I listened to a podcast given by a Harvard MBA who gave 50 things to consider when evaluating a business idea. 50! It made my head hurt.
Micro business should not need 50 things to consider. How about five? Here’s five things to think about when picking an idea for a micro businesses.
1. Do you really like the product or service? Do you use it yourself? You need to be enthusiastic about what you are selling so that people to buy from you. Hopefully, you have used the product yourself and can tell customers how great it is from your personal experience.
2. Is it profitable? Do a cost-benefit analysis to calculate how profitable your business could be. Don;t know who to do a cost-benefit analysis? It’s all explained in Starting a Micro Business.
3. Is there a need? You can’t sell ice to Eskimos-there’s no need, but you can sell ice in Florida! Evaluate if there is need for your product or service carefully. Try doing some surveys of potential customers or test your product on a few customers first.
4. What are the start-up costs? Micro business should not need a lot of start up money. If your idea takes a lot of money just to start, it is too risky for a micro business. Think about launching another, simpler micro business first to raise the start up money for your second venture.
5. Is it manageable for you? You may have a great idea, but it might consume all your free time. Save that idea for when you have more time and launch a simpler micro now to learn the ropes.
Those five questions are enough to help you determine if your idea would make a good micro business.
More tips on starting a micro business can be found in Starting a Micro Business. Available in print and ebook.
Carol Topp, CPA