How do you know if your business idea is actually 'good'?

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.