He's determined three basic tests for people to go through before they try to start a business.
1. It has to have the potential to be huge
Schwarzman said one of the most important aspects of starting a business is testing whether it's going to be a good use of your time.
"It's got to be something that's really large, consequential, something you're willing to dedicate 100 to 120 percent of your time to," Schwarzman told FOX Business.
He said the reason it has to be a huge project is that if something bigger comes along, you don't want to wish you had waited for the bigger thing.
"Part of what makes people have success in what they do is dreaming big dreams that could work and then prosecuting those."
2. It must be unique
Schwarzman believes it's critical to not just take something people already have, and try to slightly improve it.
"That doesn't capture the imagination of the world or whatever relevant constituents say you're trying to sell to," Schwarzman said.
"So you really have to have something that's unique."
Since people typically fear change, Schwarzman said ensuring your idea is unique will help them accept your business easier.
3. The timing has to be right
Everyone's heard the phrase "timing is everything," and Schwarzman agrees with it.
His tried-and-true method is asking trusted friends their opinion on the potential business.
"When you come up with something that's pretty unusual, you sort of have to test it on your friends, and you have to think about all the reasons someone else won't want to buy it or adopt it," Schwarzman said. "And you have to try and defeat that before you actually get to them."
"And if you can do that, then you know that you're doing the right thing at the right time."
Schwarzman recently wrote a book called "What It Takes: Lessons in the Pursuit of Excellence" which covers this subject matter as well as many others.