How to Find Out If Your Business Idea is Profitable

Updated: March 16, 2022

While hanging out with friends, it’s not rare that we would discuss business ideas. Most of the time, the idea would stem from a recent experience or observation.

I remember a friend sharing that he’s been eating a lot of Jollibee and McDonald’s at home because theirs are the only delivery numbers that he knows.

He thought it would a good idea to have an app where you can order from different fast-food restaurants. Just use the app and you don’t even have to memorize phone numbers.

This was in the early 2010s and a few years before Grab and Foodpanda were founded.

I saw that friend last week and for some reason, I asked if he remembers that weekend when he unintentionally thought of that billion-dollar business idea.

Oddly enough, he does and he’s proud of himself for “predicting” that.

“Imagine if you pursued that idea. You’d be a billionaire now,” I said.

“Yes, I would. But back then, I wouldn’t know how and where to start,” he answered.

Ideas and Execution

“Ideas are a dime a dozen. People who implement them are priceless,” says businesswoman, Mary Kay Ash.

Indeed, it can be fairly easy for most people to come up with a business idea. Just look around and think of a solution to a problem that many complain about.

However, the key into turning that idea into a profitable business is execution. And this is what’s difficult.

Execution requires planning and persistent action. It’s a commitment that most are simply not willing to take on.

Ideas are just a multiplier of execution.

In a simple yet powerful method, entrepreneur and author Derek Sivers comes up with a formula to measure how much your business idea is worth.

He claims that ideas are just a multiplier of execution. If you want to know the potential value of your business, then multiply your idea and your execution using the values in these tables:

AWFUL IDEA -1
WEAK IDEA 1
SO-SO IDEA 5
GOOD IDEA 10
GREAT IDEA 15
BRILLIANT IDEA 20
NO EXECUTION $1
WEAK EXECUTION $1000
SO-SO EXECUTION $10,000
GOOD EXECUTION $100,000
GREAT EXECUTION $1,000,000
BRILLIANT EXECUTION $10,000,000

Thus, if you have a brilliant business idea, but you have no clue on how to execute it, then that’s only worth $20.

But if you have a good business idea and you’ve written a so-so business execution plan, then your value goes dramatically up to $100,000.

Interestingly, even a weak idea with weak execution is still worth a decent $1,000 — totally acceptable because a running business can always improve its execution to increase its value.

So, the next time you have a business idea and you truly believe that it’s worth pursuing, then your next step is to write a business plan because knowing how to brilliantly execute your idea is what will make it profitable.

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2 comments

  1. A certain amount of luck is always there in business. Successful entrepreneurs, on the other hand, know how to make their own luck, or learn how to do so. “The harder I labour, the luckier I get,” said legendary Hollywood producer Samuel Goldwyn.

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