribution channels
• Timing issues
• Market size limitations
• Operational challenges

While the market will eventually give you honest feedback about the business potential, you shouldn’t be the one tearing down the core idea. Your job is to protect the concept while objectively evaluating its business prospects.

So, how should you present your ideas to others?

Rule #1: Don’t EVER NEVER EVER Pitch to Non-Potential Customers 

This is crucial. Non-customers will give you biased feedback because they don’t experience the problem you’re solving. You will be tempted to ask them about pricing or how the copy on your site looks. DON’T! Instead, ask for introductions to people in your target market.

When Talking to Potential Customers:

1. Start by explaining your industry focus and your aim to find the right solution
2. Ask questions before presenting your offering, but avoid leading the conversation. You should be listening more than talking.

Key Questions to Ask Potential Customer:

• What’s the hardest part about [problem area]?
• Tell me about the last time you encountered this problem
• What solutions have you tried before?
• How do you currently solve this?
• What’s preventing you from solving this today?
• How much time/money do you currently spend on this?
• How much would you be willing to pay for a solution? (This often reveals surprising insights about pricing expectations)
• Who else do you know that has this problem?
• If this existed, who would you tell about it?

The Real Test: Closing the Deal 

If someone quotes a price they’d pay that aligns with your plans, try to close the deal right there – Venmo, PayPal, Cash App. Their reaction tells you everything about the business potential, not just the idea’s merit. If they hesitate, ask: “What would make this an immediate purchase for you?” Their answer becomes valuable feedback for your next customer conversation.

It’s important to understand the “Exploration Phase” 

This phase is where you bridge the gap between a good idea and a viable business. 

It really depends on the type of business

• Is it a one-time purchase or recurring revenue?

• How quickly can you secure paying customers?
• What features and price points drive purchases?
• Is there real value for customers? 
• Are they paying for months in advance are they reupping?
• How large is your potential customer base?
• How can you reach these customers efficiently?
• Are there legal compliance requirements that will take time to get the product purchase.

Remember: Having a great solution to a real problem is just the starting point. The business viability comes down to execution, market conditions, and a host of other factors. Don’t let initial business challenges make you doubt the fundamental value of your idea – but also don’t assume a valuable idea automatically translates into a successful business. Keep these evaluations separate, protect your core concept, and let market testing reveal wether or not you have a good business.