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10 Steps to Measure the Potential Value of a Business Idea

Do you have business ideas that you’re in love with and that your friends support uncritically, and are you ready to bring them to life? But how much is your idea really worth? I was very excited when I learned that there’s a way to measure it numerically.


value of an idea
value of an idea

Josh Kaufman — The Personal MBA: Three years ago, I read Josh Kaufman’s book, "The Personal MBA". I believe that every business owner, from the smallest to the largest, and ideally their employees, need the knowledge found in business expertise programs. This can be an expensive overseas education or something you can learn on your own, like I did, through books. I’ll touch on this again at the end of the article.

Now, I want to share a fantastic tool from this book that I use almost every day. Josh Kaufman calls it “Measuring the Market Value of a Business,” but I call it “10 Steps to Measure the Potential Value of an Idea.” This tool allows me to assess whether even a small improvement within an existing structure is worth the time, not just a new business idea. It saves time.


Let's take the test together. Write down the 10 points below and I’ll explain how to evaluate them with current business idea examples. We’ll soon be assigning scores from 1 to 10 to these points. Be a bit harsh when scoring.


  1. Urgency

  2. Market Size

  3. Pricing Potential

  4. Customer Acquisition Cost

  5. Value Delivery Cost

  6. Product Uniqueness

  7. Speed to Market

  8. Initial Investment

  9. Upsell Potential

  10. Continuity Potential


My Big Whiteboard at Work These items are listed on the big whiteboard at my workplace, and I use this tool for every new idea. After reading the explanations for each item, you should score each one for your idea from 1 to 10.


  1. Urgency: Ask yourself: Do people need this product or service urgently now or in the near future? For example, before the COVID-19 pandemic, producing surgical masks or hand sanitizers wasn’t an urgent need, but now there’s intense demand. Conversely, it’s impossible to say there’s an urgent need for going to the cinema these days.

  2. Market Size: Using Josh Kaufman’s examples: Opening a craft course has a small market size, but selling these courses online with videos is a more scalable idea. Cancer treatment is a massive industry. Any small improvement you think can contribute to this field has an astronomical market size. Consider your scores based on such extreme examples and be realistic.

  3. Pricing Potential: How much are buyers willing to pay for your product or service? For example, I wouldn’t be willing to pay a lot for toothpicks for my home, but buying a car has different criteria. Some tech gadgets may fetch a higher price than their worth. What’s the pricing potential of your idea?

  4. Customer Acquisition Cost: How easy is it to acquire a new customer? If you plan to open a café in a busy area, even someone passing by once could become a customer. No significant marketing campaign is needed. However, if you’re designing a platform to compete with Netflix, your content must stand out from other platforms, and it’s unlikely I’d subscribe to 4-5 platforms at once. So, you’d need a compelling value proposition to make me switch from my existing subscription. Acquiring me as a customer would be very costly.

  5. Value Delivery Cost: How cheaply can you produce the item for sale? For example, the cost of selling your courses online is very low. But if you’re designing an innovative product, you need to set up workshops or factories, pay employees, and create distribution channels, which significantly increases costs.

  6. Product Uniqueness: This point is clear, but thinking about the author’s example is fun. Opening a new hair salon isn’t a unique idea, but space tourism is still unique. Most of the time, a unique idea isn’t something that hasn’t been thought of before but something that hasn’t been done before. How unique is your idea?

  7. Speed to Market: How quickly can you create something to sell? Taking a camera and photographing your friend’s products for e-commerce can get you started quickly. Opening a currency exchange office requires a more serious process, such as providing guarantees and completing approval processes due to regulations. It’s clear you can’t start making money tomorrow.

  8. Initial Investment: How long can you continue to invest before you start selling something? This depends on your cash on hand or creditworthiness. If you’re going into gold mining, you need to continue investing for a long time before you can find and sell gold, with no guarantee of success. If you have such an idea, give this point a score of 1.

  9. Upsell Potential: A great example: If you sell razors, you can sell replacement blades, shaving foam, and creams. You might make more money from these add-ons than from the initial product. Printer cartridges work similarly. You buy a printer, which isn’t very expensive, but the cartridges often cost nearly as much as the printer, and you need to keep buying them. An air conditioner you install at home isn’t like this; you use it until it breaks down. It’s almost impossible to sell a secondary product with it. A frisbee has one of the lowest upsell potentials; buy one, and if you don’t lose it, you can use it forever. If your idea is like the frisbee example, give it a score of 1.

  10. Continuity Potential: You can write a book and continue selling it for years, even after you’re gone, providing for your children. Writing a book is a great idea in terms of continuity potential. But if, like me, you’re in the advertising sector producing photos and videos, you need to keep selling and producing constantly, and at the start, it’s mostly impossible to sustain it without you. If your goal is to write a bestselling novel or business book, give it a score of 8-9. My work doesn’t score highly here.


all ideas grow out ot other ideas
all ideas grow out ot other ideas

Let’s look at how to evaluate the results. This is the fun part.


  • If the total score is <50: Give up immediately. Sadly, your idea has no market value. Don’t waste your time; test another idea.

  • If the total score is between 50-75: There are risks, but it could turn into something valuable if pursued. Which parts of your idea could you improve to bring the total score to 70-75? It’s time to think about this. It’s worth spending some time and trying it out.

  • If the total score is >75: Full speed ahead.


How did your scores turn out? Please share your thoughts and whether you found this helpful in the comments. Honestly, I haven’t found an idea that scored 75 or above yet. What did your idea score? Is it worth starting?


I think this is much more than a rough way of thinking about whether your idea is worth acting on. It clearly shows you the dynamics involved in every business and the strengths and weaknesses of your idea.


“It prevents you from falling in love with your idea.”


Bonus:

Now, let’s discuss my thoughts on enrolling in an MBA program at a school. If you’ve just graduated from university, enrolling in one of these expensive education programs can help you learn more deeply and, more importantly, find like-minded friends in this school environment. This can help you build a right network and be a great investment for your future. But if you’re in your 10th year of your career, like me, and more sensitive about time and resources, all the information is in books. So, I’d suggest getting a few books, reading them, and immediately applying or adapting the knowledge to your current job.


We no longer need schools and expensive education to access and learn information. This is the most important thing to consider about education systems. Should people still gather in a classroom and write down what’s being taught on a blackboard?

It’s clear that these methods need to change quickly. Now, what matters isn’t the information itself, because accessing information is equally easy for everyone. Knowledge is now very democratic. What’s important is acquiring the skills to interpret, synthesize, and generate new information.


In modern terms, there’s data, and the real value lies in analyzing this data and extracting benefits from it.





I realize that this could be a separate, much more debatable article. So, I’ll wrap it up here. I’d still love to hear your thoughts on this. Please share your views in the comments. See you next week.


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