A lot of people would love to start their own business but don’t have any ideas to act upon. Or at least ones that they believe in.
From working with a wide variety of companies, I’ve noticed commonalities in how new business ideas are formed.
1. Solving Your Own Problem
The steps of how it works:
- Someone is frustrated by something that directly affects them on a regular basis.
- They take action and create a solution to the problem they’ve been experiencing.
- They find other people who have been suffering from the same problem. No matter how specific your problem may be, there are bound to be others who suffer from it too. Try to find where they hang out online.
Benefits:
- Good understanding of problem
- Empathy for those who suffer from it
- Potentially narrow focus which is helpful for a bootstrapped business
Negatives:
- Solving this problem may not be a good business opportunity
Example:
- Indie Hackers was created by Courtland Allen. Courtland wanted to learn more about how internet entrepreneurs were building their companies but found it difficult to discover them online. He created Indie Hackers to become a place where founders openly discussed what they were working on and ultimately help people learn from them.
2. Accidental Entrepreneur
Some people come across business ideas totally unintentionally.
Example
- Scott Keyes was passionate about finding cheap flights for himself online. After finding a $120 return flight from the US to Milan, a few of his friends asked him to let them know of any more amazing finds he came across. Eventually Scott created a mailing list to let people know when he found new cheap flights. This mailing list grew from 300 to 600,000 subscribers and $4M in revenue in two years. See the interview here
Positives:
- This is a very natural approach.
- Market validation is typically already happening.
Negatives:
- The entrepreneur may have a very steep learning curve
- The entrepreneur may not be prepared mentally, financially or in terms of lifestyle for the journey that lays ahead.
3. Scaling Yourself
If you perform any predictable tasks on a recurring basis, you may be able to scale yourself.
Scaling yourself involves replacing your manual contribution to a process with automation software. Where time previously limited you to only performing this service for a certain number of customers per day, you can now hypothetically perform this service for an infinite number of customers at any given time. Hopefully in a more reliable way too!
Positives
- Very good understanding of the problem
- Empathy for all the parties involved in the process. These parties will need to become customers/users of your software.
- Creates passive income
Negatives
- People may value your individual contribution to the process more highly than you think.
Example
- John Doherty was always referring his clients to good-fit agencies (SEO, PPC or Marketing Agencies). After he noticed commonalities in requests and the types of agencies he was recommending – he created Credo which makes the referral in an automated way. This not only frees John from having to do the same thing over and over again – but allows him to scale his services exponentially.
4. Customer Identified Opportunities
Starting and building one business can often lead you (or your customers) to identify another business opportunity.
Example
- The team who built Intercom were actually working on a different product at the time called Exceptional. They added an experimental live chat widget to help Exceptional customers communicate with them. Quickly, their Exceptional customers became more passionate about the live chat widget than anything that Exceptional was doing. This demand made the team change tack and focus on building Intercom. Hear the Des Traynor interview explaining how this happened.
Positives
- You already have early market validation
- Identified initial customers with whom you are already connected
- Good opportunity to make pre-sales
- Experience from starting one business will stand to you on your next venture. Everything is not totally new!
Negatives
- Need to decide whether to continue existing business, focus entirely on new opportunity… or do both
- You may not be passionate about the idea which customers have suggested to you
It’s often said that the execution of ideas is much more important than the idea itself. This is up for debate.
I believe that being aware of the type of idea you have is important. This way you can more accurately prepare yourself for the journey ahead. You can also look to other companies who came about in a similar way and see what worked for them.
As always, thank you for reading.
