My latest article “In Praise of Side Projects” has just been published on the Tuts+ blog. Here’s how it starts…
So you’ve got some useful creative or technical skills, plus a healthy work ethic—now what?
Should you work in an established business? Become a freelancer or small business owner selling services to clients? Or invest in developing your own product business?
Put another way, how can you best convert your skills and time into the outcomes you seek in life?
Starting a business is like planting a tree.
This thought struck me while doing a spot of gardening this morning. A bit philosophical perhaps, but probably appropriate for the start of a brand new year. After all, they say that:
“The best time to plant a tree is 20 years ago. The second best time is now!”
The same is arguably true of a business. So, without any further ado, here are a few thoughts on the similarities between planting a tree and starting a business:
- Location is all important. A good tree in the wrong spot won’t thrive. Neither will a business.
- Think carefully about what to plant. Sure, you can prune or shape, but the fundamental nature is set at the very start.
- Preparation matters. Do the groundwork, place it in carefully, and nurture while young. A strong start helps.
- It can take years to bear substantial fruit. It may even be wise to sacrifice any early fruit to reinvest for growth.
- External factors can have a big influence on success. Pick a good climate, but be prepared for unforeseen events (frosts, heat waves, etc).
Any budding gardeners/business people out there? Feel free to add more to the list.
There’s a big difference between an idea and a successful business (or a successful new product/service). Here are a few quick thoughts on how to evaluate whether your idea is worth pursuing as a business opportunity:
1. Is there a compelling need? Do people really need the solution you are proposing? Or is it just a ‘nice to have’, something they might think about doing sometime if the mood strikes them. Too many consumer internet businesses fail this test, in my opinion – they may have some novelty or coolness value but this erodes very quickly. If you’re going to build a real business, you need to be serving a compelling customer need.
2. Will they pay for it? The gap between “yeah I’d buy that” and “here’s the money” is surprisingly large. This means that asking people about a potential product/service is not as useful as actually getting real customers. One framework that may help is to consider what drives value for the customer – e.g. the value of a published report, software-as-a-service, or tangible product typically depends on its own quality; but the value of a marketplace or advertising opportunity depends on how many of the right people are using it.
3. Is there a viable business model? Can you deliver the product/service at a cost that is sufficiently less than people’s willingness to pay? This is a common stumbling block since the devil is in the details and things inevitably cost more and take longer than you expect. Chances are your initial business model will need to be evolved after you launch, but it’s still worth doing some sanity checking first before you spend time on it. Also, if your business model only works “at scale” – e.g. a marketplace – then you need a good answer to how you will actually getting to scale without going bust.
4. Are you the right people to launch it? Execution counts for a lot in business. It’s not just how good your idea is, but whether you have the capabilities, expertise, network, and resources to make it happen. Sometimes it may be a cracker of a business idea, but you’re simply not the right person to build that business. Partnering may be a solution to this, but then again maybe you should just move on to your next good idea.
What do you think? Are there other key issues you would suggest someone consider in evaluating their next big idea?