A fun way to think about business ideas

Asking the question “Is this a good business idea?” is very different from asking “Is this business idea a good fit for me?”. When I first started out, I only thought about the former. If you actually want to start a business, answering the second question is at least as important!

So how do you find an answer to the question “Is this a good fit for me?”.

Ask yourself: Is it fun?

I found that fun is a great indicator to judge if a business idea is a good fit for me. Also, I like to think about any business idea in terms of two phases. Because once you have an idea, there are only two things left to do:

  • create the business (phase 1), by bringing the idea into the world, and then
  • run the business (phase 2).

Phase 1 takes time, it takes money, and hopefully, it is fun for you. Phase 2 also takes time, but it should make you money (otherwise it’s just a hobby), and, again, hopefully it’s fun for you.

Combining the idea of fund with the two phases leads to this simple framework for categorizing business ideas:

Phase 1Phase 2
How much fun will I have?a lot of fun, because I can spent most of my time creating softwareprobably less fun than phase 1, because I must spent more time on things that I don’t enjoy as much
How long will it take?monthsuntil I decide to stop
How much time do I have to commit regularly?whatever I decidehigh, because I want to provide great customer service and respond quickly

If you want, you can get more specific: Think about what makes things fun for you and use these as separate categories. For example:

  • How creative can I be during each phase?
  • Will I work alone or with other people?
  • Will I need to be on-call for emergencies?
  • How much of the work can I delegate?

But, of course, fun is not a very good indicator of an idea is financially viable. So before you consider starting a business, just because you think it sounds like fun, here are some more things you should consider:

  • What is the expected revenue?
  • How volatile is the revenue stream?
  • How likely is it that you will succeed reaching that expected revenue?
  • What is the risk/reward ratio, i.e. the likelihood of success vs. the expected revenue?

See also