How to find the perfect new business idea
By Erica Douglas (see below for more details)
Starting a new business, but stuck on finding the perfect idea? I hear you. In fact, you’re not alone.
Recently, I asked people who opted-in for more information on my upcoming “Art of Email” course what they needed most in their businesses. Although many people said “Customers!”, several people asked how they would go about finding the perfect new business idea.
Let’s talk about that. I know the phase you’re in when you’re stuck on the idea. You want to start a business. It pays better (maybe!), offers more flexible time by allowing you to set your own hours, and gets you out from under the thumb of a boss. Plus, it’d be awesome to work for yourself and get people to sign up for something you’re doing for them.
The problem is making the leap from where you are now to actually having a successful business. In this post, we’ll work together on the first few steps to get you to the point of building your new business’s foundation.
First, to have a business, you need two clearly-identified items:
- A market…
- And a validated pain point within that market. (Key word here is validated.)
Finding A Market For Your Business
Let’s address finding a market first.
A market is a subset of people who are willing to fork over money for your product. The more clearly-defined and specific your market is, the easier it’s going to be to sell your product.
Good examples of markets:
Accountants in Boise, ID (ideally with an idea that you can expand to accountants in other locations later)
People diagnosed with Celiac disease in the past 7 days
Notice here that I’ve stepped away from the vague “small business owners” or “moms with kids age 3-5″ types of markets. Though those are markets for large companies that sell huge amounts of products, you need a tightly-focused niche market to start your product with. (Later, as your business grows, you can expand what you offer. But for now, keep it tight.)
Now, to pair with your niche market, you need a validated pain point that people in that market are experiencing. When I say “validated”, what I mean is that you’ve talked to multiple people in that specific market and you know that it is a pain point that they are willing to pay to solve.
For instance, I was in the market of “People diagnosed with Celiac disease in the past 7 days” back in 2009. (I even wrote a blog post about it.) If you’ve ever had a diagnosis that’s life-changing, as this one is (you can never eat wheat or foods with gluten in them again–I didn’t even know what “gluten” was!), you’re in a huge world of hurt and pain. (In my case, I was literally in pain.) And you’re willing to spend money to make that pain go away.
Within the first week of being diagnosed, I’d already bought two books on Celiac disease/gluten intolerance. I’d also turned my pantry upside down, chucking a whole trash can’s worth of food with wheat in it and spending $200+ on new groceries that I had identified as gluten-free. I spent time madly doing research, trying to figure out if the soy sauce and Worcestershire sauce that I had was gluten-free, or if ingredients like “maltodextrin” had gluten in them (in the U.S., maltodextrin is made from corn and is gluten-free.)
That pain point of “first diagnosis” is when you will try anything to get help, and money suddenly becomes less relevant. That’s a perfect market to sell to!
The “Emotion Test”: How Painful is The Problem You’re Solving?
When you’re speaking with potential customers about your product (or even just speaking with them frankly, trying to understand their problems), and they start to get emotional, that’s when you know you may have a good new business idea on hand. Can you help solve that pain point that’s making them emotional? The one that may have them literally in pain (as it was in my case?) That’s your market.
But what if you don’t have any idea what to sell? Then I recommend starting with a market and talking to them–getting them to speak frankly about their problems. Let’s face it–everyone loves to talk about their problems! Some of those problems you can solve, and some of them you can’t, but at least you’ll know what’s bugging people out there.
For instance, my personal trainer here in Austin, Jake, loves to complain about the billing software he uses. He hates it and wants to light it on fire! And whenever he posts about it on Facebook, other personal trainer friends of his chime in, agreeing. There’s a lucrative market out there for someone who wants to address that problem and build better billing and scheduling software for personal trainers.
The lady who owns the salon I go to has a problem where she can’t accurately measure the amount of hair color her stylists use on clients. Clients with longer hair need more hair color, so she can guess, but guesses aren’t always accurate. She needs a system where she can measure the amount of hair color used every time, accurately, and bill her stylists and their clients appropriately.
And her husband owns a BBQ restaurant where they hire someone to man the smoker overnight and make sure the temperature of their brisket remains constant so they can serve food early in the morning after smoking it for 12 hours–except that someone fell asleep one night manning the brisket, and there weren’t any alarms that went off. The brisket overcooked and not only did they have nothing to serve the next day, making them look bad in front of customers, but they lost hundreds of dollars in brisket that they had bought to serve that day. They need a temperature logging device–and now my fiance is working on a side project to build one for them and other BBQ shop owners.
In each of these examples, we see a business owner who is desperately in need of a product that will help them either save money and/or make more money. And these are just a few ideas. Make room for some local small business owners in your friend circle, or go to some local meetups, and put your ear to the ground. You’ll quickly hear what problems they have. From there, it’s up to you to decide if solving those problems is a market you’d be interested in pursuing.
The good news is that as soon as you do have a prototype, since you've validated the market up front, it won’t be an uphill battle to get your first few customers. You can just call them up or email them–they’ll be waiting for you with credit cards in hand!
Thanks to Erica Douglass for this great article – Erica sold her online business at 26 years old for over a million dollars and now helps others grow their online businesses quickly – you can find out more about Erica at http://erica.biz