Looking for a Great Business Idea? Try This
Here's something fun and instructive to do on a rainy Saturday.
Go to the nearest closeout store--the one that buys up all the products (rugs, clothing, small appliances, and sporting goods) that other retailers weren't able to move--and spend 20 minutes wandering through the aisles.
You will find scores and scores of interesting products that simply didn't sell at what their manufacturers and inventors thought was a reasonable price.
Sure, some of the stuff was way too expensive to begin with. And yes, some of the designs and colors left a lot to be desired.
But, invariably why the merchandise ends up being sold for literally pennies on the dollar is that its creators began by saying "wouldn't it be cool if…" instead of going and discovering ahead of time if there was a market need for what they were thinking about selling.
Tempting though it may be, don't start with a blank piece of paper when you contemplate creating something new. You always want to begin with a market need.
There are at least six reasons.
1. No one other than you might care. It is typical for people to start companies to satisfy their own needs or those they have seen or experienced first-hand. You break your arm and you can't believe how itchy the cast is. So, you create a new kind of casting material that contains an anti-itch coating on the inside. There is nothing wrong with this approach. It's just that your needs might not be representative of a large enough market to support the idea or it may be hard to locate a sufficient number of customers.
2. There isn't really a need. I suppose somewhere you can find people who truly hate having their cable or satellite box exposed (and sitting near their TVs). For people who haven't figured out how to put those little black boxes with the digital numbers inside a cabinet, the idea of some kind of "cable box cozy" might be appealing. But for the life of me I don't know how you protect the idea from competition--the moment it came out it would be remarkably simple to copy--or how many people might care about the product.
3. People might care, but you simply don't have the resources to make the idea work. There is probably a huge market for private shuttle flights to the moon, but what exactly do you know about rocketry--or raising the billions of dollars it is probably going to take to make the idea work?
4. People might care, but may not be willing to pay. It does you no good to create a product too expensive for anyone to buy. The Iridium phone is a great example. The phone, which literally allowed you to call from anywhere to anywhere, was great. But given its price and the price per minute, the company eliminated any chance it had for being successful.
5. People might care, but not all that much. You may have a truly wonderful idea, but the market isn't big enough to fund the costs of filling it. Here's a simple example. Ever since The Wall Street Journal has been around, there have been people who have said, "You know, The Journal would be so much better if it…" and they then begin to fantasize about starting an improved business newspaper. The problem? People think The Journal is pretty darn good and they don't really see a reason to switch, especially not to something that is only incrementally better.
6. It takes time. Once you come up with your new idea, you have to go out and find customers who want it. If you start with a market need, you already have them. They are the people who have said they have a need that they would like you to address.
The moral is clear: Start with a market need and not a great idea.