By: Weston Bonnelle
For many budding entrepreneurs, the ultimate dream is to invent a product that becomes wildly popular or to come up with the next big idea. Starting up a business that doesn’t appeal to customers is demoralizing and costly. Eric Ries of Lean Startup personally knows the pain of start-up failure. “It’s frustrating and embarrassing; a terrible experience.” Therefore you want to carefully decide if your business will be received well by the public. There are businesses and start-ups that are lucrative however their sustainability is questionable. However timeless and revolutionary products and services remain a part of the U.S. and even global economy for years to come.
How to Know if Your Business or Start-up Idea has the Potential to be Lucrative
1. After using your product or service will people wonder, How Have I Lived This Long Without It?
Most revolutionary products are adopted and integrated into people's daily lives without much resistance and by word-of-mouth. Therefore think to yourself, does my product or service fill a hole in people’s lives? Could you imagine comfortably living without items that we consider basic necessities such as undergarments, toothpaste, soap, tissue, etc.? Even "luxury" items or services such as computers, electric washing machines, cars, cellphones, email, YouTube, video cameras and televisions are considered a necessity for many in America. Some products and services are more psychological or have entertainment value such as people believing that they cannot live without makeup, books, sports or music. Whether your product or service actually is a necessity or an indulgence, think to yourself whether your idea has the potential make people believe that without them, their quality of living is significantly lowered. No amount of marketing can convince consumers that they need a completely useless product or service. Ries elaborates, “I kept having start-ups fail even if the technology was really good...So I tried better technology, better product design, better engineering methodology but I kept running into this core problem. Fundamentally the problem wasn’t that the technology wasn’t good. It’s that we were building the wrong thing. Customers didn’t want it. It didn’t have a viable business model.”
Innovative products or services have such a valuable function and powerful effect, that they change the way people live and think about themselves or each other. They transform our social world. For example women can inadvertently get fired for not wearing makeup, a CEO without an email address would struggle to compete and the printing press spurred the mass production of books which has helped to advance society intellectually. Will your product or service become so ingrained in culture, that late adopters feel pressured to use it? There are many that would abandon Facebook once given the chance. However so many people are using Facebook that these people feel forced to stay on board. When your service or products has this effect, its staying power is strong which makes it difficult for other competitors to steal away your market. For example the Google profile social platform is having a difficult time flourishing because of Facebook’s popularity and soft power. Another way to ask this question is will people need your product or service to remain relevant or financially & socially advance?
Do you have an exceptional skill or talent that is light years ahead of the general population? For example the idea of college drop outs building computers in a basement was so extraordinary that Apple has had a strong cult following from the beginning. People want to know that they are spending their hard earned dollars towards something that they couldn’t do as expertly, efficiently, timely and/or frugally. Also the more complex or quality your product or service is, the harder it is for competitors to replicate it. Eventually your idea will be replicated however you want to be your brand to be strongly rooted so that you still garner much of the profit and retain consumer loyalty. In short, you want a monopoly on the idea and the consumers.
Businesses must be able to provide access to resources that the average person does not have to or as an economist would say, businesses need absolute advantage, which is when “one person, firm or country can produce more of something with the same amount of effort and resources, they have an absolute advantage over other producers.” For example, the average person probably would not have the connections, computer science skills or resources to develop a search engine. Therefore search engines are widely used and appreciated. Some services are not very complex, however if you have characteristics that put you above the rest such as above average stamina & strength or a keen eye & admirable attention to detail, etc. then you have leverage over potential competition and appeal to potential customers.
Try to create a service or product that everyone can appreciate due to common boundaries, the harsh environment and unpleasant aspects of human nature. For example let’s think about video games. They solve monetary limitations and legal limitations since many people aren't able to spend thousands traveling and having adventures or brutally fight strangers without consequences. Video games exploit either the violent tendencies of humans or the desire to sit and do nothing. For many people, videos games provide a mental escape without going to jail, spending exorbitant amount of money or expelling too much energy. Farming tools fight against natural forces that harm healthy crops while email and social networking solve the limitation of distance. Once again, you want your business or start-up idea to be the most appropriate and effective way to address human flaws, errors, malfunctions in society or negative natural occurrences. You also must notice the initial stages of modern trends and try to think about their impact and how you can solve the negative consequences. Currently we are in the computer age, so it would be wise to start thinking about computer related issues. Data backup services were able to foresee instances of businesses losing important files and due to this many of them have been able to beat to the recession.
Business can also be perceived as the means of profiting and exploiting human flaws in a way that benefits you and also benefits society and enhances the standard of living. In other words, businesses help improve society by providing viable solutions to deep seeded issues. Without many products and services, society would experience a decline. The goal is to invent or develop a product or service that directly or indirectly addresses the lack of specialized knowledge, strength or honesty of the average individual. Or your business could deal with societal injustices or such as the conflict between the overwhelming amount of demands and the desire for leisure time. For example, think about the historical demands of motherhood. Washing machines, in a sense, addressed the lack of equity in the division of household labor. Imagine how time consuming and strength sapping that hand washing clothes were. Even though most of the women probably desperately wanted a way out wearing out their fingers, they lacked the know-how to design and build their own washing apparatus. This is where a business came in to provide a solution to these societal and family problems through the electric washing machine. Decades later, the lessening of grueling household duties has helped women develop outside interests. Electric washing machines are also timeless. Even as women gain more freedom, there is a still place for electric washing machines. Does your product or service provide freedom?
The overall message is to question yourself before investing thousands or even millions into a business idea that doesn’t have a chance at resonating with the general public. I hope that these questions help, if so make sure to comment or share!
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