Choosing a business idea is probably the thing we help our members with most.
It's understandable. You don't want to put a bunch of time and effort into building a business, only to realize later on that there was a major flaw in the idea that will forever stunt your company's growth.
Of course you're worried about your business idea. You should be. Ideas matter. If you're going to dedicate years of your life to your business, you want that time and effort to pay off. A good business idea is the foundation of everything to come.
Business ideas are tricky because there is never 100% certainty that an idea is going to work. There is only confidence. Your job is to find a business idea you can feel confident about moving forward with, even though you'll never know many things for sure until you start actually working on the idea.
We all make mistakes building businesses, whether you're a new freelancer or the next Elon Musk. Some mistakes you can recover from, some you can't. The best thing about being at the idea stage of a business, is that there are some important mistakes you can avoid before you put all that effort in. Avoiding these mistakes now can save you a tremendous amount in the future.
We're going to share the top 10 biggest mistakes we see people making. At the end of this, we want you to be able to answer “is this a good business idea” for yourself, much better than you can right now, so you can find the idea that gives you enough confidence (not certainty) to move forward.
In case you aren't familiar with what we do here, Fizzle is training for small business builders. We've built a library with over 40 individual courses, and a community of 2,000+ other entrepreneurs building businesses that matter. Plus, you get access to the Fizzle Small Business Roadmap, which guides you through every step of setting up a business in a way that it's actually going to work.
Membership in Fizzle costs just $35/month, about a dollar a day, and you can try Fizzle completely free to see if it's right for you. Learn more about Fizzle membership and start your free trial today »
Here are the 10 biggest mistakes we see in choosing a business idea:
1) Choosing a business idea that no one actually wants
This one is the biggest mistake you can make in choosing a business idea. The biggest goal of a business is simple: make something people want. Starting off with an idea nobody wants is like setting sail with big, giant, gaping hole in your boat.
Let's say you find yourself writing on a whiteboard with a dry erase marker. Then you find yourself setting that dry erase marker down to grab your water bottle. Then you pick the dry erase back up again. And over, and over, and over, you repeat this.
So you decide, man, why isn't there a water bottle with a dry erase pen attached to it? A dry-erase water bottle. Problem solved.
But does anyone really want that? Just because something solves a "problem" and doesn't exist yet, doesn't make it a great business idea.
People have to want your idea for it to be a great business opportunity.
"But wait, I'll just explain to everyone how awesome my water bottle dry erase marker is, and how much time it saves."
If people aren't already frustrated by a problem and searching for a solution, you're starting an uphill battle. Don't start your business at an avoidable massive disadvantage. You'll have plenty of other disadvantages to overcome.
Unless you have incredible patience and a massive advertising budget, you can't manufacture demand. You can't educate your market. You have to tap into existing demand. Make something people want.
2) Choosing a business idea that you aren't capable of pulling off
This is another doozy: choosing a business idea that you aren't capable of pulling off. Something that is too big or complicated for you to execute. Biting off more than you can chew.
This is probably the biggest reason why businesses fail to even launch, to ever have a product for sale, because the business is trying to do way too much, to run before it even learns how to walk.
This is why we (Fizzle) exist. Because the reality is not that most businesses end up toiling away, creating a product, launching it, and then going through this long period of trying to find buyers, and yadda yadda.
The reality is most businesses never even see the light of day because they *fizzle out.* They die a quiet death because the entrepreneur behind it hits a bunch of hurdles because he tried to take on something that is just too big, too daunting, too difficult and takes too long to finish.
The tendency is to want to create a perfect product right away, one that fulfils our grand vision for a complete solution.
The reality is that businesses succeed by addressing one small problem really well.
Uber didn't start as a global force in transportation with hundreds of thousands of drivers in 70 countries. They started by operating one kind of vehicle (black towncars) in one city (San Francisco) for one kind of customer (rich tech elites).
You have to choose an idea that you're capable of pulling off. You have to assume that things are going to be much harder, and that they're going to take far longer than you think they will. Projects always take longer than we think they will. It's Hofstadter's Law:
Hofstadter's Law: It always takes longer than you expect, even when you take into account Hofstadter's Law.
3) Choosing a business idea that doesn't stand out enough
Problems worth solving attract lots of competition. People are thirsty, so there are millions of beverage choices out there.
Does the world need yet another new beverage? That depends.
To make your business idea work in a crowded, established space, it has to stand out. If it stands out enough, you could tap into the massive existing demand and build a huge success story.
Take razors, for example. Huge, established, old market. Billions of dollars in sales. Massive major entrenched players with ridiculous advertising budgets.
And yet, two guys turned a small razor startup from nothing into a billion dollar acquisition in five years. Mark Levine and Michael Dubin might have seemed crazy to start a razor company with such intense competition, but they knew something important. They knew the market was frustrated by expensive razors.
Dollar Shave Club stood out by simply delivering cheaper razors via a subscription model straight to customers by mail. They hammered the point home with their brilliant launch video “Our Blades Are F***ing Great” featuring CEO Michael Dubin. The simple differentiation backed by an incredible video attracted big venture capital money and led to an impressive exit less than five years later.
How many other razor companies came and went in that time? Those that failed failed to stand out enough from the competition. Differentiation is essential. Your business idea needs a unique selling proposition.
You have to give your customers a reason to choose your product over the rest, otherwise they won't choose yours. They'll just move on to a competitor who gives them a reason to choose. That's what standing out means, giving someone a reason why your thing matters more in some way than another product.
Bonus Onion article: Fuck Everything, We're Doing Five Blades
4) Choosing a business idea where you don't understand the target customer enough
If you don't understand your customers deeply, if you don't know them well, how will you solve a problem for them? How will you find them?
Understanding your customers is how you make your business idea stand out. It's how you choose a business idea that people actually want, because you understand the customer intimately. Ideally you want to be able to explain your customers' problem better than they can express it themselves.
You might be thinking, wait a second, that's impossible. How would I know my customers' problem better than they do? But this actually happens all the time, because customers are busy. They've got a lot going on in their lives and they have this thing that's annoying them, but maybe they haven't really sat down and spent months thinking about this thing. It's just something that comes up and nags them every once in a while.
So you, as the business owner, if you get to understand that person and a bunch of other people like her, who have that problem, then you have this advantage of being able to synthesize all of that information and articulate it back to them in a way they never thought about before. Then they're like holy crap this business really gets me. This business really understands that I'm tired of going to the store to buy expensive razors, I want to buy decent priced razors online.
This understanding your customers thing, it doesn't have to be innate. You don't have to have known these people for a decade. It can be learned. You can get to know your customers by talking with them and asking the right questions. That's the goal of our course on customer conversations, to help you ask the right questions, so you can really understand a group of people and the problems they face.
We've made a whole course on winning business insights from customer conversations. You can take the course in a free trial of Fizzle, no contracts or payment or anything, if you'd like. Check out the video »
5) Choosing a business idea that doesn't tap into your personal skills, background or experience
Starting a business is a big, difficult, scary adventure. It's a serious problem to deal with on it's own. That's why it's so important to try and leverage any existing skills, background or experience you already have when starting your business.
Why would you throw away all of your skills and experience and knowledge on a topic and try to gain a bunch of new skills and learn how to build business at the same time?
This happens a lot. The tendency is, you're tired of your job, you're tired of the life that you live right now, you want to jump into some fresh, new business idea. Some podcast episode or blog post comes across your screen, about how XYZ is the hottest business trend this year.
So then you're going to try and start a business, which means learning a whole bunch of new things, and at the same time, you're going to learn an entire new topic as well? It's no wonder most small businesses fail.
The point here is that if you have some sort of really useful skill or some experience within a topic, see if there's a way for you to leverage that. Don't throw all of that away. See if there's a way for you to leverage some of that within your business.
It doesn't mean you have to be an expert at the thing you're trying to get off the ground. It doesn't necessarily mean that you have to be an expert on razors, if you want to start Dollar Shave Club. But it does mean that because we're often one-person businesses, you better at least have some of the skills it's going to take, like maybe making videos if a video is going to be a key part of your strategy, or building websites or whatever it is.
If you have some skills, experience, expertise, talents, whatever, see if there's a way for you to incorporate those into your business idea. Don't make the mistake of not leveraging what you already have.
6) Choosing a business idea that you're not going to want to run
A lot of us jump into an idea because we're enthusiastic about it as a business opportunity, only to find out months, or sometimes years later, that this is just not a business that I enjoy running. Maybe it doesn't support my lifestyle, maybe I don't like the customers, or maybe I don't like the product that I have to maintain. It just becomes mundane for some reason.
You have to think ahead. What will this business look like if it's successful a couple of years? What will it be like to run this company?
If we don't include this as a factor in choosing our business idea, it's easy to end up with a business that isn't compatible with the life you want to live.
It's a lot like relationships. How many of us sit down before we find a spouse and create a checklist of what would make a compatible person in the long run? Very few. Instead, we get excited and fall in love because of attributes that attract us in the short-term. This happens with business ideas as well.
It's much smarter to sit down and write out a list. Three to five years from now, if this business is successful, what would I want it to be like? What would I like my day to day to be like? How would I like to interact with the customers? What sort of tasks, and hours, and locations and employees would I want?
For example, let's say you think you want to be a speaker. The idea of delivering talks to groups of people excites you. You love the idea of being on stage and entertaining or inspiring people. But then a couple of years into it, you realize what a pain in the ass the travel is, and that you hate being on the road multiple times every month, but your income is dependent on it. You feel trapped by the day-to-day reality of running your business.
Don't choose a business idea that you're not going to want to run in a few years. There's a reason you're starting a business in the first place, and it's not just to create another job for yourself.
7) Choosing a business idea because it seems like the easiest option
We all probably have friends who have jumped from one business idea to the next. They had this like chronic entrepreneurialism sort of thing, but nothing ever sticks. They read the Four-Hour Workweek and then they think it's just supposed to be easy.
So they're just looking for that easy get-rich quick kind of thing. They heard a radio ad about flipping houses or somebody's told them about this multilevel marketing thing. They picked up the latest issue of Entrepreneur magazine and there's 50 hot business ideas that you start in 3 weeks or less.
This is a big red flag. If you're looking for a business idea because it's going to take minimal effort to get off the ground it probably means you're going to struggle all along the way.
If a business idea finds you from a list of business ideas, like if someone reaches out to you like, oh bro, you've got to check this out it's really easy… Or if someone sells you on a multi-level marketing idea… Or a podcast or blog post proclaims Amazon FBA to be the greatest and easiest opportunity of 2015. Any business idea that finds you in that way is suspect. You can still consider these, but be skeptical.
Real business opportunities take lots and lots of hard work. There aren't any shortcuts. If you're considering a business idea only because it seems easy, you might not be cut out for entrepreneurship.
8) Choosing a business idea that customers can't/won't pay for
This one is a simple question. Can my customers pay and will they pay?
Even if you make something people want, your business could still fail if your customers aren't willing or able to pay for your product or service.
This might seem like a "duh" point to make, but trust us, this one trips people up all the time. All of us on the Fizzle team have built businesses that ran into this problem in the past, where we built a business around a real problem, only to discover our audience either wasn't willing or able to pay for a solution.
Some problems aren't valuable enough. People might want a solution, but only if it's free.
Unfortunately, this isn't always an easy question to answer. Customers might tell you they want a solution and will pay for it, until it's time to actually break out the credit card.
Like we said in the beginning, you'll never be 100% certain about a business idea. Your goal is to gain enough confidence to move forward. The same is true of knowing whether customers will pay.
There are a few ways to find out whether customers will pay:
- Pre-sell your product (like kickstarter campaigns)
- Look for evidence that people are already paying for similar solutions
- Talk to customers and ask what they would be willing to pay (be careful, this is notoriously unreliable evidence)
Ultimately, the only way to find out whether people will pay is to put a real product in front of them and see if they'll buy. The best way to mitigate the risk of having built something no one will pay for is to create a minimum viable product, something small that proves whether your business idea works.
9) Choosing a business idea that you don't care enough about
If you don't care about your business idea enough, it's going to be very difficult to execute at a competitive level.
There's a difference between passion and caring. Passion is often a fleeting thing. You don't have to be passionate about creating a solid cheaper razor option, but you do have to care about it enough to put in the years of effort necessary to build a viable business.
When you don't care about an idea enough, you'll see this evident in losing steam and momentum after just a couple of months. It's easy to have passion and enthusiasm early on in a business idea, but what really matters is that you still care 6 months, 12 months, 24 months later and beyond, when things get really tough.
When the going gets tough, where do you continue to find the motivation?
Caring can be a huge advantage, especially in crowded markets.
Caring trumps opportunism every time.
Caring isn't everything, but it's an important part of a solid foundation. And you can find care in different places. You can care about the problem, or the solution, or the audience, or the greater good.
10) Choosing a business idea that you can't explain simply
We hear all the time from people who are trying to articulate an idea that they have swirling around their head that they haven't quite distilled down enough. This doesn't mean that your idea is doomed, it might just mean that you're not quite there yet.
Because if it's too complicated, if you can't explain your idea simply enough, it means it's probably too complicated, too vague for you to identify a really specific problem, a specific group of people, and to create a product that will serve that specific audience in some tangible way. Because it's just too broad at this point. You haven't boiled everything down.
When you have a hunch about a problem and a group of peole, but it's still hard to communicate it in a clear and concise way, that's OK, but it means you're on the road. You're in the process of refining your idea. You need more input and experience and time. You need to find out if this problem is real and if it is, you'll eventually find a way to make it simple.
If you feel like you could explain your idea, if you just had 5 minutes, you need to realize that you're not going to get 5 minutes. You get a headline, or a tweet, or the 80 characters that fit in an advertisement.
Your language needs to be sharp, and compact, and compelling.
This applies not only for customers but also for potential employees, potential investors, and partners. Anyone who's coming in contact with your business is going to have to understand it and it's a big problem if you can't explain it simply.
“Is this a good business idea?”
I hope you'll be better able to answer that question for yourself, now that you know about these 10 common mistakes in choosing a business idea.
If you decide to move forward even though you're making one of these mistakes (knowingly), you might still be able to overcome the flaws in your business idea. But two or three or more of these mistakes will likely keep your business from ever making the impact you hope it will.
Remember that a business idea is just the first step and there is this whole other thing called execution, which is pulling off the idea, which is building the product and finding the people and as Derek Sivvers likes to say, ideas are just a multiplier of execution.
Execution is the hard part; ideas are relatively simple in comparison. Do your best to choose a solid idea and then prepare yourself for the months and months of hard work ahead.
Want to avoid even more mistakes? Get Fizzle's free guide to the Top 10 Mistakes in Starting an Online Business »
No comments:
Post a Comment