Clearly, the first step to becoming a real entrepreneur instead of an aspiring entrepreneur is to come up with a great business idea, but that phrase can be a little deceptive. There is a difference between a great idea and a great idea for a business. There are many, many ideas that are beyond cool, that wouldn’t actually make great businesses. For example, providing free meals to every hungry child is a noble idea, but it’s clearly not a great business as you wouldn’t want to charge your customers and wouldn’t be able to make any money. How about a tool for consultants that drastically reduces the number of hours it takes them to service each client by automating huge portions of the work they used to do? That’s an awesome idea, right? But maybe it won’t be the billion dollar business you dreamed of because most consultants charge by the hour and it’s tough to get someone to pay you money for something that means they now have to charge less for their work, reduces their average customer value, and therefore lowers their margins.
Finding a great business idea is not just about coming up with something that is really cool; it’s about coming up with something that is really cool and that lots of people are willing to pay money for. The conventional wisdom out there is that you should find your next business idea by identifying a problem and then developing a solution for that problem. That’s absolutely correct, but there’s a little more to it than that. You need to identify and develop a solution for a problem, but you also need to be able to get people to pay good money for that solution – more money than that solution costs you to produce and deliver. That means that you need to understand your target customer before you know if you have a good business idea. Don’t know who your target customer is or if there are enough target customers out there? You’d better figure it out fast. To start, try taking a look at a couple of my older videos about creating target customer personas and doing market research.
The bottom line is that while most new entrepreneurs are asking themselves if their idea is cool and new to decide whether or not to pursue a business, they should be asking if it’s something that enough customers will pay for. A super boring but easily salable idea is a way better business than a super cool idea that nobody will pay for, period.
To get you started be honest with yourself about the following questions:
- What is the problem I’m solving and who am I solving it for?
- What are people currently using to address this problem and why would they would go through the effort of switching to my solution?
- Is the customer going to pay me more for this solution than it costs me to market, produce, and deliver that solution?
- Have I verified my assumptions about the customer by talking to them or am I building my solution in a bubble based on my own experience only?
If you’re honest with yourself about these questions, you’ll be well on your way to determining if you actually have a great business idea, or if you just have a really cool idea that maybe you can pursue as a hobby.