The Things You Want in a Business Idea, That Most Think You Don’t
Finding business ideas can be a difficult process, especially when looking for ‘that perfect idea’ that probably doesn’t exist.
I think a lot of people myself included, look for a few things that seem like the right thing, but more often than not are the complete opposite of what you really want.
Here is my list of things you want in a business idea, that everyone thinks you don’t.
Where’s The Competition
This is the biggest thing I find myself doing – looking for brand new ideas that don’t already exist in any form. On the face of it this might seem like a great thing, but the reality is somewhat different.
Oftentimes if nobody is trying to solve the problem you’re trying to address then theres probably a good reason. Maybe people aren’t willing to pay for it, maybe the cost is too high for the returns or maybe its a great idea but nobody is really looking for it. The big thing that competitors prove is the existence of a market – if people are willing to pay for something you can be damn sure there’ll be someone trying to sell it to them.
This isn’t to say your should be doing the exact same thing as your competitors, far from it. Taking an original or novel approach to an existing problem can be a great way capture market share.
Even if you do find a truly original opportunity, its important to remember that the first ones to market are rarely the ones who survive:
Before Google there was Yahoo, Alta Vista etc
Before Facebook there was Friendster
Before Amazon there was Charles Stack Online Bookstore
History is littered with examples of firms taking the second mover advantage and winning out. The benefit from not being first is that you can learn from your competitors mistakes, capitalise on their failures and do the whole thing cheaper.
Get The Niche Appeal
The second big thing I find myself doing is trying top find ideas that everyone wants – these type of ideas are extremely rare, and pursuing them often results in failure. there’s several reasons for this:
If you think of your idea as being for everyone, it instantly becomes difficult to market. How do you target ‘everyone’, where are ‘everyone’, what is ‘everyone’ interested in?! Targeting aspecific niche allows you to market at specific people, with specific interests in specific places. This makes your marketing efforts highly targeted, much more effective and lower in cost.
Often if you build a product for too broad an audience, you end up comprising the quality of the experience. If you focus on a more specific niche it allows you to cater you product to your customers better, providing a better experience.
Again, targeting too broad an audience can make defining the actual features of your product very difficult – resulting in something overly complex or even paralysis by analysis. Keeping focused on a specific niche brings focus and clarity.
Generally speaking its better to focus on a niche – even if you feel your idea could be marketed to a broader audience, focus on a niche to start with. Facebook started only targeting students in a single college!
Counter The Sign-up Friction
This one is a little more complicated to explain, but I find myself constantly battling this instinct. Price based sign-up friction relates to how difficult the customer would find it making the decision to spend their cash on your product.
When searching for opportunities I have a real habit of looking for ideas that potential customers wouldn’t give a second thought to buying…ideas that are ‘no-brainers’. If you focus too much on this or dismiss any ideas because you worry that ‘people wont bu them’ then you could find yourself struggling to get anywhere. In these cases you’d be much better off putting together an MVP (Minimum Viable Product) and testing the market or interviewing your customers.
There are other upsides to having at least a degree of sign-up friction:
Your product will get a better degree of engagement with your customers, as they’ve had to put more thought into whether to buy it or not.
You will have a better chance at getting feedback which is crucial to early stage start-ups.
A higher price can often give your product a perception of better quality.
You’ll likely have fewer time wasters.
You wont be underpricing yourself.
All in all I guess the lesson is don’t sell yourself short, in order to maximise sales – 100 customers paying $100 is better than 1000 customers paying $10.
What’s The Conclusion?
In the end these principles are guidelines and don’t apply in all situations:
It can be great to be innovative and have a first mover advantage Broad appeal could result in a hugely successful product Lack of sign-up friction could make conversion rates awesome But assuming that you need a product that is totally new, that everyone wants and that is a complete no-brainer to purchase is really dangerous. It could lead to pursuing ideas that are impractical to run, vastly undervalue the effort you have put in or even get complete paralysis in finding the idea.
Instead its much smarter to find a proven market, focus on a specific customer niche with a product at the right price.