Ideas & Decisions are the Foundation of Your Business
Your business probably started with an idea. You saw an opportunity in the marketplace to offer something new. Your idea might have been how to develop and deliver a new product/service, or it might have been how you could improve on a current product/service. Ideas are where every business starts.
But while a business starts an idea, it’s built on decisions. Decisions are the backbone of day-to-day operations and short and long-term strategic plans.
But all too often, when presented with a new idea, business owners don’t take the time to evaluate business ideas to determine the impact the idea will actually have on their business.
And at first, that might be okay.
When you’re just starting your business, you have lots of ideas. Ideas that excite you. You feel inspired and decide to implement your idea right away. And it’s easy to quickly put your ideas in place because your business is still relatively small. It doesn’t take a lot to shift directions and implement your idea. And if it doesn’t work out after a few months, it’s not a big deal because you didn’t invest much time and energy in it.
It’s a low-risk situation.
But now your business has grown. You have five or more team members, revenue is in the upper six-figures annually, and your goal is to hit – and then exceed – that seven-figure mark.
And because as a business visionary, you’re an idea person, you continue to have lots of ideas you’re excited about and want to implement. Right away.
It’s the classic case of shiny penny syndrome.
But the time to indulge your passion for every new idea that excites you has passed. Your business has grown, and it’s time to intentionally evaluate business ideas to determine if they’re aligned with your goals, if you have the available resources to implement the idea, and how much impact the idea will have on your business.
An intentional, strategic mindset enables you to qualify your ideas. By stepping through a disciplined process to evaluate business ideas, you can eliminate low-quality and low-impact ideas and focus on implementing high-impact ideas with a high ROI.
Who Should Evaluate Business Ideas?
Going through a process to evaluate business ideas doesn’t need to involve lengthy meetings and large committees. But you need to include at least one person who is not the idea person. This should be the one member of your team you rely on for critical thinking and getting things done. This is your go-to person when you want someone to identify the potential holes in an idea and need to think through the resources it will take to implement the idea.
But the most important quality they must possess is the ability to say “no” to the CEO or business owner. They must have the experience, qualifications, and leadership skills to tell you that while this may be a good idea, it’s not right for the business at this time. And it needs to be someone whose advice you respect. Not someone whose advice you’ll ignore and then bulldoze your team into implementing your idea.
Because that’s what every idea person needs; someone to balance their passion for implementing new ideas with the reality of the business’ current and future state.
Steps to Evaluate Business Ideas for Impact
So, now that you’ve decided who will have input on the decisions, let’s walk through the steps to evaluate business ideas for impact. Following a framework for making decisions will streamline the discussion and decision-making process and result in only implementing the ideas that will have a meaningful positive impact on your business.
- What is the idea?
This can be as brief as one sentence or as detailed as a full-page but get the idea down in writing. That way, everyone has a common understanding of the idea.
- What will this idea achieve?
This is the business problem you’re trying to solve or the goal you’re trying to achieve. Some business owners pursue ideas just because they like the idea. It sounds fun. Or maybe they enjoy the high of implementing new ideas. It’s best if there’s a business goal the idea is trying to achieve.
- Where does this idea fit into my strategic plan?
Does the idea accomplish one of the goals in your strategic plan? Is the idea a prerequisite to achieving one of your strategic goals? If not, will it divert resources (time, money, focus) from accomplishing your strategic goals? If the idea does not align with or support one or more of your strategic goals, you may want to put it aside for now and circle back to it later.
- What are the possible benefits of this idea?
While this sounds like #2, it’s a bit different. Instead of describing the goal, you outline the potential benefits of the idea. For example, when exploring an idea to purchase CRM software to achieve the goal of increased sales, you could list improved customer satisfaction, optimization of marketing activities, and automation of routine tasks as possible benefits. It’s helpful to identify all the possible benefits of your idea to evaluate the full potential your idea could have on your business.
- What are the success criteria?
When you have an idea you’re excited about, it’s tough to stop and establish success criteria before you rush in and begin implementation. But you need to know whether the work you and your team will have to do to make the idea happen will pay off. Because if you implement ideas that don’t have a payoff, you’ll soon find yourself out of business. Establishing anticipated success criteria can help you proactively identify whether the idea is worth pursuing in the first place, evaluate if the idea was a success in implementation, or if you need to fine-tune the idea before implementation. Success criteria are worth their weight in gold.
- What are the best-case, moderate-success, and worst-case scenarios?
This step is like writing a what-if story. You imagine the best possible outcome you could achieve, what moderate success might look like, and what the worst-case scenario would be. This step helps clarify the idea’s possibilities so that you’re not just focused on your vision of the idea being 1000% successful. It’s easy to envision a happily-ever-after scenario for your idea, but it’s helpful to consider all the possible outcomes.
- What resources will this require?
This is where you identify all the necessary resources to implement the decision. Time, money, materials, and the need to hire or redeploy current team members are all things you should consider. If the idea requires a lot of resources to implement but doesn’t have a big payoff, it’s better to recognize that when you’re still in the idea stage as opposed to the end of implementation.
- What’s the risk level?
Different people have different risk tolerance levels , and different businesses can afford to pursue different levels of risk. The level of risk that works for you and your business is specific to where you’re at in your business, the industry you’re in, and your ability to manage risk from both process and team leadership perspectives. You probably intuitively know how much risk you’re comfortable with, but if the idea involves team member implementation, you should also consider your ability to lead the team through risk and the risk comfort level of individual team members. You don’t want to try to implement a risky idea you think will work, and then your entire team bails because they can’t handle the level of stress associated with implementing your idea.
- Test Your Idea
Before you go all-in on implementing your idea, test it on a smaller scale. Try implementing the new process with a handful of clients or a small workgroup before implementing it across the board. This will allow you to identify and work out any kinks in the process before full-scale implementation. It’s much easier to fix a process that has impacted a few people than something that’s impacted everyone.
Make Your Decision
How long you take to evaluate business ideas is totally up to you. The important thing is to go through the process without skipping steps or cutting corners. Include others in the process whose opinions you value and trust. Look back at the information you’ve gathered, consider the pros and cons you’ve uncovered, and then make a decision.
Statistically, only 6% of business ideas end up being good ideas. So, it’s essential to save time, money, and avoid unnecessary stress by taking the time to evaluate business ideas before moving forward with implementation. And you might find that an idea you thought was a dud, when thoroughly evaluated, is actually a winner!