I participated in a business forum last week for veterans who have separated from the service and are looking to start businesses. One question that came up is about the origin of business ideas. Where do business ideas come from? Why do businesses fail? What are the best businesses to start?
(Photo credit: Wikipedia)
There were a number of folks like me in the room who tried to provide some answers and perspective. I think where we all came out was that the best business ideas are those which solve a problem worth solving. How does one know if it’s worth solving? Well, if it’s a problem that only you have, it probably isn’t. If a lot of people have this problem you then might have a market. If it’s a problem that keeps needing solving, then you have a really good market. If people care less about the cost of solving the problem than they do in just getting it solved, you have an excellent market. And if you’re the only one with a solution that solves the problem in a way where the cost to do so is outweighed by the value you’re providing, you just might have a great business idea.
It was interesting to hear the responses as we went around the room and heard about the businesses these veterans either had started or were contemplating. Many fell nicely into the paradigm, above. In some cases, they needed help expressing their idea succinctly and clearly and in a way that demonstrated they understood the problem they’re solving and the market presented. A couple stood out as being fantastic ideas while a couple of others clearly needed more refinement and thought.
I’d encourage you to try that exercise. What problem are you solving? Is it a problem shared by enough people to make it worth solving? Who else is solving it? Why is your solution better? With those answers, you’re well down the road both to a solid business plan and to finding people who will invest in making that plan a reality. You in?
Ever been a part of a feasibility study? You know – a bunch of people have a bright idea and it’s good enough that there needs to be a serious investigation into whether it can be done or not.
(Photo credit: Wikipedia)
A team is put together (hopefully including those whose idea it was in the first place) and questions are drawn up. In some ways those questions are like a mini business plan. What’s the potential market for this idea? What are the resources needed to bring it to life? What sort of on-going support will it require? Can it be done in a reasonable time frame or will it take so long that the potential evaporates? And of course, what are the legal ramifications if we do what we’re proposing to do?
I want to focus on that last little bit because I think it’s illustrative of a broader point. Lawyers are trained to protect their clients (which are, by the way, the companies for which they work and not YOU, dummy). To many of them, the status quo is a lovely place (assuming the company is not tied up in litigation). That’s not really the best place, however, for many businesses. In fact, in some businesses such as tech, the status quo is a death sentence. When the feasibility of something new is brought up, I’ve worked with some lawyers who were fabulous at finding ways to say “no.” The could spot a potential problem long before any of us could and they didn’t hesitate to cite those problems are reasons not to proceed.
Here is what they – and you – need to keep in mind:
Obstacles are huge and opportunities are small: one often hides the other.
How many people underestimate what’s feasible since obstacles can be readily apparent but the opportunities hidden behind them get missed? We need to do what the better lawyers (and executives) I’ve known always did: spot the opportunity and find a way to remove the obstacle blocking your path. Some feasibility efforts are the business equivalent of the blue screen of death: the system has reached an issue it can’t handle and throws in the towel.
I’m a believer in almost anything being feasible as long as there is flexibility, some tolerance for risk, and a willingness to adjust as you learn. People – and businesses – have done things a certain way for years and in most cases it’s working for them. Trying something new or doing things in a new way might not seem feasible and it’s not if there is a predisposition towards allowing the obstacles to obscure the opportunity. But I’ll bet you can tell me about a time when you tried to do something in a new way – you shut your eyes and didn’t see the obstacles but visualized the opportunity – and succeeded. So tell me!
If you’ve ever played or watched tennis, one thing you know is that the players seem to approach each point with a plan.
(Photo credit: Marc Di Luzio)
To a certain extent they play the points backward – what shot do I want to set up, which positioning and speed of the serve will let me do that, and where do I want to hit it? Part of the equation involves moving the opponent around, far away from your intended target. Ideally, you can hit it just next to a sideline or the baseline depending on your plan. The nearer to the line the shot lands, the more likely it is to be a winner. There’s also an increased chance you lose the point by hitting it out.
Often when one watches high-speed Motorsports, the “high line” is the one that many drivers choose on an oval course. Generally, the racing groove nearest the wall allows the cars to go faster even if they’re travelling a slightly longer distance (think of concentric circles – low vs. high). It’s better to go faster and generally the high line is way to do that. It’s also the line closest to the wall. Hit the wall – go over the line – and you’re done.
There are similar analogies in golf (aiming for a target along a preferred line with a hazard line along the same flight path) and baseball (bunting very near a base line almost always works better for a hit than closer to the pitcher but it’s just as likely to be a strike for a foul ball). What each of the athletes involved needs to do is to develop a plan that revolves around their tolerance for risk and the availability of a reward. You might get spectacular results and you just might cross the line, crash, and burn.
Think of those athletes as you approach your business. What’s your tolerance for risk? Is the value of the reward worth going over the line? I think most great athletes hit those lines – the places where very few can put themselves consistently and win. To me, that sounds like a pretty good business plan if you can tolerate the risk. You?
Let’s end the week with a Foodie Friday Fun look at miraculin.
(Photo credit: Jonathan Harford)
I know – you haven’t really thought about it in a while, but as food topics go it’s very interesting. Miraculin is the stuff found in an African berry that serves to change completely the taste of foods you ingest after eating the berry. The berry is known as a miracle berry and was discovered almost 300 years ago by a guy exploring the wilds of Africa. It seems that there was a terrible famine and yet one tribe out of the thirty the explorer met were well-fed. Apparently they would eat this berry and were then able to eat stuff that under normal circumstances was unpalatable. In short, it makes bad tasting food taste good.
The berries work by masking some of the taste receptors on your tongue, primarily the ones that read “sour”. Things that are sour taste sweet. That’s the business point today.
I’ve known a number of managers who seem to eat miracle berries right before they read their financial reports or analytics. There is never anything wrong – nothing tastes sour – at least not internally. Oh sure – the market may be bad (good time to steal share!) so growth is limited or the new product we launched isn’t really being trashed on social media – it’s just a few vocal haters. This is the business miracle berry at work.
I’m as big an optimist as there is. However, there is a difference between being optimistic and lying to yourself. It’s one thing to put a good face on the numbers; it’s another to overlook the realities those numbers express. If you can’t understand what the data is telling you then you need to do one of two things – find someone who does and is unafraid to tell you or get into a business where you can make sense of what’s going on. Reading the numbers whilst under the effects of the business miracle berry is not an option.
While miracle berries helped the African tribe avoid famine and stay healthy, the business equivalent of eating miracle berries can get you very sick and maybe even kill your business. How are your taste buds as we end the week?
I was going to write our Foodie Friday Fun piece about Jacques Pepin and his insistence in cracking eggs on a flat surface until I realized that I had written it already almost three years ago. I guess that sort of proves his point – small details are what makes good cooking. It makes good businesspeople and managers too. Apparently, it makes for less redundant blogs as well.
Lunch (Photo credit: munir)
Instead, let’s write about free lunches. We’ve all heard about them and that it’s supposedly impossible to get something for nothing. It comes from the old tradition of bars serving free food if you bought drinks. I was reminded of this as I experienced yet another “freemium” model. The problem is that many companies have turned freemium into bait and switch. They’ve also made the free product pretty useless without the premium purchase. There’s a really nice piece on three gaming companies and how they approached this balance on The Mary Sue (hat tip to my girl geek youngest daughter for pointing it out!).
In my case, I used an online golf trip service. It’s a great idea – in fact, it was a concept my buddies and I had talked about doing ourselves to help other groups plan golf trips and score golf tournaments. The problem is this: the basics – organizing emails, setting up housing, and communicating with the group are free. Another free element is setting up scorecards. Once you actually have scores, you can input them but tournament results are part of the paid system. So is the trip accounting. Now if you’ve ever traveled with other folks you know that keeping track of the money and dividing it all out is a big pain. So is scoring a golf tournament when handicaps, match play, and other side bets factor in. The price to upgrade is per player, per round, so as the trip gets bigger or longer, the cost goes up until, as in our case, it became prohibitively expensive. In other words, I scored the tournament manually, the accountant is figuring out the bills manually, and we won’t be back to the service since it offers us nothing we really need.
I’ve had the freemium business model discussion with many clients over the last few years. I think it’s a good idea but I also think it the free part needs to be valuable on its own and the paid part needs to be an add-on, not an integral part of why folks would use the product in the first place. As always, the focus needs to be on the customer and providing value, not on luring them in with a semi-broken product that only a payment fixes. Look at Pandora or Skype – great freemium businesses. So is Valve, the game company.
There may not be any free lunch but we certainly can provide some great free snacks that whet folk’s appetites without making them angry. You with me?