“My original business model – I actually wrote this down – was ‘interesting work for interesting people.’”- Tim O’Reilly

Today is the age of entrepreneurs. Everyday entrepreneurs are coming with their new business model to woo consumers. They are not only creating opportunities in market like additional jobs but also giving better solutions to consumers for the pain areas. Idea which seemed like the craziest one few years before are now the need of daily life. No one could have imagined computer in every home before Steve Jobs and Bill Gates made it happen.

Most of the times entrepreneurs have multiple ideas in their mind to execute, but which one to select and which one to discard is the real struggle and challenge. Some concepts might sound good but doesn’t make any business sense while some may sound crazy but are profitable. The concepts which are reducing the pain areas of consumers have high probability of being appreciated by mass. There is no point of investing resources when success doesn’t seem to come in near future.

Though success of any business model is the result of passion, hard work and determination, it doesn’t give any assurance of success of startup. A lot of factors are involved behind the success of startup and shall be evaluated before moving ahead with your concept and utilizing available resources. Here is a generic analysis from FS for optimum startup idea selection when you have multiples in your mind to execute simultaneously.



[A] Available Market Size

Market size/ volume is the estimation of consumers for some particular product/ service. Based on the type of product, the potential consumers can be categorized easily as per age groups, gender, affordability limits, geographical boundaries etc to estimate the numbers.

To know the market size before execution is helpful in terms of predicting the potential of the concept. Out of the total market volume only few percentage is penetrable at initial stage unless the consumer trust is gained.

When you have multiple startup ideas in your mind, it’s better to move ahead with the one having maximum available market volume. A product designed for specific consumers is difficult to scale up rapidly. Also, convincing the limited consumers’ volume is more difficult.

[B] Market Competition

One of the biggest challenge for startups to survive in long run is the “Market Competition”. Players working in same domain of the product or service are direct competitors while biggies getting diverse are the indirect competitors. Betterment of existing business models have a lot of competition as anyone can incorporate the additional features/ product/ service at any point in time once it start attracting consumers. A completely new business model has less market volume as it always has the advantage of first mover.

Since the available market volume within operational boundaries for a particular concept is limited, every single player of similar domain is trying to grab the maximum slice. Who will win the race is dependent on the consumer trust that it is able to gain. Consumer trust and loyalty are majorly driven by the quality of product/ service, cost effectiveness and reliability. Players with ample resources are able to gain the consumer trust and liability easily, hence get the maximum slice of market volume.

To stand against a biggie is not only risky in terms of gaining consumer trust but also in terms of resource wastage. Players with limited reach and resources are easy to handle by achieving operational excellence and providing better alternative to consumers. So, when you have multiple startup ideas, it’s better to go with the one having less market competition. Bigger the market competition, greater is the probability of failure.

[C] Potential Revenue Models

Major motive for any business idea is to make money. Revenue model is the cash flow of any business, cash input, output and profit. Cash-in must be greater than the cash-out to earn profit.  Since fixed cost of set up is generally huge as compared with running cost, so return on investment is dependent on profitability limit.

Though the revenue models associated with business idea might be multiple, but their applicability and growth depends on time. Revenue models with limited profit margins require huge volume to overcome the fixed and variable cost of execution hence require comparatively more time to reach breakeven point, while more profitable business models can reach at breakeven with lower volume also.

All the possible revenue models might not be clear at the idea stage itself or some are anticipated to come in picture at later stage of execution, comparative analysis of possible revenue sources combined with time frame gives a good estimate for selection of startup idea.

[D] Availability of Required Resources

One of the major contributors of realization of idea into running business is the availability of required resources. Manpower, money, technology, assets etc. are essential element to run a business model. Based on the estimated penetrable market volume, the required resources can easily be determined. For example – if the product is completely technology based having specific potential customers, it requires technology knowledge, sale and marketing skills.

At initial stage of startup, available funds, technology and manpower are limited, hence the entire scope of work needs to be distributed within the existing team and the funds. Few skills can be learned with minimal effort while few are time consuming. Outsourcing of work might be a good choice if the quantum of work is large or not manageable but it depends majorly on the available funds.

So one of the major selection criterion out of multiple startups ideas is the availability of resources. There is no point of working on a concept which is going to get stuck with progression of time. It’s better to start with something and make some money with the possible concept and then working on other parallel on later stage.

[E] Feasibility of Execution and Market Acceptance

At starting stage, Idea itself might seem impressive but more important is the feasibility of execution. Also, the new concept might seem appreciable by targeted consumers, but the real scenario is based on the actual acceptance by them once the product is out there in the market.

So at initial stage, it’s better to check the feasibility of execution at all the stages and analyze the mitigation plan for any risk associated. The benefit of having this clarity at start itself is that no surprise will stop the execution at later stage. Also, it’s better to interact with targeted consumers with prototype/ MVP and get their expectations aligned with the product/ service. Though it seems impossible to contact with all of the consumers but a section of good sample is suitable to get the insight about consumer behavior.

Selection of one suitable idea can be done based on the higher probability of execution feasibility and market acceptance.

[F] Other Critical Parameters

Other critical parameters for startup idea selection are government rule and regulations, liabilities, proprietary issues etc. Also, the product specific or segment specific challenges must be considered while selecting the idea.

So the right combination of critical parameters applicable for all the idea shall be analyzed to finalize the execution of one. Based on the highest probability of success, right idea can be selected. Though no foolproof mechanism can be developed to evaluate a business on idea base only as the evolution of right business model is a continuous improvement and experiment process, a good judgment on success can be made on the above basis.

“The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.” -Alexander Osterwalder

Wish you luck for your startup. Stay tuned with FS for more updates.