Copyright Fast Company
Over the years, I’ve been presented with countless business opportunities—some that turned out to be golden and others that I had to walk away from. If there’s one thing I’ve learned, it’s that every opportunity looks exciting at first glance, but not every one is worth pursuing. Evaluating an opportunity takes discipline, clarity, and a willingness to ask tough questions. Here are the keys I use to decide whether a business idea is worth my time, money, and energy. 1. Market demand The first question I ask myself is: Is there real demand for this product or service? It’s not enough for me to think it’s a good idea—customers need to think so too. Subscribe to the Daily newsletter.Fast Company's trending stories delivered to you every day Privacy Policy | Fast Company Newsletters I always look for evidence of demand through market research, surveys, or even small pilot tests. If people are already searching for solutions in this space or spending money on similar products, that’s a positive sign. Tip: Don’t rely solely on enthusiasm or assumptions. Talk directly to potential customers. If they can clearly explain why they would pay for your product, you’re on the right track. 2. Competitive landscape Once I confirm there’s demand, I turn my attention to the competition. Who else is operating in this space, and how strong are those competitors? A crowded market isn’t always bad—it usually means there’s money to be made. But I want to know what sets me apart. If I can’t identify a unique angle, I’m setting myself up to fight an uphill battle. Tip: Map out competitors’ strengths and weaknesses. Look for gaps they’re not addressing—whether it’s customer service, pricing, convenience, or innovation. That’s often where opportunities lie. 3. Business model and revenue streams I always ask, “How does this business make money, and is it sustainable?” A solid idea without a clear revenue model is just a hobby. I evaluate whether the pricing structure makes sense, if there are recurring revenue possibilities, and what margins I can expect. Tip: Focus on recurring income streams when possible. Subscriptions, memberships, or service contracts create stability and make a business more resilient. 4. Financial viability Even the best idea can fail if the numbers don’t work. I dig into projected costs, required capital, and expected returns. Can this opportunity realistically generate the profit I need for it to be worth my time? I compare the potential upside to the level of risk involved. Tip: Always run a conservative set of numbers. If the business still looks profitable under worst-case assumptions, you’ve likely found a solid opportunity. 5. Scalability I ask myself: “Can this business grow beyond its initial stage?” A company that depends solely on my personal time and energy may be profitable in the short term, but it won’t scale. I want to know if the model can be expanded—whether through additional locations, broader markets, or systems that reduce dependency on me. advertisement Tip: Look for opportunities where processes can be standardized, automated, or delegated to streamline operations. Scalability increases both revenue potential and the long-term value of the business. 6. Alignment with my skills and passions Not every profitable opportunity is the right one for me. If the business doesn’t align with my skills, values, or passions, I know I’ll eventually lose motivation. I’ve learned to ask myself: “Do I see myself enjoying this work in three, five, or ten years?” If the answer is no, I move on. Tip: Think about the lifestyle impact. A business that looks great on paper but drains your energy or takes you away from what matters most isn’t worth it. 7. Legal and regulatory considerations I’ve seen entrepreneurs stumble because they didn’t account for licenses, permits, or industry regulations. Before committing, I check what rules apply to the business. Failing to consider these factors can result in costly surprises. Tip: Consult with an attorney or compliance expert early. It’s better to spend a little upfront than face fines or lawsuits later. 8. The people involved Finally, I evaluate the people. If I’m going into business with partners, investors, or key employees, I want to know that they share my values, work ethic, and vision. I’ve learned that the wrong people can sink a good idea faster than any competitor. Tip: Look for partners who complement your weaknesses. A balanced team with aligned values creates resilience and long-term success. Closing thoughts Evaluating a potential business opportunity is an art and a science. It requires running the numbers, studying the market, and asking honest questions about fit and sustainability. But it also requires trusting your instincts—your gut often picks up on things that spreadsheets miss. The truth is, not every opportunity will be the right one. Saying “no” is just as important as saying “yes.” For me, the keys are clear: Validate demand Understand the competition Ensure financial viability Plan for scalability Ensure the opportunity aligns with my skills, passions, and the people I want to work with. When those boxes are checked, I’m not just chasing another idea—I’m building something that can last. Stephen Nalley is the founder and CEO of Black Briar Advisors.
