6 Steps To Finding A Profitable Business Idea
Finding a business idea can normally be a very hard thing to do.
When I first jumped into the world of business, I had the common misconception of thinking that you have to recreate the wheel in order to excel in business.
And there is some truth to that as Peter Thiel explains in his book 'Zero To One.'
I slowly realised that this, however, is far from the only way to success.
Unless your goal is to be on the list of the top 10 richest people in the world, you're not going to have to make the next Amazon, the next Google, or the next Facebook.
Starting my first e-commerce brand selling lumbar back stretchers, I did not correctly understand how to find a strong and profitable business idea.
I saw a trend with e-commerce and jumped into it - this being one of my biggest mistakes that I made in my first year of business as explained previously.
With the marketing agency a little later down the line, I made the mistake of starting with 'too much competition.'
Although I believe that competition is not a massive issue, it is hard to compete when there are 100s of thousands of others in the same industry as you.
These are only two examples of when I've mistakingly gone into business without doing in-depth research on the business model I've chosen.
Finding a winning idea can be a very difficult thing to do.
But with a process in mind, you'll be able to identify opportunities where ever you look.
So what is the ideal way to quickly find a business idea worth pursuing?
Look for problems, not 'ideas'
The first common mistake is that we often go into a business with an 'idea.'
The idea may be very cool and it could be promising the world to it's target audience.
We even spend a few months and some thousand dollars building it out.
We release it - throw some ad spend on it and...
Crickets.
"WHY!?" We may wonder.
It's because of this one simple, yet common error made by almost every new business owner or entrepreneur.
We keep our minds and eyes open to 'ideas.'
The issue with this is people won't buy your 'idea,' they want to buy your solution.
Consumers spend money based on emotions THEN justify with logic.
This means that if your product does not emotionally connect with people (or your audience specifically), you might aswell give up while you're ahead.
When people look at your product, they looking to see if it solves their problems.
An example:
Bob is a builder.
He has to order material from abroad for a high-paying client of his company.
The issue is that these materials will take over 6 weeks to arrive.
What sort of business will be more attractive to Bob?
Business #1
A business that offers specfic shape cut wood, with funky designs and a nice website or
Business #2
A business that promises to deliver all essential materials for handymen and builders within 1 week or less.
If you're reaading this with a clear head, you'll probably say business #2.
Here's the dilemma - it's a little harder to find these sort of ideas unless you've personally been in the building industry.
This is because you wouldn't know that Bob or other builders faced this problem.
So start by solving a problem instead of going straight for the idea.
The idea is supposed to help fix a problem in a unique way.
Solve your own problems
A lot of people start successful businesses doing this one simple thing.
Solving their own problems.
Why is it an effective way to go about it?
Solving your own problem proves one thing - there is one person with the problem you're solving.
There's a saying that goes, "If you can convert one customer, you can convert more." ~ Not sure who said that.
This usually makes life a lot easier for entrepreneurs.
After all, we make money from solving people's problems.
What's the easiest way to find problems worth solving?
Go after your own problems!
Everyone faces problems.
Even Jeff Bezos with his $200 billion net worth may face a problem like having difficulty managing his wealth.
So sit down and think of all the problems you face on a day to day basis.
Write them all down until you can't think of any other problems you face.
Now go to those you know - friends, family, network and ask them to give you some of the problems they face.
If you have a friend who runs a business, they may tell you that they struggle to balance their time.
A cool business idea may be a virtual (AI) assistant that helps with day to day tasks.
Now go through the list you have and filter out the good problems that would be worth solving, and those that are not worth spending time on.
Now start exploring and looking into the the market, doing more in-depth research (next few points).
Work with startups
I spoke to a fellow entrepreneur not long ago.
I was on the last few interviews for the customer discovery interviews for Condensr.
We got into a long and interesting talk about business - we're both young and so we had a lot to talk about our experiences so far.
He told me something very interesting.
For the past year or so, he was working as a consultant helping startup founders with product and go-to-market.
He told me that over the course of the year or more, he's managed to come up with pages on pages of problems that he's seen based on the work he's done with other startups.
He's learnt about some problems that people are solving, and the effective or ineffective ways to solve those issues.
He also mentioned that out of those pages, good ideas may only end up being 4 of the pages.
Pretty much meaning most of the problems weren't worth pursuing.
This was a very interesting way of finding an idea and it interested me.
After all, startups are all new businesses looking to solve a specific problem.
Working with them will allow you to have a better overview and look into the sorts of problems people are solving.
With this, you'll also be able to think about these problems and figure out if they're being solved in the best way possible.
Check the demand
This is a very important part of figuring out what business idea is worth pursuing.
You need to identify if the problem you're now wanting to solve, is prominent with more than one person.
Usually, if one person has a problem, there is a good chance that others will also have that same problem.
It's important nonetheless to figure this out using real data because some people may have weird problems that only they want.
Something like 'a spoon with a fork on the other end' would probably be a problem that only a few people in the world want.
So how do you check for demand?
Here are a few ways to do so:
- Find your target audience online and do surveys to ask them
You'll most likely be able to figure out where your target audience hang out.
For example, if the problem you're solving helps stay at home mothers, you'll probably want to go to support groups on Facebook, Reddit forums or even some slack groups etc.
You can even check YouTube comments and groups to talk to people commenting under videos within related topics.
- Check Google trends to see if the problem or related topics are being searched and if the searches are increasing or decreasing
- You can even check Google Adwords to get a better idea of the searches
Google trends is a great way to see if something is in popular demand or not.
It's a simple tool that allows you to see the growth curve of a particular word and tell if it's going up or down overall.
You can even use Google trends to compare the demand between words (up to 5 at a time).
Once you figure this out, you'll be able to go to Google adwords to get a better picture of the topic you're searching for.
You can check the monthly searches, the cost per click for running adverts and even related topics with strong affinity.
- Run some advert and see if people click on them
Another recommendation is probably the most effective, yet the most expensive too.
You can create an advert and advertise a 'solution' which you have not yet built.
There are a few flaws to this though - one being the cost of course.
But the other flaws are:
- You have to be decent at advertising
- If it doesn't do too well, you won't know if it's a lack of demand or because your ad is not great
It will require a budget and testing.
With ads, a great idea would be a lot of demand yet low CPC (cost per click) indicating that there is not too much competition in this space.
Talk to the audience
Talking to the people you're looking to serve in the future with your product is one of the best ways to get a good idea.
If you've already thought of a problem you're looking to solve, you'll want to approach the people you're solving the problem for.
You will want to talk to a solid number of them (10+) in order to figure out their current habits, alternatives and ways they solve the problem.
You'll also want to find out if they find the problem important enough to search for ways to solve it.
Usually, the people you want to talk to will be early adopters.
These are people who really need to solve the problem urgently because they'll be wiilling to cooperate with you and help you build this out.
If you can't find an audience for your product, it may be a good indication that the problem is not very important.
Usually, you'll want to be pretty open ended with your questions and only ask non-hypothetical questions.
Having people predict the future will not be a good source of reliable information that can help you determine whether a certain problem is worth solving.
With Condensr, I had a lot of these 'hypothetical questions.'
Once I finished my customer discovery interviews, I took the answers to those questions with a pinch of salt.
You'll want to read the 'Lean Startup' if you're looking to adpot this method of staying lean and doing things right.
Another amazing source of information is Ash Maurya, author of 'Running Lean.' Look at your market / competition
The final step will be to look online.
And for good reason - they have the best information, in the simplest way possible.
Spending time on Google, looking for trends, market news and assessing the competitive landscape can be very beneficial.
You'll want to look around for other businesses that are currently solving the same problem.
Really good review platforms like G2 and Capterra can give you insight into the sort of feedback users give these businesses, their pros and their cons.
This will help you identify trends and patterns that you can use to figure out how you want to solve this problem too.
In general, most entrepreneurs believe that in order to have a great business, you want to be atleast 10x better than the current market alternatives.
This is the only way to get people to switch.
This is true, but I want to argue against it too.
Two massive businesses with heaps of competition.
Uber has a ton of other on-demand cab services.
UberEats has tons of other food delivery services competing with them.
Are any of them 10x better than the other?
Most likely not - not that I can see atleast.
Nonetheless, a good market is a market where there is a large audience (you can start niche too which is recommended) with little to no competitors.
Once you done these 6 steps, you'll be able to properly identify which business 'problems' to solve and turn into a business idea.
You won't HAVE to go through all five steps as some serve similar purposes.
It's up to you to figure out how you use this information.
What have you learnt from this blog?
Let me know down below in the comments.
Till next time,
Mohamad
6 Steps To Finding A Profitable Business Idea
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