Identify What You Like
It's one thing to know a lot about something or be good at it. It's quite another to enjoy it enough to want to make it your life's work. So, remove from the list you created in Step 1 anything that you don't really, really like doing or which plain doesn't interest you. No matter how good you are at it. If you're lucky enough to like what you're good at, as a general rule, stick with what you know.
Do I have the job skills necessary to be successful at such a business?
While desire can be a strong driving force, one still needs to know how to drive to reach their goal. While it's not necessary to possess every skill needed for the business you're contemplating opening, you at least have to identify such skills and determine if you have the time, energy, and/or resources to learn them and/or to ask for outside help in performing various tasks such as bookkeeping or marketing. Answering this question thoroughly also involves analyzing whether you have the right personality to get the job done. If you're not a "people person" and you're considering opening a beauty parlor in your home, you might want to re-evaluate if such a career is the best use of your capabilities.
Start to inventory your skills, experience, interests, and personality characteristics. These are what you have to work with - your raw ingredients, so to speak.
Make a list of personal qualities and factors that you can throw into the mix. Include things like:
=> your personal background;
=> training and education;
=> work and volunteer experience;
=> special interests and hobbies;
=> leisure activities;
=> your personality and temperament.
All of these qualities and factors make up what you know and what you're good at.
Do I have the resources necessary to be successful at such a business?
This includes financial resources as well as the time to commit to your endeavor and a suitable location, whether your home or a nearby facility. Again, while you don't need a large inheritance stashed away in the local bank to get your business underway, you should at least have sources that you can approach to tap into when and if necessary. Obviously, depending on your career choice, you might need less start-up money for one endeavor versus another; that's often the case for service-oriented work compared to product-driven businesses.
Also, consider how much time you can realistically invest in this new adventure. Do you only want to work part-time when full-time is potentially going to be necessary to really succeed? Last, but certainly not least in importance, is your home suitably located and zoned for your business or will you need to rent, lease, or purchase an office, store-front, manufacturing facility, or maybe even an existing franchise?
Just because I have the desire, skills, and resources, is there a market for my business?
Sure, you might see the need for a better "blue widget," but will anyone else? Maybe the market is already saturated with blue widgets that work just fine and the competition is sufficiently meeting the consumers' needs. Perhaps blue widgets are just the latest trend and have no real long-term potential for helping you realize your business goals.
Please realize that blue widgets aren't just products, they can also be services. If your market research leads you to the conclusion that your idea isn't likely to meet your ultimate business objectives, DO NOT hesitate to start from square one and come up with a different idea. Successful business people realize the value in knowing when to backtrack and begin traveling a new stretch of their career path.