Scrutinize Your Business Ideas

When planning for a new business, most aspiring entrepreneurs seem to try to prove to a skeptical world that their idea can really work.

Their approach to developing a business model and writing a business plan involves gathering as much information as they can to support their decision to start the business.

Most entrepreneurs gather some cursory industry data and talk with people already working in the industry, with one thought in mind: “What can I uncover that will validate my desire to open this business?”

They selectively pay attention only to information that affirms their desire to get the business started as soon as possible. As a result, they fail to uncover information that may not paint such a rosy picture about the viability of their idea.

When I talk with aspiring entrepreneurs, I always take the opposite approach. I start asking them questions that attempt to prove that their business idea cannot work.

I shoot as many holes in their idea as I can possibly come up with. If, after I am done, the concept is still standing, I feel better that they may be on to something.

Over the years this has resulted in some pretty frustrated students.

I once overheard a student exclaim, “That Dr. Cornwall sure is a negative guy for being an entrepreneurship professor.” My approach has even been called “being Cornwalled.” I have been labeled the Simon Cowell of entrepreneurship.
Assume business won’t work

Being a naysayer isn’t what my heart wants me to do. I would love to be their cheerleader. But I know that I am not helping them if all I do is blindly encourage new business owners to jump ahead.

One of the most important things I try to teach entrepreneurs is to always work from the perspective that their new business ideas won’t work.

Statisticians call this working from the null hypothesis. When they come up with their next “great idea,” I want the would-be owners to immediately take the null hypothesis. Assume that it cannot work, and start trying to disprove that it cannot work.

If the idea survives scrutiny, then it is time to further develop the business model and possibly move toward launching the venture. I know it may seem like we are coming at the same thing from only a slightly different angle, but the difference in outcomes can be profound.

Once you start looking at a business idea with a critical eye, you uncover the weaknesses and holes in it. If the idea survives evaluation from this perspective, the resulting business model will be stronger when it comes time to launch.

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