Anyone can have a good idea but turning a good idea into a successful business is another matter altogether. (There are plenty of people with good ideas out there but not many with good businesses.)

One of the problems is that when you're just starting out, you can get so excited about the fact that you've come up with an idea that you launch straight into trying to turn it into a business. Successful entrepreneurs know that they will have plenty more ideas and therefore are happy to take their time to assess their ideas objectively and only act on those with the best chance of success.

As Richard Branson says, "Business opportunities are like buses, there's always another one coming."

In fact this is one of the biggest differences between successful entrepreneurs and others - successful entrepreneurs have an "abundance mentality" when it comes to ideas while most people have a "scarcity mentality". In other words, inexperienced entrepreneurs are often worried that they won't have any other good ideas so they proceed with the only one they've got (often the first one they come up with) instead of taking the time to apply a stringent selection criteria to it.

So here are a few of the criteria I've adopted when assessing new opportunities:

1) Am I passionate about the product/service/industry?

Many people will say that you don't need to be passionate about your product or service - just about building your business. For example, they say you don't need to be passionate about paper clips to go ahead and build a paper clip business. In my experience, and from talking to other business builders, I have to disagree.

Building a business is hard enough without not caring about your product or service, or the problems it will help your customers solve.

When the going gets tough, as it surely will, and when even the potential monetary rewards aren't enough to keep you going, as they surely won't, what is going to make you do what it takes to make the business successful if you don't passionately believe in the good you are doing?

2) Does a market exist for your product or service and is the market big enough?

This question speaks for itself. Are there enough people who will buy your product or service for what you need to charge to build a profitable business? No use building a business to solve a problem only you and your friend care about.

An add on to this question is, "Is the market concentrated enough?" While there may be a big enough market nationwide, are there enough potential customers within your reach for you to build a profitable business?

3) Is there a gap for you to become Number 1 in?

My favourite strategy in business is not to compete. When you have the chance to create your business from scratch, why choose to make it harder than you need to? In terms of assessing ideas, the question to ask is this, "Can I make this business number 1 in it's category?" If yes, that's fine. (Note: this is just my criteria - in reality there is often room to build a successful business occupying the Number 2 or even Number 3 position. Think Coke and Pepsi, McDonalds and Burger King, Telecom and TelstraClear... It's just that the more competitors you have in your category, the more you need to compete in price and the harder you'll have to work to achieve market share.)

If not, the next question to ask is, "Can I create my own category in which I can be Number 1?" If yes, then go ahead. (For example, Burger Fuel created it's own fast food category - gourmet burgers. Consequently it doesn't have to compete with the price of burgers from McD's.)

4) Is it systemisable and can it run without me?

If the business you're thinking of starting cannot be run by anyone else but you, or the products or services you're producing cannot be produced or delivered by anyone but you, then it's a fair bet you've come up with an idea for a job, not a business.

That's not actually to say you shouldn't go ahead with the idea, just that your scope for growth will be limited by the amount of work you can do personally and that the value of the business will be intrinsically linked to you, limiting it's attractiveness should you ever want to sell it.

5) Cost. Do I have the resources?

Do you have the capital, time, knowledge to turn your idea into a successful business? If not, can you get it?

Turning a good idea into a successful business is all about execution. Many great ideas fail not because they weren't a great idea, but because the entrepreneur is undercapitalised, doesn't have the man power, or doesn't have the skills or knowledge to implement it.

If the answer to any of these questions is "No" then my advice would be to find another idea.

Having said that, if you back yourself, and are prepared to learn some hard lessons and to never quit, then go for it.

Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.