The Near Futurist
5Oct/12Off

So I’ve got this idea for a business…

We've all had that moment when we come up with the most awesome business idea that will no doubt change the world. Most of these ideas are shrugged off, as we move on to more pressing things in our lives right in front of us. But what if you decide that you do want to take this idea seriously and build a business. The first question that any potential entrepreneur has to be, "Is this idea worth spending time on to grow it into a business?" Put another way, a certain amount of cost is sunk to build a business (time, money, resources), so can we be sure that the corresponding revenue will be there sustain and grow the business?

This is of course the proverbially $64M question (or in Apple's case, as of Oct 2012, possibly the $640B question!). I've spent time thinking about this question over the last several years, as I encountered variations on this during my time at Google, StumbleUpon, and Media Camp (Turner). I recently spoke with an entrepreneur looking to build a business, and worked with him through the things he needed to know for himself to come up with a solid case for why he should (or shouldn't) start his business. I've collected and cleaned up the list that we went through, and have posted it here. Hope you find it helpful, and of course, I would love to hear your feedback! Also, it's worth noting that this is for a business that would primarily rely on advertising for revenue, and potentially include third-parties to partner with to help drive growth and revenue.

Who is our user or customer?

  • Who is the user or customer for this business?
  • What demographic is the business going after? Age, gender, location.
  • What is the value this user derives? Are they saving time, or spending time?
  • What will keep the user coming back?

Who is our advertiser?

  • Who will pay for this, and why?
  • How much are they willing to pay?
  • Is this additional cost, or cannibalized cost? (i.e. Are they pulling existing budget, or new line item in spend?)
  • What is the advertiser's value from spending on your product?

Who is our partner?

  • Who will integrate this, and why?
  • What is the revenue model with partners?
  • Is there prestige with the partner's brand association?
  • Is there value with knowledge/expertise that the partner brings?
  • What is the value proposition for the partner?

Advertiser segments

  • Size
    • Small (individuals, experts, celebrities)
    • Medium (SMB)
    • Large (companies, orgs)
  • Industry vertical
    • Media
    • Finance
    • Travel
    • CPG
    • Automotive
    • ...
  • Goals
    • Direct response (CPC, CPA)
    • Brand awareness (CPM, rev share?)
  • Budget
    • <$100/month
    • $100-$1000/month
    • >$1000/month

Publisher segments

  • Size
    • Small (individuals, experts, celebrities)
    • Medium (SMB)
    • Large (companies, orgs)
  • Type
    • Media publishers
    • Companies/orgs?
    • Celebrities
    • Bloggers, experts, tastemakers

How to gather data

  • Surveys
  • AdWords/FB/StumbleUpon ads
  • Focus groups
  • Conferences/networking events