Is there such a thing as the right formula for identifying what will be the perfect business for you to start up? You know, the business that you can be assured that if you work hard at it, it will become an incredible success?
Well regretfully the answer is no but there are some pretty good guidelines that can help you from making the perfectly wrong decisions of which business to launch yourself into and maybe a few other pieces of good advice we can add to provide some guidance. Let’s look at three guiding principles that will serve you well if you are looking for the right business for you.
Guide One
There was some research undertaken quite a few years ago which I believe still provides excellent guidance on where you will find the right business for you. Amar Bhide in 1994 published in Harvard Business Review an article titled ‘How Entrepreneurs Craft Strategies That Work‘. In that article, Amar considered where entrepreneurs had found their business ideas, he found that the source of their ideas were:
- Replicated or modified an idea encountered through previous employment – 71%
- Discovered serendipitously – 20%:
- built a temporary or causal job into a business – 7%
- wanted as an individual consumer – 6%
- Happened to read about the industry – 4%
- Developed a family member’s idea – 2%
- Thought up during honeymoon in Italy – 1%
- Swept into the PC revolution – 5%
- Discovered through systematic research for opportunities – 4%
For me these numbers provide two clear messages:
- An approach of systematically looking for opportunities and then analysing them to pick the best one, generally does not work ( well it did for 4% of entrepreneurs);
- Recognising an opportunity to develop a business through your work is where you should focus.
This is really common sense as our work is where we spend most of our waking days and where we apply our skills and competencies so this is where opportunity is going to jump out if you are alert and watching.
Guide Two
Stepping this out a bit further, there was a recent article in Inc magazine titled ‘How to Think Differently: A Proven Approach’ by Paul B. Brown. Paul sets out what he describes as a proven approach to dealing with uncertainty in all forms, that is, what to do when you don’t know what to do. He uses serial entrepreneurs as his benchmark as he considers these are people who deal with uncertainty in every business they seek to launch.
From his observations he notes that good entrepreneurs always test the water first before throwing themselves fully into a new business venture. In his words they:
- Act
- Learn from the action, gauging the level of response from the market
- Build off that learning
- Act again
- And continue that cycle until the venture is proven successful or not.
An approach of testing and proving up your ideas to build a solid foundation to your new business is a sensible one.
Guide Three
There was an article in Fortune Magazine about a subscription based business called Dollar Shave Club which sells premium razors and other products to Men. Each month you will receive your new set of razors. It’s not the only business in this market place but there was one aspect of this business noted in the article that serves as a good example of the third point l wanted to emphasis in starting and in particular growing your business.
So Dollar Shave Club sells razors and does so with a brand campaign that would I imagine either attract you or turn you away. It commenced in March 2012 with an annual turnover of $4m and is expected to reached $120m in 2015. The thinking behind the business was that ‘men gave too little thought to their drugstore-purchased shaving supplies and, critically, that they changed their blades too infrequently.’
They started selling razors with a social media campaign that clicked and got the attention that social media does when it works ($4500 to produce, site crashed because of the traffic on the first day and they sold out of stock in 6 hours). But the key message is in the way they grew the business, quoting from the article:
Dubin (the founder) has designs on the rest of a man’s medicine cabinet. He says that in the spring the company will expand into new, as yet undisclosed “personal care” lines. “We ask ourselves, ‘What other problems can we solve for guys?’ You’ll see us start to make a transition into a company with more of a grooming mission.”
How are they growing the business? By looking for other needs of their customers which are a natural extension of what they do and expanding the circle of the needs they meet but all under the one purpose ‘What other problems can we solve for guys?’ .
In launching and growing your business your must have a clear purpose that is locked into a clear need which allows you a natural course of growth even though you may not recognise what that is at the start.
The Summary:
- You will most likely find the business opportunity that is right for you in the place where you spend most of your time. For many of us that is our work. You will see something that can be done much better than it presently is or you will see a need that no one is even recognising yet.
- Take that idea and explore it. Act upon it, learn from this experience, improve it and test it again. Don’t spend too much time just thinking but spend a lot of time making it work right.
- Define a clear need in the market that you are seeking to solve, for example, men need an easy way to get their shaving gear. And then expand/grow your business by just stepping out from that need and expanding your circle (don’t jump off and do something totally different). Growth from this core is solid and reliable.
I find that the best business ideas just seem to be the ones that just naturally appear before you and you say ‘this is a great business opportunity’ how do l make it work? Your passion then kicks in to drive your motivation and the endurance you will require to bring it all about.
