Not everyone can or should be an entrepreneur. Coming up with a sound idea, developing it into a product, and growing that product into a business is not as easy a process as it may seem to most. This process requires soft skills such as leadership, communication, character, tenacity, and teamwork, and hard skills such as technical skills in the trade of choice and sound understanding of the market environment. Before contemplating whether you have these qualities, there are more rudimentary questions to ask:

  1. Do I have a solid idea?
  2. Can I execute it effectively?

There are more sophisticated questions such as whether the timing and environment are right, but we’ll focus on the two most basic ones.

In our assessment of funding pitches from entrepreneurs at Swazi Ventures, we find that entrepreneurs often rush to attempting to build businesses without investigating these basic questions. The rate of failure among small businesses is very high (up to 80% by some estimates) due to both internal and external factors. External factors pertain to the operating environment and the quality of the ecosystem. Internal factors pertain to the quality of the business and its executing capacity. It is essential for any aspiring entrepreneur to make sure that both external and internal drivers of success are supportive of the proposed business. At Swazi Ventures, we are uncompromising about these questions; before conducting further review of a pitch, we require that the answers to each of these questions be unequivocal and resounding. The advice we pass on to entrepreneurs is the same as what we are sharing today: dedicate your efforts to entrepreneurship only after you are convinced that you have a compelling idea that you can convert into a strong, competitive business.

Do I have a solid idea?

The most successful entrepreneurs contextualize their ideas in a bold aspiration for the future and in the needs of a large portion of the population. Entrepreneurship for them is not merely pursuing a clever idea, but it is solving a specific need facing a large, growing segment of the population. An instructive way to find out if you have a good idea is to break this question into two: (1) Is my idea solving a serious problem that people face, perceive, and are willing to pay a premium for; (2) Is this group of people large enough to make this worth my while (i.e., if everyone that I think needs this product actually bought it from me, how much money would I make – is this enough to sustain and grow the business)?

These are questions of demand. We meet many entrepreneurs who have developed or are developing clever products that very few people would be willing to pay for. Before pursuing an idea, an aspiring entrepreneur should be convinced and be able to convince potential partners and investors that indeed a large number of people are willing and able to buy her product, and that this number will grow greatly over the next two, three, four, and more years. A clever business idea on its own is not enough; market opportunity is and should be the primary basis for business. What many entrepreneurs struggle to understand is that value in a business is not inherent, but derives from the market.

Entrepreneurs often like to defend their ideas and shield them from criticism and potential competition. But feedback is crucial. If you, your best friend, and your father are the only people that think your idea is brilliant, then you are in serious trouble. What are other people saying? Is there enough grievance that establishes a basis for your product? The most successful entrepreneurs position their products as compelling solutions to needs faced by large groups of people. Before building a business around an idea, understand what problem you are trying to solve, the people you are solving it for and the needs they face, and whether your idea is the best solution to that problem.

Can I deliver?

This is a second order question; if the answer to the first question is "no", go back to the drawing board and develop a new idea, or consider how you can tweak your idea until the answer to the first question is a resounding “yes!” Once you have validated the market opportunity, the next question to ask is whether you have what it takes to develop and deliver a high quality product that captures that market opportunity.

While it would appear that the ability to deliver is a less consequential question in that it speaks to capabilities that can be sourced or built, the quality of a start-up’s core team is one of the most important drivers of its value and success prospects. At Swazi Ventures, this is another question that we are uncompromising on; we need to believe that each entrepreneur that we commit to supporting is capable of not only developing and delivering the proposed product, but also of building a lasting business around it. What about you makes you the right person for this idea? What makes you better than most? Do you have above average competency in the trade, for instance, due to your professional or academic background? Do you own a unique set of skills that you have perfected better than most? Have you managed teams before and therefore know how to run a high performance team in a startup environment? Have you launched a startup business before that allowed you to learn how to fail or succeed? Do you have access to a strong network of suppliers, buyers, and mentors? Do you have unique access to a crucial input? What would prevent someone else from competing you out of business? Can you reasonably conceive of your business as a monopoly in the space for at least a couple of years?

Entrepreneurship is competition, and to win in a competition, you have to be better than most of the people that you are racing with. The qualities in which you are better than most qualify you to build a product and a business that other people would not be able to build to the extent that you can. If you are not better than most in the crucial elements of the business and if the market opportunity is as compelling as you believe it is, chances are that someone else will build the business better than you and take your customers. Before you pursue an idea, ask yourself if you can deliver it better than most.

Recommendations

If you have a weak idea, go back to the drawing board and imagine another or refine it. If you have a strong idea but weak capability, consider whether you can build or source these capabilities before developing the idea. If you have a strong idea and strong capability, go forth and prosper; in the words of Lupita Nyong’o, your dreams are valid!