The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are some common mistakes young entrepreneurs make?” is written by Jon Denn, vice chair of Cape Cod SCORE.

Passion for your idea is mandatory in order for your business to be successful. However, it can blind many entrepreneurs to the risks of their business idea and its industry. Here are the biggest mistakes I’ve seen young entrepreneurs make in their pursuit of the American Dream:

Great idea, bad industry

One of the best tools to see if your industry is healthy is to look at the Porter’s five forces process by examining threats of new entrants, threats of substitutions, bargaining power of your customers, bargaining power of your suppliers, and how crowded the competition is already. You may have a fabulous video-rental store business plan, for example, but the advent of streaming video is a pretty good clue the industry stinks. A great idea in a bad industry may not be a good long-term business.

Good idea, great industry

I see this all the time: The industry is booming and a young entrepreneur has a good idea, but it’s either too narrow in scope or will eventually be eclipsed by all of the energy of the other great products, services, and advertising. The idea might be a good or great product line for another manufacturer or distributor, but as a stand-alone company, the risk of failure is very high.

A seemingly great idea in an okay market

One of the first things I look for when mentoring is proof of life. All of the variables might be looking great, but as my professor in business school once said, “If the dogs don’t eat the dog food, it isn’t dog food.” See if there’s demand for your product or service before spending too much time or energy on its development.

I’ve seen ideas that were well executed and fulfilled some consumers’ needs, but just some demand may not be enough to justify the time, effort, or capital. These ideas make great hobbies, but not good businesses. It’s important to get a realistic gauge on demand. Ask people who could actually be customers if they would spend their hard-earned money on your widget or service.

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