Thus far, we’ve brainstormed two business ideas including an adult mental and physical gym and tween / teen clothing line.  We could keep using the four questions methodology to quickly evaluate ideas and narrow down to an idea that we want to pursue.  This post focuses on what the next steps are to help you determine which idea you want to pursue.

We’ll assume that you have used the four questions to evaluate your idea and now you have 2-3 ideas that you are deciding between.  What else do you need to consider in order to select an idea that you want to build a company around?  Here are some criteria that you might want to use.  Again, we are trying to combine strategy with your passion and enthusiasm.

1.  Which idea gets you most excited? By excited, we mean the idea that you can’t stop thinking about, that you can visualize for the next 5-10 years, that you are always bringing up in conversation?  In the evaluation stage, we focused on very rational, logical aspects of starting a business.  However, we must remember

2.  What is your time horizon? Now, of course!  Seriously, are you ready to start working on this idea full-time tomorrow or are you going to try and keep your day job and start your bsuiness part time?  Some businesses can be started part-time, while other will only realize their potential with full focus from the beginning.  Therefore, your time horizon will impact which idea you should select.

3.  Where is the capital? Do you have savings? Are you going to use credit cards or try to get a bank loan?  Are you going to bootstrap or look for an investor?  The questions surrounding money, just as those about time horizon, will have significant impact on which business you should pursue.

In going back to our two ideas, lets evaluate them assuming that we have the following answers to our three questions above:

1.  We are most excited about the tween / teen clothing and accessories line.  We think about it daily and have sketched out enough ideas to fill an entire notebook.  We haven’t started but we already have expansion ideas for an online community, personalize clothing lines and more.

2.  Although we are excited, we have a family and responsibilities to think about.  We are going to need at least 8-9 months to ease into the business and we’ll have to do it part time (for time and money reasons).

3.  We have about $5000 in savings  and $2000 of it can be used for the business.  That will get us some initial designs and a preliminary website.  We think that well have another $200-$300 per month that we can build into the family budget. Beyond that, we’ll need to pay for expenses from sales.

While these criteria are just an example, they point to selecting the tween/teen clothing line over the adult mental and physical gym.  When you evaluate your ideas, where is the most promising entrepreneurial arrow pointing?

Let’s move on an evaluate another of our business ideas. This time we are looking at clothing and accessories for the tween / teen audience.   Pretty straightforward, which also means that it’s a VERY crowded space.  But, let’s not jump the gun.  We’ll get to the competition as we answer our 4 questions.

The Idea

The business idea here is to create a line of clothes and accessories that will appeal to a specific age group–tweens (11-13) and/or teens (14-18).  We know upfront that these have to be fun, hip, and worthy to talk about our our audience will completely ingnore them.  However, is this enough?  Can we sub-segment this market or target an  under-served group within the category?  That is going to be one of the challenges that we must keep in mind as we evaluate the idea.

The 4 Questions

1. Will customers buy it? (Does it fill a need? Is it attractive to them?)

Answer:  It depends.  What kind of answer is that?  Well, any teenager will tell you (or their parents) that the need new clothes. However,  they need those clothes from whichever designer is “in” and whichever trend is relevant at the moment.  So, more important than the need in this case is the want.  Of course, the want is going to be driven by whether or not the accessories / clothers are attrative to the teens and their peers. However, we know that they do spend their money on clothes:

• According to a 2003 study done by Coinstar (Coinstar Teens Talk Poll: Teens Report on Money, Spending and Buying). Teens spend 33 percent of their weekly earnings and allowance on clothing and an additional 21 percent on food. Other popular items include movies, music and games.

2. What does the competitive landscape look like? (Are there too many competitors already? Do you have the resources to compete with them?)

The answer to this question is pretty simple.  There is a LOT of competition.  From malls filled with the Gap, Banana Republic, and Forever 21 to the lastest fashions seen on American Idol or in Twilight, you’ve got plenty of competition.  The more important question here is not do you have the resources to compete, but how will you compete.  Even if you have the resources, you have to be able to get their attention and offer something unique.

• According to the 2001 American Express Retail Index: More than a third of teens (39%) describe themselves as “trendsetters,” or fashion style leaders. Even if it means going over budget, more teen girls (44%) than boys (35%) will purchase clothing that is “hot and trendy.”

3.  Can you create the business or build the product and bring it to market? (Do you have the resources and skills? If not, where will you get them?)

The response here is similar to my suggestions from the Baby Boomer Mental and Physicial Gym Post. You need to evaluate your skills and experience in clothing, merchandise and retail.  Have you ever made products for teens before?  Do you have experience with sourcing and creating a clothing or accessories line.  If you answer to these are “no”, then you are going to need to find a partner or vendor that can help you.

Beyond your first line of products, design is going to be constant challenge. Ultimately, it will be what sets you apart from all of the competition.  You have to be able to quickly and regularly bring new designs to the market.

This is your opportunity to think creatively about how you might differentiate.   You want to be abe to bring the clothes to market, but you also want to be able to regularly spot trends or unmet needs in the marketplace.  For example, is there a clothing line for girls who want to look sophisticated without showing “skin.”  Can someone create a clothing line that girls will like AND their mothers will approve?  If you can bring that to market, you might just have a chance!

4. Can you make a profit off of it? (Will you be able to price it so that you can make money? Will it be too expensive to create?)

Again, your answers to question 4 will always depend largely on your responses and thoughtfulness around questions 1-3.  Can you make money if you are able to chart $45 for a shirt that only cost you $12 to manufacture?  Yes, if you don’t have to hire 5 people to help you get the design and sourcing done.  In the age of cute non-designer clothes at Walmart and Target, the $45 premium (example) must have strong percevied value in the mind of the teenager.  However, the brands that charge $45+ for their tank tops and shirts also have a strong brand behind them.  You will have to think of creative, low cost ways to create the brand that will allow you to charge enough to to make a profit.
As you can see, this is another interesting idea with some potential. However, the clothing industry is very competitive.  It lives at the mercy of the latest trend.  You can do it, but you have to bring something unique to the table (or closet in this case).

Based on our trends, we came up with several business ideas for each trend.  The next three posts (including this one) will each evaluate one of the ideas we brainstormed using our 4 key questions. Remember, this is just an initial evaluation to determine which idea we could want to write a full business plan for.

The 4 questions technique can help you put stucture and rigor into the process of looking at an idea.  Will your final decision of which business idea be based solely on “structure and rigor”? No, of course not.  There is, rather, there must be emotional excitement and investment (also know as passion) into the idea as well.  However, neither of these alone is sufficient. You must have the emotional excitement and the structured research to help you pick an idea that has the potential to create a business that you will love and a business that has customers!

Ok, so let’s start with our baby boomer idea.  Let’s assume that we are very excited about creating a business that caters to the baby boomer generation.  We know the stats–they are 77 million strong, with the “oldest” of them just hitting the 60 mark as of January 1, 2006.  They also control 67% of the country’s wealth (about $28 trillion–at least before the economic crisis).

The Idea

We have an idea to create a gym that is different from traditional gyms.  This facility would cater to the boomer generation  and it would focus on both physical and mental health.  For example, there would be traditional machines and weights, but it would also have classes for yoga, stretching, massage therapy for arthritis relief, relaxation and meditation.  Additionally, this facility would have “mental exercise” enrichments classes and events. This would include book clubs, soduku tournaments, and even video games.  We would be combining the “body gym” and the “brain gym” into one.

The 4 Questions

1. Will customers buy it? (Does it fill a need? Is it attractive to them?)

Answer: Yes, because the boomer generation is different from their parents. They are active, engaged and they plan to stick around well into their 80s if they can:)  They are more conscious of the mind-body connection and as they watch their parents succumb physically to cancers and heart disease and mentally to alzheimers/dimentia they are determine to take action.

2. What does the competitive landscape look like? (Are there too many competitors already? Do you have the resources to compete with them?)

Answer: It’s competitive, but that means there is a market! An initial search in google for “gym for baby boomers” gives us some interesting links and helpful information:

1.  An MSNBC Article headlines by telling us the boomers account for almost 25% of health club members, a trend that has been increasing for almost 15 years. (http://www.msnbc.msn.com/id/9570162/)

2. A Medicinenet.com article also confirms the trend: http://www.medicinenet.com/script/main/art.asp?articlekey=56354

3. A Fitcommerce.com article is catering towards fitness center owners to help them attract more boomers: http://www.fitcommerce.com/Blueprint/Page.aspx?pageId=306&tabindex=5

Ok, so all the gyms are thinking about this.  And how many gyms is that? According to the International Health, Racquet and Sportsclub Association (IHRSA), there are over 29,000 healthclubs in the US, with about 41.3 million members (about 19.1 million of whom are very active–100+ days per year).

Now you might be thinking that we’ve answered the question.  It’s competitive, but maybe we have a shot.  However, the question is not completely answered.

• First, you must remember that that we are thinking about combining the traditional gym with mental gym, so we need to look into that.
• Second, we see that the industry is very competitive, given the number of clubs, but is it still growing (i.e. is the pie that these clubs are tryingt to slice getting bigger. This is very important for anyone trying to enter a market).
• Third, we must identify the resources and skills that we have to bring to the table (this begins Overall Question #3).

Addressing the first bullet:  Yes, the industry is growing.  According to an article on BNET, the number of clubs has grew by 40% from 1992 to 2002.  Additionally, the number of members grew by 60%.  Additionally, when asked if there is a surplus of clubs, IHRSA President, Bill Howland, says:

No. It’s tempting not to think so when we look at a few, isolated markets that have a lot of competition. However, there are actually not enough clubs to serve the growing market of aging baby boomers and the coming wave of “echo boomers” or Generation Y, who will become the 18 to 34 year-old market over the next ten years. Health clubs are a prime market for the industry and their sheer numbers–comparable to the baby boomers in the ’80s–will place strains on existing health club facilities. Building more clubs is necessary to meet the growing demand.

For the second bullet, we can do a another google search on “brain gyms” and we get plenty of trends, including a May 2009 Wall Street Journal Article about brain gyms and brain game stores as the latest trend in mental health.  Bam! We are on to something.

Since our third bullet also gets at overall question #3, let’s shift there.

3.  Can you create the business or build the product and bring it to market? (Do you have the resources and skills? If not, where will you get them?)

Answer: This is not a question that we  can just research or google. It gets at two things.  First, what skills and experiences do you/we bring to the table to help get this brain gym off the ground? Have you ever run a gym? Are you a mental health professional, or is your business partner?

Secondly, are you passionate enough about this idea to compete and make your idea a reality?  You have to be willing to work harder than you ever have and get the human, monetary and physical resources to make you idea happen.  This might include:

1. Finding a business partner who has skills or expertise that you are lacking.

2. If you are not interested in a partner, then you will need mentors, consultants or others who can help you.

3. Starting a gym will take capital resources (building out a location, buying equipment, hiring staff) before you even open your doors.  Do you have savings, investors, home equite, family and friends or other access to capital?

This is a critical question and may take you a bit of time to think through.  However, remember this is an initial evaluation of one of your many business ideas, so you want to do the necessary research and investigation within a few weeks and not drag out this process for months (or years).  You should know fairly quickly what skills and resources you have and what you are lacking.

And finally, question #4 (usually the hardest).

4.  Can you make a profit off of it? (Will you be able to price it so that you can make money? Will it be too expensive to create?)

Answer: Question 4 is largely dependent on your answers to the prior 3 questions.

First, if it is not attractive to customers, then they will not buy it and therefore you won’t make any revenue, let alone any profit. Second, in a very competitive landscape, there may or may not be price wars.  As a new company, positioning yourself primary on price from the start will put you out of business very quickly in a brick-and-mortar service based business like a gym.  There are gyms at various price ranges, with some focusing on no-frills, cost effective customers and others trying to create a more intimate-spa like “experience” at the gym for clients willing to pay a premium. You may find yourself somewhere in the middle or you may be able to charge a premium because of the unique combination of physical and mental health.

We’ll probably need to do some in-person observation and research with potential customers to see how much they would be willing to pay.  If they are willing to pay more than a typical gym membership then there is a likelihood that we could charge enough to cover our expenses and make a profit.

If they are not willing to pay more based on how we explain the idea to them, then we’ll have to think about how to lower our costs or how to create more value (maybe with on-site medical staff?).

Are you tired yet? Yes, this is a process, but it is very doable.  We have posted this all at once, but you would actually spend from a few days to a few weeks trying to answer these questions.

Are you excited about the possibility of the MAPEG (Mental and Physical Exercise Gyms)?  We are, but we’ve also got two other ideas to evaluate!  So many opportunities, but we are ready to get focused!

Using the 4 key questions from the prior post, we are going to walk through the process of doing an initial evaluation of a set of business ideas.  Aspiring entrepreneurs often have many ideas and are scared to just pick one to move forward with.  This process will help you narrow down those ideas and provide a structured way to make a decision.  Now, you can always just go with your gut. However,  you’re planning to leave a job, are a provider for a family, or want to build a scalable business, I would suggest starting with a disciplined approach like this from the beginning.

First, we need some business ideas to put to the test.  I recently read a post on Ideablob about Top Trends to Turn Into Businesses. Another great source for ideas and trends is Entrepreneur.com.  Let’s start with the Ideablob trends and brainstorm some business ideas for each trend.

1. Seniors

• Senior Day-Care
• Physical Therapy and Fitness for Seniors
• Healthy meal delivery

2. Baby Boomers

• Metal and Physical Exercise Gyms
• Adventure Travel

3. Children

• Subject Based Tutoring
• Tween/Teen clothes and accessories
• Music or entertainment

4.  Weddings

• Green Wedding Planning
• Recycle Wedding Favors / Items
• Budget Wedding Planning
• Theme Based Weddings

5. Business Services

• Temporary Staffing / Contract Workers
• Employee Training and Development
• Sales Consultants
• Marketing and Social Media Services

Wow! These are all very different but interesting business ideas.  The decision to narrow down the ideas to a few that we want to probe more is challenging. However, you can initially think about what ideas are you drawn to most? If there are 3 or 4 of those then you can test them with our 4 key questions.  We’ll pick 3 ideas and walk through each of them with our 4 questions in the next few posts.

Which would you pick?

Once you have identified a business idea (or several), you need to do a quick initial evaluation to see if it is actually a business opportunity that can generate revenue or just a great/cool/ fun idea. Once you evaluate it, you can decide if you want to do more extensive research and planning.

Here are some key questions to ask:

1. Will customers buy it? (Does it fill a need? Is it attractive to them?)

2.  What does the competitive landscape look like? (Are there too many competitors already? Do you have the resources to compete with them?)

3.  Can you create the business or build the product and bring it to market? (Do you have the resources and skills? If not, where will you get them?)

4.  Can you make a profit off of it? (Will you be able to price it so that you can make money? Will it be too expensive to create?)

We’ll use these questions in our next few posts to evaluate several different types of business ideas.