TODAY YOU'RE GOING TO LEARN TO ASSESS BUSINESS IDEAS, TOSS OUT ONES THAT WON'T WORK, AND FOCUS ON DEVELOPING A WELL-CONCEIVED CRAFT BUSINESS IDEA WITH A REAL CHANCE FOR SUCCESS.
If you're a creative type, I'm going to bet that you have plenty of ideas. You probably have ten new ideas for your craft business before breakfast.
The problem with ideas, though, is they always appear so lovely, compelling and exciting on the surface. We often fall in love at first sight with our ideas. But as solo-entrepreneurs, we only have time to pursue a few of our very best ideas.
We need a way to assess business ideas - to really understand them, and challenge them before we fall in love with them - before we commit precious time and financial resources to bringing them to fruition.
I've been through the process myself and helped clients through the process of assessing life-changing ideas many times. It really is quite liberating to look at an idea, examine it from all sides and determine if it is actually as bright, shiny and promising as it appears on first glance.
Ask yourself questions like:
Once you've been through that process, you can either dive in with deeper knowledge about how to execute our idea. Or, you can let it go without regret, knowing the idea wasn't right for you or your business.
There really is an enormous amount of information I could share, so over the course of three articles, I'm going to winnow it down to some key elements that are most relevant to craft business owners.
If you're interested in a more in-depth exploration of your creative business ideas, have a look at the course, The Best Craft Business for You.
CLARIFY YOUR IDEA(S)
EXAMINE RISK VERSUS REWARD
CLARIFY YOUR IDEA(S) IN MORE DETAIL
Ideally, you will come to this process with more than one idea in mind.
If you only have one idea, you risk falling in love with that idea. You don't leave yourself with any other option when you only have one idea, so you run the risk of hanging on to that idea even if evidence shows that it might not be the best idea for your business.
You need to be ready to scrap an idea if you discover a deal-breaker problem with your concept. It's easier to let go of one option if you have other possibilities in mind.
Step one, then, is to get yourself into a mindset in which you are not in love with your ideas, and you are willing to scrap one of them if you discover a fatal flaw that has no real solution.
You need to be able to understand your ideas clearly, so you can assess them effectively. When we first come up with ideas they are not fully formed. We have a general impression of how something might work, but, until we think through the idea systematically, we lack necessary details and information.
You need to write up a summary of each of your business ideas.
Brainstorm what the product is, and what are the special features or benefits of the product. Answer questions like:
You don't have to do a huge amount of research at this point. For the most part, you can just brainstorm based on what you already know.
If you need to do a quick search for the cost of a raw material you use, that's fine, but don't get mired in research right away. Just summarize so you can clarify in your mind what it is you are considering.
Now look for problems, both solvable ones and deal-breakers.
It might feel early to start looking for problems, but really, it's better to find problems early on, before you've invested a lot of time and money into developing an idea. Looking for problems early will help you solve them and make your product better. If the problem turns out to be an unsolvable fatal flaw, you'll be able to move forward to a more viable idea.
Do you notice anything that would be problematic with your product? Consider your resources. Do you have the time, money, and skill required to develop your idea? Do you have any concerns about selling your product to your target market?
Make note of any problems, and red flag any ideas that have problems that are of real concern to you.
We often think about assessing the risk of taking on a project, but do we ever think about carefully assessing the potential for reward? In assessing the reward, you're asking yourself how much your business could reasonably benefit from the development of your product idea.
That kind of assessment will give you some indication if it is worth your time, or if you'd be better off spending your time pursuing another project. As a solo-entrepreneur, your time is almost certainly your most scarce and precious commodity. You need to use it well.
I'm aware that this information can be VERY tough to know, especially if you are just starting out. You might have to use your best educated guess.
If you have an established business, you'll likely have a better sense. For example, if you have your own website, or an Etsy shop, you might have an idea how many items you typically sell in a given time frame or based on a certain number of visitors to your site. Or if you've sold at craft shows before, you might have a good idea how much you typically make depending on the attendance numbers at the show.
Often, for new business owners, this assessment comes down to making an educated guess, but it really is helpful to think through the reward potential.
Here come the big questions you need to ask yourself before developing an idea. Consider:
Consider the amount of money you will need to spend to develop the product. How much income will you need to invest in raw materials, tools, skill development, marketing opportunities...
Consider loss of time when you consider risk. Your time is worth something. Give yourself a specific dollar per hour rate and determine the approximate amount of time you'd spend in activities like product development, production, sourcing materials, skill development. Think about time you'll spend developing and creating the product, launching, marketing, providing customer care, credit card collecting... All of that time carries value.
There are actually specific mathematical formulas you can use for assessing risk and reward. I debated whether to include them but decided against it because they can get complex and also because often, when you're just starting out in a craft business, you simply don't have the information you need to make then numbers truly accurate.
So, instead of formulas, we're looking at it on a more general, broader scale. Trying to get a good grip on potential reward as well as potential risk, and then weighing these factors against each other.
Looking at the notes you made about the rewards and risks of each idea, consider the following:
If something is lower risk:
If it is higher risk:
Now that you've assessed risk and reward, you'll have more information to be in a better position to assess problems.
Don't be so in love with your idea that you ignore a problem. Don't assume you have to go forward with an idea just because you've researched it to this point. You are a creative person; you will come up with other ideas if you discover one you are researching has a fatal flaw.
At the same time, don't drop an idea immediately just because you discover a potential problem. Work through it. Look for solutions. The solutions you find here may really differentiate your product from your competitors.
When we talk about potential risk, it's good to be a craft business owner.
Craft businesses are generally low risk enterprises. Certainly, your time and financial risk will vary depending on your process, and the equipment and raw materials you need, whether you need to invest some time sharpening a skill, and where you decide to sell your products. However, you can often start this type of business on a part time basis. There's no need to give up your day job. Plus, there's a good chance you have equipment and some raw materials on hand because craft businesses often begin with an area of specialization that is already a hobby.
When we talk about potential reward, craft business owners need to be careful.
If you are making products by hand, that means the growth of your business (your reward) is intrinsically limited by the time you have to create your items. That might be fine based on your goals. It's not an automatic deal-breaker, but it is something to keep in mind. When you consider the time it takes to make an item, and the profit on each item, do the numbers work? Will the reward meet your expectations? Are there ways to change your product or your production process to increase the potential reward?
So far you've clarified your ideas, looked for problems, and assessed and weighed potential reward and risk for each of your ideas. At this point, you might be ready to let go of an idea or two.
If you've found that one of your ideas has a very clear deal-breaker, insolvable problem, it needs to go.
Similarly, if you've discovered that you're just not in a position to develop a specific type of product, you might want to put that idea on the shelf for future consideration.
Maybe you're just not excited about an idea anymore. After thinking it through in more detail, perhaps the reward of developing the idea just doesn't seem worth the work and risk involved.
Whatever the reason, if you've discovered that an idea really isn't viable, feel free to drop it at this stage, and move on to something with more promise.
I'm going to assume you have an idea or two that have survived the initial assessment. Now it's worthwhile to invest some time in fleshing out the ideas in more detail.
Describe your product in thorough detail.
Imagine your target customer using your product. Ask yourself: How does she interact with it? How does she feel when using your product? What is her objective (what is she trying to get from using your product)? Does your product successfully deliver on that objective? What you can do to improve on the experience?
Connecting your customer with your product in your mind in this way can help you improve the design, find and solve problems, and find benefits you might not have considered.
Next, do some simple, initial research. There's no need to spend hours on information that might be tough to find, but make sure you have all of the basics you need to know including things like:
If, for example, your product requires expensive raw materials or a long time to create each item, but the typical selling price is low, you need to know these things (and develop a solution) before you commit to developing the idea.
Have a very honest conversation with yourself about whether you think people would actually buy your product at a price that allows you to make a reasonable profit.
Be willing to let go of an idea if it doesn't pan out. Yes, you have invested some time in assessing the idea. But if it's really not workable, in letting go, you'll save yourself time and pain, and you can move on more quickly to an idea that will work.
Once you get your ideas narrowed down to a single winner, it's time to take your testing to the next level.
You might need more detailed and structured guidance to examine all of your options and choose the business that's the best fit for you. It's worth spending some time in the early stages of your business to make sure you're going in the right direction.
I've developed a course called The Best Craft Business for You to help craft professionals assess all of their skills, resources, and options to find a creative business that's a good fit. You can learn more about developing The Best Craft Business for you here.
Assess Business Ideas