Every once is a while someone tells me that they have a great idea for a business. Usually it involves a solution to some problem they’ve been experiencing or maybe it’s a better way to do something. Most of the time what they’ve come up with is, in fact, a pretty good idea. That doesn’t make it a business.
Part of what I do with my clients is work on their business models. In some cases we’ve turned their existing model on its head because the way they’ve addressed the problem makes no sense as a business even if the solution is viable. In other cases we’ve had to change the solution itself to make it appealing to investors or, more importantly, to consumers. The important thing is to solve the problem but to do so in a way that assures a return on the time and resources needed to do so. A business!
What questions do we ask? First, we identify the core problem we’re solving and figure out if there are, in fact, enough people experiencing the same pain that the business isn’t a one-hit wonder. We figure out how much it will cost to produce the solution and then how much the market will pay for the solution. This gets tricky because inevitably the founders think their product is worth a lot more than the marketplace does.
We figure out if the business is seasonal. We look into the universality of its appeal across geography. We discuss other dependencies – is it tied to weather or some other factor that is completely out of our control. Did you ever notice how many people who plow your driveway also are in the landscaping business? That’s eliminating the seasonality to an extent.
When I was figuring out what to do with my life after leaving the corporate world I had a series of honest discussions with myself about a few ideas I had. I came to the conclusion that most were not “A+” business ideas even though every one of them addressed a need and were a good idea. Not every good idea is a business, and not every business is based on a great idea. We don’t need to invent the mousetrap; we just need to make it better and more profitable. That takes time, common sense, and maybe even some help (hint hint). You in?