Consider most small businesses. It’s clear that they don’t meet many of the above elements.
They don’t generate enough profit to pay a replacement founder, and when they do, it’s not consistent.
They are difficult to sell for a reasonable amount of money. If you are able to sell them, they might fall apart without the founder.
They die because one piece fails or they often hit ceilings where they can’t grow anymore.
Their revenue plateaus year after year because they operate in small markets.
Think about your own idea and whether it’s going to fall into the same traps. Choose a business idea that meets the nine elements well and you are ready to move on.
You can tweak the idea later, but some of these fundamentals will be hard issues to solve later on. It’s important that the potential is there from the start. You should also consider these things:
Don’t Pick Low-Hanging Fruit
Creating a startup means creating something valuable for your customers that is a long-term asset. It doesn’t mean going after low-hanging fruit, getting caught up in get rich quick schemes, or chasing passive income. Here are some examples:
Web designers host client sites to make a bit of money. The host is delivering the most value in that scenario.
Consultants “white label” existing products and double the price. What value are they creating? What asset are they building?
Drop shippers take someone else’s products and sell them for more money without doing much. This is okay for the short term, but what separates them from everyone else? Their Google rankings? Good luck with that.
We are talking about launching a real startup here. Something that gives you a purpose, creates something original in the world, and builds long term value. You need to think about how you can truly create something.
Consistently producing original concepts will boost your motivation and confidence, set you up as an authority, and put you in a place where you can develop real, long-term assets.
Creating something real could mean writing content on your company blog, or producing a software app that accomplishes a task slightly better than everyone else. You could start a services business that delivers services in a unique way. Or make a physical product that offers something new.
It is possible to start a business without constructing anything, but in the long term the businesses that stand out are the most creative ones.
Creation doesn’t just happen one day in the future when you think the time is right.
It’s something that the best companies and the smartest entrepreneurs do every day.
It took me seven years to build my agency “business,” and only after selling it did I realize that it wasn’t a real business. I want you to build a real business the first time.
It needs to be original and provide significant, ongoing value to its customers; and to you.
Don’t Try to be Steve Jobs
With Informly, I tried to be Steve Jobs.
I let my creative side take over my entrepreneurial side. It helps for entrepreneurs to be creative, but fundamentally entrepreneurship is about creating a product that people want and selling it to them.
Jobs’ statement, “People don’t know what they want until you show it to them,” is correct. It’s also extremely dangerous advice for a new entrepreneur. Informly ultimately failed. I’m not Steve Jobs.
Playing the visionary is a privilege reserved for second- and third-time entrepreneurs. It’s fun, but it’s fraught with danger.
As an entrepreneur you need something that people want to pay for, with their money or attention. Asking them will not work, because people are bad at predicting their own behavior.
For your first startup, there is a much easier way:
Solve problems where people are already paying for solutions.
Compare my analytics dashboard software to our WordPress support service. Customers generally used Google Analytics (which is free). Most didn’t use paid analytics software and didn’t even know that you could get dashboards with all of your stats in the one place.