You are an entrepreneur with a burning passion to change the world. You know that you have the mindset and the tools necessary to be successful… You can “feel it”.
Just one problem – you need a business idea. And it needs to be a good one.
A couple days ago, I gave you an in-depth guide on the best way to pick the perfect name for your business or startup. But what about the step before name selection…
How do you pick the perfect business idea?
Many times it seems like the best business ideas come from a random flash of genius. You’re enjoying a nice, hot shower, singing your favorite Katy Perry song Pink Floyd solo and…
A brilliant business idea comes out of nowhere and forcefully latches itself onto your brain.
Isn’t that how Zuckerburg came up with Facebook? One of these days I’ll finish watching The Social Network.
Seriously though, how are you supposed to separate the good business ideas from the bad? Especially if this is your first startup or if you’re working alone, it’s easy to get caught up in the never-ending mental argument over the viability of your business idea.
Will it make money?
Will people respond to it?
How likely is it to flop?
Will it ever make a difference?
These are all questions that your nagging subconscious will force you to answer if left unchecked.
Fortunately, as you continue reading I’m going to give you a simple list of ingredients that every good business idea should have. These will allow you to objectively evaluate your business idea instead of relying on pure guess-work.
Ingredient 1 – Responsive Audience
The first and most important ingredient is a responsive audience.
In other words, your business idea should cater to a group of people that you can actually change. Your target audience should be one that will take action towards a specific goal.
For example, last week I read an article in Bloomberg about the massively successful startup, OkCupid. For those of you who don’t know, OkCupid is a matchmaking service with a focus on local dating, and they have an app that will automatically set you up on a blind date. The way that they use local data has made online dating easier and more authentic than ever before. Because of that, they have a user base of 3.8 million people, 1 million of which are active daily, and they’ve experienced a 33% growth every year since 2004.
Now, clearly this is a successful business. Many of you may be thinking that you could never come up with an idea as high-impact as OkCupid.
But you can!
While innovation, convenience and attention to detail is a big part of OkCupid’s success, the real catalyst behind their explosive growth is the responsive audience they cater to.
Just think about it – what audience is more responsive than single people who desperately want to go on a date? I can’t think of very many.
So, now you need to answer these questions for yourself:
Who will your business idea impact?
Does your audience have a real motivation to respond to your idea? Why or why not?
Fortunately, I’ve already written about how to validate an audience’s response to your business idea, so check out that guide if you need more help evaluating this ingredient.
Ingredient 2 – Unique Selling Point
If you know anything at all about marketing or copywriting, then you’ve already heard of this ingredient.
A unique selling point, or USP, is something that makes you different from every other competitor in the market. Your USP is what your audience can’t or won’t get from anyone but you and your business.
So, for example, let’s look at StartupBros. What do you think is our unique selling point?
Honestly, you could probably find several. For instance, both Kyle and I are successful Internet entrepreneurs. Our goal is to equip you with battlefield-tested tactics and ideas instead of abstract theory or regurgitated marketing-speak.
But there are other legitimately successful entrepreneurs with blogs… What makes us different?
Two things – we’re here to break the rules, and we want you to do it with us. StartupBros is about creating a community of like-minded entrepreneurs all on their way to online success. We’re not teaching a class of students, we’re more like guides in a mastermind group. That’s something you won’t find anywhere else.
I’m not going through this with you just to brag, but to demonstrate that without our USP we would be just another blog in the endless sea of business and marketing blogs.
Before you move on I have one quick disclaimer:
Being unique is important, but don’t be different for the sake of being different. What separates you from your competition must be something that is noticeably beneficial to your audience. Being different just to be different will make you look like an amateur.
Ingredient 3 – Realistic Business Plan with Clearly Defined Goals
This ingredient pretty much explains itself, but I’ll still say a couple things here.
First, as I said in Lee Schneider’s interview with me about college, persistence is one of the most important traits for a successful entrepreneur. The reason that we need this trait is because all entrepreneurs fail, and persistence is what lets us get back up.
Ask anyone with cold calling experience… You mark your progress by how many “no’s” you get, not by how many “yes’s”. Being an entrepreneur often requires a similar mindset.
So, the important thing here is that you can create a realistic business plan before you start. And it’s extremely important that you establish clear goals beforehand in order to quantify your progress.
I’m not saying you should write out a full-fledged business plan like most are taught in school – in fact I’d recommend against it. But you need to at least have an idea of how your business is going to run and how you are going to grow it.
For me, this means sitting down with a whiteboard or a piece of paper to “map things out” and tear the idea apart. I usually use Steve Blank’s Business Model Canvas and some good old-fashioned brainstorming.
However, recognize in advance that your business plan and goals may evolve as your business idea plays itself out. Plan to adapt.
Don’t underestimate the importance of this ingredient. As I have said in previous posts, mapping out your goals and setting up milestones is perhaps the most crucial part of being successful in any venture.
Ingredient 4 – Scalability and Potential for Automation
I say “potential” here because launching an Internet business almost always requires lots of hands-on work throughout the initial stages.
Whether it’s brainstorming sessions with your team, writing articles for your blog, consulting with a developer, or building an audience on social platforms, you’re going to have to put in some serious time, energy and money to get things off the ground.
If you evaluate your business idea for automation potential from the beginning, you will make sure that on the other side of all that initial work is a happy-fun-land filled with treasures and trophies beyond imagination.
The simplest example here would be selling an info product. You will spend a lot of time and money creating an info product. Then, it will take even more time and money to promote that product.
But, when all is said and done you’ll have a steady stream of traffic paying you lots of money to let them click a button and download a file… After the initial launch it takes substantially less effort to keep the snowball rolling, and that’s all thanks to automation.
Be sure your business doesn’t depend on your time and money to grow in the long run, or else it’s growth will be very limited. You must have a plan to scale your business up in a cost and time effective manner.
Ingredient 5 – Personal Excitement
The last crucial ingredient for your business idea is completely subjective, because each one of you reading this has a different set of likes and dislikes.
It’s important that your business idea gets your heart pumping.
But, understand this – I’m not telling you only to pursue something if you’re passionate about it, at least not in the way that most people take that advice.
For example, Steve Jobs – the man who most recently pushed this idea of “follow your passion” – was not born an innovative tech-geek. He was known for walking around barefoot in college, and as a young man he spent several months on a psychedelic-filled spiritual journey through India. Not exactly the basement-bound nerd most of us might imagine.
What I’m saying here is this:
While Steve Jobs wasn’t born to be the king of Silicon Valley, he WAS born to be a mover and shaker. He was born an entrepreneur, and he was passionate about any idea he believed could change the world.
In a similar way, your business idea should excite you. It should be something that you can see throwing yourself into 100% and then some. If you’re not passionate about your idea, if you don’t see how you can change something, then you should probably go back to the drawing board.
On the other hand, if your business idea includes all five of these ingredients, then it’s time to throw ‘em in the pot and see what you can cook up. Chances are you’ll create something that a lot of people genuinely love, and that’s what this whole entrepreneur thing is really all about.
Now it’s your turn – What did you think about my 5 ingredients for a good business idea? Anything I should add to my business-cookbook? Let me know in the comments!