Where does the seed of a business idea come from?
They come from different places, as in you can have an idea in the shower. I had the idea of fillmybelly.com, an online takeaway site, in 2004, but I didn't launch it till 2006. That became successful and then I sold that in 2012. Other ideas for businesses have come from feedback or from listening to what people want.
Ideas can come from anywhere but I don’t think idea generation is the most important part, it’s the execution of those ideas and finding out which idea you should execute first. Maybe you’re taking a business that you're applying to a different niche, or maybe you’re figuring out what your passion is and working with a business that aligns with that and what you're good at and what you’re interested in. You can brainstorm ideas or talk to other people, but then it’s figuring out which of those you're going to work on which is much more important.
Depending on how big the business idea is, then you'd probably go into more markets, but you do this through researching, focus groups, etc. Testing out ideas first is paramount. You can do this simply now, however I’d probably say 90% of the people that I speak to will have an idea for a business and they think, right, this is going to be s**t hot. They build the business and then when they're done with all the fun, exciting stuff, they go and market it. That’s generally where it fails because you've got all this stuff, but then no one wants to buy it. The alternative way is to test the market first with pre-selling, for example. If you've got an idea you could pre-sale and run some Facebook ads and see whether people are driven to the idea to solve whether they want to buy that product. If they do, great, then you can go and build it. If they don't, well, you've just failed quickly and you can move on to your next idea.
Say the mafia wants a new business idea, and you have until 9 am sharp tomorrow to come up with the ideas, how do you get them? Talk us through that.
I’d start by talking about what problems are out there, what people are good at, what people's passions are, etc. What is the aim of the business, because it varies from person to person. There are lots of different processes. If you wanted to look at things that were popular now, for example, you could look on things like Google Trends. Brainstorming ideas is always going to be a winner, but it’s hard to just say that this particular process is a winner because ideas are never the problem in business, it’s how those ideas are executed. There is a whole prioritisation piece that comes before. People will spend their days working on stuff that isn't going to drive their business forward because they feel they have to do it, or because they've always done it. For example, everyone advertised in the Yellow Pages, but then they renewed it because they always did. Nobody knew how much business they were getting from the other pages. They just carried on doing it because they felt they had to! Eventually, that trend then dwindles.
Hypothetically, say a lot of people are facing problems and they’re having to pivot, is there a framework you run through with clients to get them over bumps in the road?
There is a framework and part of it is understanding what your goals are, as knowing what you’re working towards is important. It sounds obvious but a lot of people don’t know that. Understanding where your customers are coming from, which customers are highest converting and all those sorts of things are crucially important. Once you understand which metrics are important you can start focusing on the things that work and you can prioritise ideas based on the metric that you need to move. Let’s say you’ve got a web-based business with loads of people coming in at the top of the funnel, but no one's converting, meaning you've got a conversion problem, an activation problem. What you need to do then (if you're working on stuff such as your website) is ask whether your checkout works. Is your proposition easy to understand?
A lot of people think okay, I’ve got an idea for my business. I'm going to do this. I'm going to go and run an expo next week and be there for two days. Is that the best use of your time? If you've got loads of customers coming to you anyway and they're not converting, it probably isn't because you need to be focusing on another part of your business. You've got to break it all down to understand all those parts. Prioritising is simple; then you just look at each idea and think, well, if this idea succeeds, how impactful will it be and just score it 1-5.
I had someone recently that came up with a business idea, and we were able to take it right back to the beginning and test it first, before they went ahead and built it. They ran a Facebook ad to test the market, got some feedback on it and ran more and more and only launched the website recently after doing all that testing, rather than going ahead and spending money. Building that website first meant it was much more tailored to what those consumers wanted than what he thought they wanted in the beginning. It wasn't completely different, but it was a different product.
How do you arrive at those initial seeds of an idea?
Most businesses are trying to solve a problem that a business has and you have to ask if you are in a position to try and solve that problem for a consumer. You could start with a small problem or you could go large and try to do the whole thing. There are lots of businesses out there that need improving. You can take an existing model and improve it. Dollar Shave Club, for example, was in a market that typically has a low NPS (Net Promoter Score) because nobody loves buying replacement razor blades. However, I’m getting my months’ worth of razor blades for $5, and I’m going to tell everybody about that because it’s disrupting the market. That’s got a high NPS so you can take this model into an existing market and just do better.
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