Evaluating Several Business Ideas: How to Decide on One Focus and Avoid Analysis Paralysis

by Corey Philip
October 15, 2019

Analysis paralysis in starting a new business occurs in two ways. One of them is when you have a hyperactive mind with several ideas that could potentially be a business, but you can never be too sure about any one of them.

The other is when you really want to start a business and have a business mindset, so then you come up with good ideas and they all have the potential, but none stands out enough or is the superior one among the list.

Questions to Ask When Overwhelmed with Ideas

I’ve seen too many people online and in real life struggle with at least one of these. Perhaps you’re in the same boat? This can feel like a dead-end, but actually this situation opens up a lot of questions and considerations that can help you. Here are some that you should be asking yourself in the process of evaluating your choices.

How probable is your idea to be materialized?

We all have good ideas that could be good enough to turn into business, but so many ideas are also only seemingly great in theory. They’re not really actionable. In a practical and tangible sense, you’ll know it’s not really attainable if it’s not profitable. But there are other ways of knowing if they don’t deserve a spot on your list of choices.

In the first place, do you understand the business processes that would be required to serve your customers? Do you already have some knowledge of it or is it something you also have yet to learn?

What about the customer? Do you understand their needs and do you have a specific person in mind and a specific problem of theirs you want to solve? An individual customer avatar can fit into this, but the market is a much wider aspect that also includes the competition, the industry trends, and other similar data. All these information are important to determine if your business idea is actually doable.

Is there a problem that you’re trying to solve?

Some of the best business ideas that actually last are those that fill a void in the market, a gap in the industry. There are loopholes anywhere, even in the most saturated market. You just have to find it and come up with a solution.

Some people don’t actually have to find it, they experience it themselves, and so they try to find a solution for it. When business ideas come organically this way, it’s highly likely that you’ll succeed because you already know the problem, the customer’s pain points, and the like. It can also be doable the other way around, which is to look at a niche market you’re interested in and finding what’s missing.

In a way, this makes you look at the sustainability of the idea. Some of the most sustainable businesses are ones that resolve a continuous problem.

What resources are needed for every business idea?

Some people can be very passionate about one idea and still fail because they underestimated the capital needed to take it off the ground and boost it to a profitable level. When I say capital, think more of resources.

It takes more than money to build a business. Consider also your knowledge, the time you’re able to allot for it (maybe you want to build something on the side while you work part-time or full-time), and your personal and entrepreneurial skills.

With some ideas and business processes, you might have to hire a person who knows more than you in a specific area. You have to take all these things into account because they’re non-monetary investments that matter just as much as money.

What is the opportunity cost of every business?

In economics, opportunity cost is what you give up and lose — a potential gain from one option — when you choose a different alternative. It translates exactly the same way in business.

The opportunity cost usually involves all the resources you noted in the previous question. Other times, it can also be more personal. Some businesses may take more of your time. That’s time lost spending it with your family, for example. Don’t forget to look at personal sacrifices you also have to give up as an opportunity cost. It may not seem too important now, but they will come up especially if it involves family or personal needs.

How much drive and interest do you have in it?

I guess this is what most people would call passion. Personally, I think passion has no bearing anymore. So many people are too caught up in “finding their passion” or “chasing their passion” that it makes them unfairly cancel out really good business ideas that could turn into something. Or, that kind of reasoning actually causes their analysis paralysis.

Instead, you could ask yourself if you have enough drive and interest in a certain topic or niche to build a business around it. Note that I said enough drive and interest, which means a whole lot of it.

Tips and Recommendations

Now that you’ve answered some hard-hitting questions, hopefully you’ve canceled out some ideas that are only good in theory. Now you have a more practical list of ideas that can all be turned into a good business. Here, I’ll share more tips and recommendations for what to do next to further narrow down the list.

Have a bias on taking action.

Don’t be the kind of person who takes too long to decide. Someone who only has a vision but never a plan. Having this kind of attitude won’t get you anywhere in business.

Entrepreneurs don’t stall on making decisions, even if it’s a big one that could majorly impact your business. You choose what seems most right, and then make do with the consequences, if any. Execute one task after another and don’t let them pile up.

Get out of your own head and let go of perfectionism.

All ideas don’t come out finished. Sometimes, it’s at the tip of your tongue (or brain) but can’t quite grasp it or don’t have the words to articulate it. Sometimes you have to crawl your way deep into your consciousness to make sense of a fragment of an idea. Something might trigger those fragments one by one but you have to pick your own brain to make sense of it.

This is not uncommon. Most of the time when you brainstorm, you put the pressure for ideas to be coherent right when it comes out of your mind. The key is to get any fragment of an idea out onto paper. It makes them easier to organize and turn into a solid business idea when it’s not overanalyzed in your head.

Test Your Idea

If you can, make a prototype of a product idea. Get as much feedback on it as possible. Also notice how people naturally react to it without you asking. The purpose of this is to tailor your product into something that people are actually going to use.

As you do this, refer back to the questions above. Testing your product gives you more insight and information to answer those questions. Then, you can fairly evaluate whether the results reflect those answers.

Set a deadline

This would be a good tip for launching your business, when you come to that point. If you’re still in the decision-making process about what business idea to pursue, still set a deadline. Again, this comes hand in hand with not stalling on decisions and taking action.

When there’s a time limit and you know you have to eliminate some ideas, your intuition just naturally leans towards certain ideas more. Ready or not, a deadline encourages you to align with your gut feeling. Most of the time it’s your natural entrepreneurial senses that will lead you towards what makes the most sense to build a business around.

Coming back to launching your business, having a deadline pushes you into the first big action you’ll take. Ready or not, you have to launch. Of course, don’t put out there a sloppy product. That’s not what we mean by this. If you’ve already curated your business plan a hundred times and tested your product, did all the necessary research for launching successfully, I see no reason that you can’t launch as long as an appropriate time is set.

Warren Buffett’s 5/25 Strategy

As of this writing, Warren Buffett is ranking 4th in the list of the richest people in the world. Sometimes, he’s playing between the third and the fourth. He’s best known for his influential expertise in investing, specifically value investing, and of course, being a business magnate.

When it comes to having several ideas, Warren Buffett’s 5/25 strategy is a logical approach. There would be 3 steps:

  1. List 25 ideas or goals that you want to pursue.
  2. Pick your top 5.
  3. Reel in on the 5 and discard the rest (for the time being).

Pursuing those 25 goals at once will require you to spread yourself too thin to cater to all. Narrowing down on 5 increases your chances to succeed on them rather than when you’re pushing to achieve all 25.

Buffett’s 20-slot rule yields the same message. In a hypothetical scenario, if you can only have 20 investments in your lifetime and you can’t go beyond that number no matter how many mistakes, you’d likely be more meticulous in choosing which assets to invest in. That goes for every investment you make in your life: time, relationships, and business.

If you adopt this way of thinking, you’ll have more bias towards ideas that are on top of your priority. This rule encourages you to focus on a set of goals and ideas you want to pursue first. Only when they’re satisfied can you start chasing the rest on your list.

Deciding on One Idea is a Long Process

Deciding on one business idea takes a lot of work for some people. It’s not always a eureka moment where an idea suddenly pops up all polished and ready to go.

If it’s one among many solutions that already exist, and it’s highly likely that it does, then it’s not really a good enough business idea yet. Even after careful thinking, you still have to get a feel for the space you want to belong in — the community, the industry, the market — because if it’s something you’re not interested in or doesn’t excite you, the whole venture will seem pointless to you some time in the future.

However, these questions and tips are good starting points for when you’re bombarded with all the possibilities. These serve as the pause button on your mind, and lets you see ideas from a logical viewpoint.

About the author

Corey Philip

Corey Philip is a small business owner / investor with a focus on home service businesses.

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