I have a business idea, now what?
You want the freedom self-employment brings or maybe you don’t want to worry about money anymore. This dream isn’t going to happen on its own. You’re wondering “I’ve got a business idea, now what do I do?” The answer is: make sure it’s not a bad idea! Before you proceed to the next steps, write up a business plan or develop a marketing strategy, you need to make sure your business idea has legs. Any business requires resources. Whether that’s time or money, do you have these resources to spare on a bad business idea? Do you have financial back to make your business idea a functioning, revenue generating business?
Here are a couple ways to know that the idea you’ve got in your head looks better on paper than in the real world.
You won’t share your business idea with anyone.
You know those little “the more you know” commercials that aired after G.I. Joe and Saturday morning cartoons? Well you’ve been lied to. In our age of instant information, knowledge is not power. You can Google anything and figure out how to do it. So to be clear, your idea is not what’s powerful. For example, when Facebook launched in 2004 and exclusively targeted college kids, people didn’t want to invest in it because college kids don’t have money. It would have sounded like a stupid idea to a short-sighted investor. Recognizing potential and taking action is what’s powerful. Most people are inherently lazy and won’t take action on a good idea or have the capital to do so. Watch an episode of Shark Tank where people are pitching their products to investors and one of the very first questions investors ask after the initial song and dance is “how many units have you sold?” It’s not about the idea, it’s about the product that’s been developed. It’s about connecting that product to the right market. The product is refined through many rounds of feedback. And getting a good market fit only happens from sharing that idea with others. If you’re afraid that someone will steal your idea, stop worrying about that. You need to get your idea challenged so you can strengthen it. The sooner you’re able to shed bad business ideas the faster you’re able to generate good ones. This only happens through feedback.
It’s being done very well by someone else already.
I had an old co-worker ask me for my advice on a new business they wanted to launch. I asked her for a general summary of what they were trying to do. With a little hesitation she told me: I want to sell discount furniture online. Immediately I said “that is not a great idea.” That may seem a little harsh but here’s how my brain worked its way to that answer. If I want to buy cheap furniture online a few places come to mind: Ikea, Overstock, Amazon, Wayfair, Target, etc. The competition here is absolutely immense. These are giant companies with huge advertising budgets. I have never shopped on Wayfair.com but I can sing you their jingle right now, “Wayfair’s got what I need!” It’s burned in my brain from endless commercials and a nearly endless marketing budget. There’s no amount of guerrilla marketing that’s going to match that unless you win the lottery. These companies already have global manufacturing, distribution, e-Commerce and advertising figured out. They have tens of thousands of employees. If you’re a small business owner, how in the world will you compete for a piece of that pie? I’m not saying it’s impossible, however. It’s possible to disrupt a market. Take a look at Uber and how they were able to disrupt the longstanding taxi cab and livery service industry in the United States. The difference here is that they didn’t create a business that was trying to “provide transportation services.” They took advantage of widespread use of mobile phones to give people more flexibility and generally lower costs for hailing cabs. They also created employment opportunities for tens of thousands of individuals by reducing the barrier to entry for drivers to make extra income legally by driving people around. They took advantage of new technology and consumer trends to refresh an existing service. If you’re trying to compete with giants in an established industry you need to do it in a new way or highly targeted way that’s not being done currently. Don’t get me wrong, I’m not saying you need to re-invent the wheel. But competition is so high you can’t aim to compete. You need to disrupt. And that takes identifying weaknesses in existing industries and cost-effective ways to capitalize on them.
Nobody needs it. Not even cats.
Take a look at this incredible video of Mike Rowe (of Dirty Jobs fame) trying to sell a noisy bag for cats.
Mike can’t maintain composure to pitch this product to viewers without being totally confused by its purpose. To be clear, this is a guy who supposedly got his first gig on the home shopping network by talking about a pencil for 8 minutes. It’s a bag. It’s crinkly. Cats love it. The problem is, the cat could care less about it. They don’t show a cat loving it. They don’t even have audio of the cat playing in the bag. The product just stinks. Your business idea very well may only appeal to a tiny audience. It’s OK and often required to go niche. But you’ve got to take into account the big picture. Your costs, the cost of the product and how it fits your customer base. If there’s only enough people interested in your cat bag that you have to price it at $50 to make any money, chances are you’ll be out of business fast. It’s much easier and cost-effective to make a product for a market than to build a market for a product. Use tools like Google Keyword Planner to gauge search traffic for phrases. Talk to your potential customers and find out what’s missing in the market. Do people really want a loud crinkly bag for their cat when they can easily give them a free grocery bag? Get those kind of questions and answers figured out before going to market.
You can’t describe your ideal customer.
A really great way to figure out if your good business idea is actually terrible is if you can’t even describe who would purchase your product. Having a clear idea of who you’re selling to is often called “developing buyer personas.” Write up a description of a person who would be your ideal customer and flesh them out as much as possible. It’s common to have a number of buyer personas to fit different products or different service offerings your company provides. For example, I offer internet marketing consulting and services. The people who need my help are in different industries and departments. I have personas for people who work at agencies and want to complement their service offerings, small business owners who need marketing help, and individuals looking to jump start a new business idea and turn it into a successful business. Each of those is a different persona. Here’s an example of the agency persona. Employed at agency: Account manager looking to expand service offerings on proposal or project manager looking to fulfill contract help for client’s job. In their late-20’s through mid-30’s. Account manager is generally female, project manager is typically male. Stressed out and working long hours. Heavy coffee drinker, enjoys cocktails and happy hours. Works downtown in an urban setting. Interests include healthy eating, exercising, productivity, pop culture and traveling. Lives on Twitter. Build these personas based on who you work with and their peers who you’d like to work with. They’re great reference points when developing web content. It’s really easy for me to come up with ideas using the example above: Top 5 Downtown Gyms for Business Pros, 20 Happy Hours to take your Clients to, 5 Apps with Agency Discounts, etc. This the building block of a successful content strategy plan.
You won’t quit your job to start it.
You can’t be sort-of-all-in on your business idea. You’ve got to go all the way. If you’ve got an idea but you’re not strongly motivated to pursue it with 100% of your being, then it’s not a good business idea for you. OK, maybe it’s still a good idea…but to be successful in business you’ve got to be personally motivated to follow through with your idea. You’re going to face some serious ups-and-downs, your patience and commitment will be challenged and if your idea isn’t something you feel strongly about then you’re going to fail. Customers can smell passion from a mile way. The other day, I took my mom out to a diner in North Aurora, IL which is a suburb of Chicago and just north of Aurora, IL (“Wayne’s World, party time, excellent!”). The diner is called Ari’s Kitchen. Ari was running the front of house operation when we arrived and he was clearly very happy to be there. He was cheerful and joked with us the whole time. The food was excellent but the service was even better. They have these really good biscuits with homemade jams. He brought me a second biscuit on-the-house after noticing I gobbled the first one up. Really stand out place. Very memorable, definitely going back. Is your business idea good enough that you feel like you have to quit your job to pursue it? If it’s just a casual side project there’s no way you’ll be successful. After leaving the salaried marketing world to start my marketing consulting business I quickly realized the 9am – 5pm structure does not work. I regularly put in 60 hours a week, but I love working now. I’m building something for myself, choosing which clients I provide value to and get to work whenever and wherever I like. If you’re interested, I cover all the gory details in my podcast for the self-employed called Faucet. When I was nervous about leaving my job to pursue my own business I just kept this in mind: the worst case scenario is, I have to get a full-time job again. That’s the worst case scenario for me. Going back to doing the thing I was doing currently. That’s not bad! Everyone’s situation is different. Maybe you need the better health insurance, the 401K and your barrier-to-leaving your job is much higher. I get it. But list the pros and cons so you can start planning for your escape whether it’s now, three months or a year. Identifying which business ideas are good and bad is a critical part of entrepreneurship that only happens through practice. Don’t be afraid to share your ideas with others. Get advice from people who you think would be good customers. Focus on your best idea and work, work, work.