How do you know if your business idea is actually 'good'?
Wondering if your business idea is worth pursuing? Our expert shares five key questions to help you assess your idea.
Coming up with a business idea is exciting, but it’s easy to lose objectivity when it’s your own. We often get so invested in our ideas that we might overlook whether they’re truly viable. To help you evaluate your concept, Murray Hurps, Head of UTS Startups, suggests five key questions to assess whether your business idea is worth pursuing.
1. Will it make money?
The first priority for any business is financial viability. Can your idea make money? If not, it won’t get far.
While many entrepreneurs, especially younger ones, are driven by passion and the desire to make a positive impact (which is really important), profitability and growth must also be part of the equation. According to Startup Muster’s 2023 survey, 21% of startups identified “impact” as their primary decision-making factor, while another 56% said “impact and profit equally”.
"Passion often drives entrepreneurs, but it can only take you so far," Murray says.
"We often see impact-driven companies make initial progress, but eventually they realise they need to prioritise income to sustain their mission. Once they do, they can achieve even greater impact."
2. Has anyone tried this before?
If no one has tried your idea, it might feel like you’ve discovered an untapped opportunity. But Murray warns this could actually be a red flag.
“When people say no one has ever tried this before, it’s not always a good sign,” he explains.
“Chances are someone has tried it, but for various reasons it didn’t gain traction. Of course, exceptions exist, like breakthrough technologies or truly novel and useful new ideas, but these are much rarer than people think.”
In today’s data-driven world, blind testing of ideas is often unnecessary. With a bit of research, you can usually find precedents for most business concepts. Tools like Google or advertising platforms such as Adspy and Pipiads can help you explore similar ideas in your target market. If others have tried and failed, it’s important to understand why. Marketplaces like Flippa.com (an Australian startup), which offer opportunities to buy and sell websites, can also be useful, providing insights or even a head start by purchasing an existing small site.
If after your search, you can’t find anything similar, ask yourself why. What barriers might have deterred others? If it’s truly unique, how will you protect it from being copied? If similar solutions do exist, identify their challenges: Is the market too small? Are customer acquisition costs too high? Is competition too intense?
Platforms like Amazon, Etsy, TikTok and YouTube are great for observing what works. Use them to refine existing ideas and create better-performing solutions. Don’t be discouraged if your idea is already out there — instead, focus on making it better.
3. Do you have the right resources to execute?
Successful companies often thrive due to their unique enablers, such as financial backing, specific networks, a deep understanding of a problem, proprietary technology, special skills or ideal market timing. When evaluating businesses similar to your idea, consider the enablers that contributed to their success. Do you have access to the same resources?
“Before launching that big marketplace idea similar to the one backed by billions in funding and an elite network, assess whether your enablers match theirs,” says Murray.
If your resources differ, look for examples of what others with similar enablers have achieved.
4. What do your potential customers think?
Getting feedback from outside your immediate circle is crucial. While friends and family might support you, real insights come from potential customers — those willing to pay for your product or service because it solves a problem for them.
The best sign your idea has potential is when people are willing to commit early, whether by signing up, pre-ordering or agreeing to be pilot customers. The earlier your product or service is engaged with the market (either as a prototype or final product) and you’re learning from its activity and demand, the better.
5. How will you reach your market?
Understanding what your potential customers think is vital, but how do you reach them? It depends on your target audience. If you're focused on consumers (B2C), platforms like Facebook and TikTok are excellent for testing your concept. Analysing existing ad campaigns using tools like AdSpy and Pipiads can provide valuable insights into reaching specific customers. Running your own small-scale version of a similar campaign will help you learn even more.
On the other hand, business-focused concepts (B2B) present a different set of challenges, often requiring a greater investment in each interaction, but typically with larger payoffs. Consider your existing networks and how they can be leveraged — many B2B startups originate from professionals already established in a particular industry.
Ultimately, your success relies on how well your product serves your audience and how effectively you understand and connect with them.
Starting a business is rarely easy. If it were, everything possible would already be done. Your entrepreneurial journey will always involve discovery and course correction. By reflecting on these five questions, you can navigate that journey more effectively and with greater confidence.
Ready to kickstart your business idea or just curious to learn more? UTS Startups offers a free Rapid Value Creation program open to everyone! You’ll explore key topics like understanding data from large commerce platforms, creating and learning from market instruments, leveraging the latest AI tools, content creation, outsourcing and developing a risk-aware entrepreneurial mindset.
Want to learn more about startups, innovation and the entrepreneurial journey? Check out our Curiosities series on YouTube.
Curiosities
Startup Curious Episode 7
Startups, innovation and the entrepreneurial journey with Murray Hurps
Duration 8min 26sec
00:00:00:00 - 00:00:20:18
Hello curious people. I'm Murray Hurps, Director of Entrepreneurship at UTS. I'm here to answer your curious questions about startups, innovation, and the entrepreneurial journey. This is startup curious.
00:00:20:20 - 00:00:49:03
Our UTS community has sent in some thought provoking questions. Let's get started. What is entrepreneurship? Entrepreneurship is deciding what you work on for yourself. Instead of being told what to work on for someone else. So there are things about you that are special your understanding of problems, your skills, your networks, your enthusiasm to do something, and all of that can be directed into an existing kind of large organisation or into a new small organisation that you build and control.
00:00:49:05 - 00:01:15:13
I don't like the dictionary definitions of entrepreneurship because I rely too much on the risk and other components, but for me, it's just about capturing the value about you, the things that make you special. Do I need money and specific skills to launch a startup? Increasingly, no. We're not in a world where you need to, you know, have racks of servers in a data centre or really expensive tech people or those kind of things anymore for these kind of tech enabled companies.
00:01:15:15 - 00:01:38:05
There's wonderful giant e-commerce platforms that are very accessible, these wonderful technologies that are very accessible. And as that gets better, it gets more and more accessible. So the skills you need and now less of a requirement and more and more people have access to this kind of thing. We do have a specific program called the Rapid Value Creation Program, which is why I'm not allowed to name programs anymore.
00:01:38:07 - 00:02:00:19
But it's very focused on people that don't have specific tech skills or money behind them to help them start on their entrepreneurial journey. It's just one example of the kind of things that make that much easier today than it used to be. How do I know if my business idea is viable? Data. So you live in a world, of data everywhere, especially in those kind of commerce platforms.
00:02:00:21 - 00:02:30:11
So ten years ago, we had lean Startup as a thing where putting ideas out became really cheap and easy to do. So people, this threw things at a wall and saw what stuck. Now you can look at giant platforms like Amazon or Etsy or TikTok or whatever and see what's working and then take inspiration from that. So it takes away a lot of the guesswork and experimentation, and it can look and say, is that particular niche performing well or other similar ideas that I can learn from?
00:02:30:12 - 00:02:52:10
So go to data, see what's working, and then test your own idea against those kind of ideas. What are the funding options for startups and how do I choose the right one? I would question how much you actually need funding to get what you're doing off the ground. There's definitely good examples of things that need money still. So things in research or things with hardware or things that it is quite hard to get off the ground.
00:02:52:12 - 00:03:14:00
But the days of raising money, hiring a team, building something that's, you know, an app or a marketplace or things like that, they're gone. People are walking in today to places like UTS startups with their AI everything and their platforms and things that they're using and they don't need venture capital behind them in the early stages like they used to.
00:03:14:05 - 00:03:35:14
So it's obviously not true all the time, but more and more, that early stage funding is not required anymore. And people instead of starting companies with customers first funding, using customers and then growing from there, which you could argue is much nicer for the people starting companies. What common challenges do startups face and how can they be overcome every challenge.
00:03:35:16 - 00:04:01:02
There's a thing called effectuation, which is a terrible word, but it's the experience basically of going, doing something, learning from it, and doing something else. And that is what entrepreneurs do. They don't wake up one day with a perfect idea, and this kind of genius thing that takes over the world. They wake up one day with something that's probably terrible and they don't realise it, but they're enthusiastic and start doing things and they learn and they get better and better and better.
00:04:01:04 - 00:04:23:23
And every day that waking up and solving a new problem they haven't solved before, and doing that again and again will expose you to every challenge, almost, that it's possible to imagine having, having. That's great. Imagine the learning journey that you can have by doing that, compared to more defined roles that you might have in other places. Expect every challenge and look forward to it.
00:04:24:00 - 00:04:49:00
How important are technology and tech skills when launching a startup? Less than they used to be. So I remember a time, you know, ten years ago, places like Fishburners down the road, the startup incubators where if you didn't have that tech co-founder or tech skills yourself, then you didn't really get much done. It was hard to kind of have this rocket ship take off without those kind of really amazing tech skills.
00:04:49:02 - 00:05:20:04
That's not the case anymore. So technology has moved along so far. The platforms are so good. The technology is so good. AI was getting so good and there's so many like more opportunities in different niche fields than they used to be. But it's not just about those kind of rockstar tech people to make these tech companies. So your ability to work in that more and more complex world with really new, powerful technologies coming through, is now more important than your massive background in technology?
00:05:20:06 - 00:05:42:02
Is there a formula for the perfect pitch? No, and I'd be cautious around people that say you should pitch in a certain way. For me, the purpose of a pitch is getting support for something. So that parable of someone going into a town and having no food to eat and saying, I've got this magic stone, I'm going to make the most delicious soup you've ever tasted.
00:05:42:04 - 00:06:00:21
And I just need some of your help to make this soup with this magic stone that I've got. So you can imagine what happens. I get ingredients from around the town, some leftover meat or leftover vegetables or whatever, and turning this worthless rock into a wonderful soup that then they can enjoy. That's basically part of what pitching is.
00:06:00:23 - 00:06:21:05
To say you've got this wonderful thing that is going to be amazing, but you need someone, a customer or, some talent to join the company or usually investment to make it into that amazing soup. So I think if it achieves that, then great. If it's just ticking off boxes to make a particular person happy. Not so much.
00:06:21:11 - 00:06:44:19
What's the most important lesson you've learned from a mistake on your startup journey? I think, who I take advice from is the biggest lesson that I learnt. So, in your entrepreneurial journey, there will be unending numbers of people that are happily trying to help you with what you're doing and offering advice on do this or whatever.
00:06:44:21 - 00:07:05:22
And you have to realise that advice has no impact on them, it has a large impact on you. And often people don't realise the damage that they can do by giving bad advice. And you can avoid that by making sure you're listening to people that do have the right kind of recent relevant knowledge for you. How do I maintain work life balance as a startup founder?
00:07:05:24 - 00:07:23:10
All work, I think, comes at the cost of what you do outside of work. That kind of cheesy answer is to say entrepreneurship is nice, because you can choose the kind of entrepreneurship that makes sense for you, and maybe you work in a field that you like or, in a schedule that makes sense for you or things like that.
00:07:23:12 - 00:07:42:22
And that's kind of true. But then often, you know, there's no one else to delegate a lot of the responsibility to, especially in early stage companies. And a lot of people are super motivated by what they do. So often that's not really much flexibility either. So this, in terms of the impact it will have, it will have whatever impact you allow it to.
00:07:42:23 - 00:08:07:08
It can be more flexible and can be more rewarding. But often can be a lot of work as well so just be prepared for that. What is the one piece of advice you would give to aspiring entrepreneurs? Be critical of advice that, as I said before, that filter that you will build up as an entrepreneur that allows you to figure out, does that person know from recent experience what I'm asking them about that is your filter that you need to build up as an entrepreneur.
00:08:07:08 - 00:08:26:22
So be careful who you take advice from, make sure it's the right people. Develop that filter. Godspeed. That was all the questions for today. I hope you learned something new. Until next time, stay curious.
