I’m working on a little framework to compare business ideas 💰 Is it useful? What am I missing? 💡

Problem

Founders have to face lots of obstacles. Coming up with business ideas is not typically one of them 😬

But how do you decide between the multiple ideas competing in your head?

Here’s a little framework I’ve been working on to help founders identify the most promising idea as objectively as possible.

I’m calling it the Business Opportunity Scorecard.

How does it work?

Here’s a Google Spreadsheet where you can test the initial version of the Business Opportunity Scorecard with your own ideas.

IMPORTANT: Make a copy of this sheet in your Google Drive workspace before editing.

To use it:

1. Assign a number between 0 and 10 to each of the 10 factors listed below.

2. Change the weights assigned to each factor based on your preferences. Just make sure to apply the same weights to the different ideas that you're comparing. Each factor has a final score which is the result of multiplying its 0 to 10 value x the assigned weight.

3. Check the total score of each idea. The bigger the score, the bigger its potential based on the weights (hence criteria) that you’ve established.

Factors & weights

a) Desirability validation - 0 to 10 → 25% weight

0 = You don’t have any idea if someone wants your idea (i.e. you haven’t collected any evidence -emails, pre-sales, letter of intentions...- that anyone wants what you’re thinking about building)

10 = You have lots of people paying you money before your product actually exists (i.e. Tesla when they pre-sold 150.000 units of the Model 3)

b) Feasibility confidence - 0 to 10 → 15% weight

0 = You don’t know if you can build the solution (i.e. Kennedy mentioning USA would reach the moon in 10 years)

10= You have built a very similar solution already in the past (i.e. King.com -Candy Crush creators- any time they build a new puzzle game)

c) Viability confidence - 0 to 10 → 15% weight

0 = You don’t have a clue about how you’ll make money and if you will be ever profitable (i.e. Whatsapp when it launched)

10 = You know how other people are making money with similar solutions (i.e. any SAAS product entering an existing market)

d) Time to market - 0 to 10 → 10% weight

0 = The market you want to sell to is not experiencing the problem that you’re solving nor is using/paying for alternative solutions (i.e. any company selling holiday packages when Covid hit)

10 = A big portion of the market you want to sell is already paying/using for the type of solutions you want to offer (i.e. people that want to travel and need a Covid-19 PCR test)

e) Baked in distribution - 0 to 10 → 10% weight

0 = The product is experienced by an individual who doesn’t have any motivation in telling or involving other people (i.e. most physical products...)

10 = The product gets more valuable when your colleagues/friends are involved (i.e. Slack, team sports, Whatsapp, World of Warcraft...)

f) TAM size - 0 to 10 → 5% weight

0 = The market that you would sell to is too small to make your goals viable (i.e. fully remote companies located in desertic areas might be not big enough if you aspire to build a venture backed unicorn)

10 = The size of the market you want to sell is more than enough to satisfy your end goal (i.e. non-english speaking Shopify store owners might be great for a bootstrapper looking to build a profitable SAAS app)

g) Team/market fit - 0 to 10 → 5% weight

0 = The solution that you need to build is completely unrelated to the expertise and experience of your team (i.e. Nestle starting a video-game studio)

10 = The solution that you need to build benefits from the skillset, experience and resources you already have (i.e. Nokia in 2006 inventing the new generation of mobile phones)

h) MOAT size - 0 to 10 → 5% weight

0 = You don’t have anything that protects you from potential competitors tackling the same market with a similar solution (i.e. anyone starting a drop-shipping e-commerce business without an existing audience)

10 = You have a difficult to replicate competitive advantage that protects you from potential competitors (i.e. Whatsapp and his established customer base, Stripe and its unique expertise & tech in payments)

i) Market credibility - 0 to 10 → 5% weight

0 = Your previous experience is perceived as irrelevant by your potential customers (i.e. a group of successful banking executives launching an app for video creators)

10 = What you’ve done in the past is perceived by the market as a great sign that you will deliver (i.e. Apple announcing a smart TV).

j) Mission/vision alignment - 0 to 10 → 5% weight

0 = The solution goes against how the market sees your brand (i.e. Marie Kondo launching a box subscription service)

10 = The solution totally aligns with your brand and values (i.e. Twitter launching a Substack competitor)

What do you think about the approach? Any ideas to make it better?

Thanks 🙌