As this edition of EQUITY focuses on the need for innovation as a catalyst to relaunch microenterprise development for people with disabilities, our tip of the month is centered on the role of innovation when planning to start a micro business.   Read on – it may just be the opposite of what you think you are going to read.

Tip:  Business ideas don’t have to be innovative to be good. 

In fact, the presumption of a business idea being “good” is not necessarily related to innovation.  Proven by many Main Street business owners, a good business idea is tied to the marketplace and the potential customer’s perceived need and demand for the service or product.  Whether it is an “innovation” on a commonly consumed product or one that “breaks the mold” when it comes to business niches, “good” only means that a marketplace of potential customers, who value it and will buy it from you, have been identified.

I meet dozens upon dozens of entrepreneurs who work very hard at dreaming up what they contend to be new and innovative businesses.  I always ask them the same three questions: 

1. How many – How many people in the target market already buy this type of product or service?  What is the historic sales data behind marketing this type of service?  Can you describe the buying habits?  If this is really an innovation and there is nothing to compare it to and no historic data to work from, what will you use as a basis to estimate the size and scope of your market?
2. How much – How much does the target market spend when purchasing the product or service that you will be selling?  Using researched, market-based numbers, how much will they potentially spend with you every time they buy it?  Again, if it is a new concept, what are you basing your sales potential on?
3. How often – How often will they make the expenditure?  Do you anticipate repeat business?   Are sales projections based on how often potential buyers will purchase  this type of item/service daily, weekly, monthly, yearly or once in a lifetime? 

The bottom line is simple:  a good idea is one that sells.  Entrepreneurs cannot afford to let their egos get involved when assessing “good.”  Rather, they need to let their practical side take over and answer the three basic questions regardless of whether the idea is truly innovative or one that has been repeated time after time. 

Patti Lind is the co-founder and Executive Director of The Abilities Fund.  She has worked in various aspects of the US microenterprise/microloan community for more than 20 years.  She is an entrepreneur herself, an advocate for microbusiness, and, often times painfully, a realist.