Written by Jamie Irvine | 3-minute read
The dream that most people have when they start their own business is to provide for their family and create freedom and flexibility in their lives.
They decide to start a business doing something they know how to do well, mechanics start repair shops, web designers start web development firms, barbers start barber shops, carpenters start renovation businesses.
If being good at what you do was enough to make a business successful we wouldn’t see the massive failure rates that we see. So, there must be more to it than just being able to do the work.
How can you evaluate a business idea?
Why is it important?
Sadly, most people that start their own service-based business end up chasing a nightmare that is disguised as a dream.
Instead of having more money they often go deep into debt and instead of having more time they end up working long days and sometimes 7-days a week.
Being able to evaluate a business idea before you start the business is critical to long-term success. But, how do you do it?
What is the blueprint?
To properly evaluate a business idea, you must ensure that it contains four fundamental components.
These four components are:
- Produce Predictable Results – The business must be able to produce predictable results for the customers, employees, suppliers, lenders, and investors.
- Operate Independently of Its Owner – The business must be able to be operated by systems that produce a predictable result for the people it serves which allows the owner to become independent of the operations of the business.
- Scale – The business must grow over time generating enough revenue and profit that the owner can be independent of the business and earn sufficient personal income.
- Can be Sold for a Profit – The business must at some point attract a buyer who is interested in purchasing the business because it produces a predictable result, operates independently of the owner, and scales.
If your business idea has the potential to do these four things, not only is your business idea viable but you have the blueprint of a great business that will actually be a dream instead of a nightmare.
Now a word of caution:
Your emotional attachment to your business idea or existing business may cloud your judgment.
You may be tempted to say, “well it doesn’t check all the boxes but its close.”
This is a trap and you must resist the urge to settle if you truly want to build a GREAT business.
All great businesses meet all the criteria contained within our definition of a great business because building a business with these criteria will result in having a business that will provide for your family and create freedom and flexibility in your life.
Let’s talk about your business.