The would-be entrepreneur's handbook

You'll have the best shot at success if your idea is in an area in which you have experience, and in an industry that's in demand. The grid at right, which was devised by Scott Shane, professor of entrepreneurial studies at Case Western University and author of "The Illusions of Entrepreneurship," illustrates the point:

That's not to say that you should give up on an idea if you don't know the market. But at least give yourself a shot by choosing a field that's in demand (bottom right of the box). Especially during a tough economy, you want to focus on customers' current needs, with your edge being that you deliver a product or service faster, better or cheaper, says Edward Hess, professor at the Darden Graduate School of Business at the University of Virginia and co-author of So! You Want to Start a Business? You may also want to shift yourself up to the top-right quadrant by teaming up with someone who does have expertise. Or consider working in the industry to study up and taking any classes that will push you forward.

NEXT: Step 4: See what the customer thinks