When people start a business for the first time, they often do so with an idea for a particular product that they believe to be both brand-new and also acutely needed – some sort of “better mousetrap” that will put their business on the cover of Inc. magazine.
Having a brand-new product idea may be the most common way to start a business, but it’s not always the best way.
Because brand-new products usually crash and burn.
They fail for a number of reasons – weak marketing, insufficient cash flow, poor product reviews. But the most common is this: The appetite for them is much smaller than the would-be entrepreneur has imagined.
When some enthusiastic young person comes to me with a “great” new idea, I always ask about the size and variety of competition. When they say “That’s the best part! There is none!” I have to explain why starting a business with a product for which there is no proven market is a big mistake.
You might not think so from everything you see in the business media. Journalists understand the power of a good story, and the best-loved stories about entrepreneurs are those that feature the lone and courageous person with a brand-new idea that he spends all and risks all to bring to the market, against huge doubt and even criticism, only to be proven right in the end with a huge success and the fortune to go with it.
But the reality of a successful start-up business is much more like this: READ MORE
A man wakes up one day with a great idea – for a product, a business, an invention. It’s not a brand-new idea. It’s an improvement on something that already exists in a market that is already large and growing.
His idea is not crystal clear. It’s a notion. When he tries to describe it to friends and family members, they think it’s silly, impractical, even foolish. Yet he perseveres. He continues working on it quietly, making progress in small increments, testing and retesting different versions of his idea, hitting and overcoming countless obstacles.
While refining his idea, he is also testing different ways of selling it. Different marketing angles. Different sales copy. Different pricing, guarantees, etc.
He is, in short, finding an optimal selling strategy for his product.
And then one day he puts it all together. He’s got the right product and he knows how to sell it at a profit. He is excited. He is confident. He can finally talk about his product in a way that makes people take notice.
It’s only then, typically, that someone will step in and offer to fund his business. Because he’s already on his way, he feels no pressure. He might accept the offer, or he might decide to let the business continue to grow naturally.
The reality of the entrepreneurial experience reveals an important truth: Ideas in and of themselves have little value. It is their expression that matters – the particular emanation of the idea with its particular shape and size and bells and whistles. And it’s the particular strategy for selling it.
Successful businesspeople know this. They know that any idea becomes valuable only as it develops from an abstraction to a plan to a working model, and, finally, to a product that proves itself in the marketplace.
And that’s why my advice to inexperienced entrepreneurs is to recognize the frailty of the idea itself, which means to detach themselves from their expectations about it. They need to understand that the important thing is to shape it into something that can sell. And sell well. And that means spending a good deal of time and money testing out versions of it and marketing strategies until they find a combination that works.
How to Develop a High-Probability Start-Up Product
Once you have a rough idea of what you want to do, spend a few weeks researching the market. Since nearly everything is sold via the internet these days, chances are you will be doing at least some of your selling online – so conduct your initial research online, too.
If there is no market for the product you have in mind, go back to the drawing board. If there is a market, find out which versions of the product are the bestsellers. (This is relatively easy to do, thanks to the online marketing analytics that are available these days.) Then spend some time studying them. Make lists of their features and benefits. Compare one version of the product to another.
The better acquainted you become with a product, the easier it will be to see its faults. And every fault that you notice is an opportunity for you to create a me-too version that could sell better than the original.
How to Turn Your Idea Into a Moneymaker
The initial idea for a product can come from anywhere. It can be the result of a disappointing experience with a product you bought. It can be a flash of inspiration when you realize how much more useful a service you’ve been using for years would be if it were modified ever so slightly.
But it should be based on something that other people are already selling profitably. By “based,” I mean 80% the same and 20% different. That difference must have perceived value. It must be appealing to your prospective buyer. It doesn’t necessarily have to be better or useful, but it must appear to be so.
How do you create perceived value? There are many ways. One example: Nick Swinmurn, the founder of Zappos, did it by taking a familiar product (name-brand shoes), adding convenient online shopping, and topping it off by overwhelming his customers with extraordinary service.
So if you want to start a business, go for it. But make sure you do so with a long-range view of making profits and a serious commitment to creating good products. Even if they’re “knock-offs.”
If you do it that way, it will be a little tougher at first. You will have to spend more money improving your products, and you’ll have to wait a little longer for them to be produced. But it will be worth the time and effort because your customers will stay with you and reward you with continued buying.