Today, I want to talk to you about building a successful business. There has never been a better time then now to own a business. Many people just like yourself are creating businesses that give them extra income or set them totally free from working as an employee.
If you are thinking of starting a business or have already started, I want to talk to you. It is vitally important that you hear what I am about to say.
9 out of 10 businesses fail, but you don’t have to be one of them. Sure, there is always the possibility that any business will fail. No one can guarantee success and I am not suggesting that here.
But, you can give yourself a better than average shot at success by doing the right things.
When starting a new business or adding a new product to an existing business, there are three necessary steps that have to be followed to give you a better than average outcome. Many fail because they don’t follow these three steps.
Choose an idea that is marketable
Validate the marketability of the idea
Find a scalable business model
These three steps are the keys to a successful business startup. If you don’t execute them correctly, you will fail.
I learned this lesson all too well in some of my earlier businesses. In 2007, I had the bright idea to create a restaurant menu site. I was going to put up thousands of menus and get restaurants to pay me to keep their menus updated. So I started building the site. It took me a year of nights and weekends to get the site working the way I wanted.
After I got the site working correctly, I started adding menus. Then I worked on getting traffic. Then I worked on building a web crawler to pull more data about restaurants from the web to add to the site. When it was all said and done, I spent 5 years working on the site, hoping I could make some real money off of it.
It wasn’t until I read The Four Steps To The Epiphany by Steve Blank, that I realized I should have contacted my potential audience before building anything. This was 5 years after I started on the restaurant menu site. So, I set out to call restaurants and see if they were interested in paying to have an updated menu on my site. I called about 200 restaurants and got 1 restaurant to agree to pay me $15 a month; they cancelled after 2 months. Every other restaurant either hung up on me or just didn’t think it was worth it.
It was a very hard lesson, but it was one that I learned well. Since then, my approach to starting a business is completely different. If I had taken the time to call those restaurants before I started on anything else, I would have saved myself 5 years of hard work. And more importantly, I could have spent that time finding out what people really wanted and built a successful business.
The three steps I mentioned earlier – choose an idea that is marketable, validate the marketability of the idea, and find a scalable business model – make up the system that I use everytime I start a new business or launch a new product. I have learned that all three of these steps must be accomplished for a business to be successful.
The first step, choosing an idea that is marketable, is one that many people are confused about and generally skip. It’s not that they don’t choose an idea, they just don’t make sure that it is marketable. To understand this, we have to understand what the term marketable means.
When you are going to sell something, a product or a service, you have to have certain factors come together. First, you have to have something that people want or need. The greater the want or need, the better the possibility that you can sell it to them. The next thing you need is a large enough market to sell it to. The final thing you need is a price you can sell it for, that when cost are subtracted, you are profitable. When all of these are present, you have a marketable product or service.
When choosing a business idea to pursue, you don’t have all of the information necessary to determine if it is marketable. But what you do have is the ability to take an educated guess, create a hypothesis, about the marketability. This is where you can make or break the future of your business.
We both can agree that every business starts out with some kind of hypothesis, or assumption, about what they are going to sell and who they are going to sell it to. The problems start when they fail to realize that they are in the hypothesis stage. They still have to validate the idea and find a scalable business model before they can be successful.
When any business fails to validate their business hypothesis early, they will usually spend the bulk of their time and money before they find a valid idea that they can scale. This drain on their resources will usually cause them to shut their doors for good.
This is why it is so critical that you validate your business idea early; before you commit to spending a significant amount of your time and money. It is far better to find out at the beginning if the idea you have is marketable, than to waste months or years to arrive at the same conclusion.
In the next article, I am going to talk more about validating the marketability of your business idea.
Let me know what you think about finding a marketable business idea in the comments below.