Criteria that make a business idea a good bet

Starting a new company / startup always comes with a high risk of failure. Its said that 9 out of 10 new startups don’t survive the first year. About 2 years ago my cousin Joscha and I met for a weekend to discuss online business ideas. I know it sounds a bit crazy but this is what we do sometimes: book a little apartment in the middle of nowhere, buy some bottles of wine and talk about online business ideas.

That weekend we spent a good amount of time thinking about which criteria a (online) business idea must fulfill in order to maximize the chances of success. We came up with a whole list of things. Whenever a new idea pops up we pull out our list and check whether this is an interesting thing for us or not.

I’m not saying that if an idea doesn’t fulfill the criteria it can’t be successful, but rather that we believe that an idea that fulfills them is much more likely to be successful.

I will explain some of the criteria on the list in more detail in further posts, as well as why we think it is an important criteria. But first the list:

  • Product is scalable (twice as many customers doesn’t mean twice the amount of work) I use here the word product as a synonym for business idea or service.
  • Product is sold directly or as part of the transaction (e.g. eBay)
    → Direct monetization, not indirect through advertisements or the like
  • You are successful if your customers are successful. Use this for your monetizing model
  • Create a new market or change an existing market with the product / service
  • Sell to small or midrange companies
    → end users are not very willing to pay for online services (see  for example email providers)
    → big companies are hard to target, the processes are slow, its hard to get in
  • Product is for a „slow Market“, not a Hype market (huge today, tomorrow dead)
    → Slower development acceptable, no “IT war” with competitors
    → Technical investment is not too big
  • Avoid an “all or nothing market” → You don’t need a monopoly to be successful:
    • eg. eBay: There can be only one eBay → High risk from competitors
    • eg. Basecamp → market can be shared, you don’t need to be the biggest to be successful
  • Aim for an homogeneous target group.
    → Makes marketing easier
    → makes it easier to fulfill their needs
  • If you need to build up a brand it can be archived or accelerated through one or some big partners.
  • The product must be fun/interesting to you
This entry was posted in internet startup and tagged , , , . Bookmark the permalink.

One Response to Criteria that make a business idea a good bet

  1. Patrick Schweizer says:

    I’ve just found another list that gives general tips about online business. Check it out, its worth a read.

Leave a Reply

Your email address will not be published. Required fields are marked *