How to Assess Business Ideas
Framework for evaluating new business ideas before investing time and money.
Core Principles
1. Fish Before You Build
“Fish until you feel a pull in the market, then build business around that.”
- Don’t build first, test demand first
- Look for existing problems people are actively trying to solve
- Watch for organic interest before committing resources
2. Don’t Change Behaviour - Enhance It
The easiest products to sell are bolt-ons to existing workflows, not replacements.
Good examples:
- WhatsApp automation bolt-on to existing sales process
- AI bolt-on to existing communication systems
- Review collection added to existing service delivery
Red flags:
- “Users just need to change how they…”
- “Once they adopt this new workflow…”
- Requires training or habit change
3. KAK to LTV
Evaluate the ratio of effort/friction (KAK) to lifetime value.
| Low KAK + High LTV | High KAK + High LTV | Low KAK + Low LTV | High KAK + Low LTV |
|---|---|---|---|
| Ideal | Worth it if defensible | Volume play only | Avoid |
Idea Spec Template
When evaluating an idea, document:
The Problem
- Who has this problem?
- How are they solving it today?
- How painful is it? (1-10)
The Solution
- What exactly are we building?
- How does it fit into existing workflows?
- What behaviour change (if any) is required?
The Market
- How big is the addressable market?
- Are people already paying for similar solutions?
- What’s the competition like?
The Business
- Price point: What would people pay?
- CAC estimate: How do we acquire customers?
- LTV estimate: How long do they stay? What’s the upsell path?
- Margin: Can we deliver profitably at this price?
The Pitch
- Selling points: Top 3 reasons to buy
- Pain points: What frustrations does this solve?
- Objections: What will people push back on?
Validation Plan
- How do we test demand before building?
- What’s the minimum viable test?
- What would convince us this is worth pursuing?
Quick Filters
Before doing a full spec, ask:
- Is there existing demand? (Are people searching for this, paying for alternatives?)
- Is it a bolt-on or a replacement? (Bolt-ons win)
- Can we reach the buyers? (Do we have access to the market?)
- Does it fit our strengths? (Tech, sales, existing relationships)
- What’s the realistic LTV? (Small one-time vs recurring)
If you can’t answer “yes” or “high” to most of these, park the idea.