The ONE Thing Every Profitable Business Does Before They Start
How to start a profitable business (the crucial step you MUST do)
Does this sound familiar? You want to start a profitable business so you turn to Google and, 5 minutes later, you have 17 tabs open. The list of things you have to do looks something like this: form an LLC, open a business bank account, file for an EIN tax number, decide on a cool business name, buy a domain name, build a website, open an Instagram account for your business…
But that list is missing the most important step to starting a PROFITABLE business -idea validation.
So please, before you do ANY of those other tasks on your “start a business” list, do this ONE thing 👉 VALIDATE YOUR BUSINESS IDEA.
BTW we’re teaching a FREE “Validate Your Business in a Weekend” Workshop next month so get on the VIP list to get the invite.
That is the very first thing to do when “starting a business”. Because without a product that people will pay for, you don’t have a business, you have a hobby.
So, in this post, I’m going to walk you through how to start your business right, by defining and refining your idea using “The 3 P’s” method -plus sprinkled in you’ll find the 4 common missteps that would-be entrepreneurs make when starting a business (and how to avoid them).
“But what if I don’t have an idea?”, you may be asking. Fear not. Going through this process will naturally help you define and refine your business idea. The key is to take the pressure off of yourself to come up with your million-dollar Shark Tank idea and, instead, to realize that MOST businesses are not unique -and yet they exist.
In fact one of the traps we see would-be entrepreneurs falling into is the one where they’re so concerned with finding an idea that’s never been done before that they don’t even START their business. The truth is, it’s much easier to be the second (or seventeenth) one to market, than the first (because the first often had to educate the market before they could sell to them).
That’s why having clear competitors that you can identify is actually a good sign -because it means there’s a market for what you want to offer. But don’t take my word for it. Here’s what Harvard Business School has to say about the idea for starting your business:
“Your idea doesn’t need to be a new invention-it simply needs to fill an unmet need. If you have an idea for an original product, that’s great, but an improvement to an existing product’s cost, production, functionality, or accessibility can go a long way.”
For a fun visual representation of the ideation process, I recommend this short post, “How ideas come together”, by Basecamp co-founder Jason Fried.
So, now that we’ve turned the idea pressure cooker down, how might you come up with YOUR business idea? I recommend you start with the “3 Ps”:
The 3 Pillars of a Profitable Business Idea
- The problem you solve
- The people you serve
- The product you offer
Start a Profitable Business Pillar 1: The Problem
Very often entrepreneurs start their business accidentally by “scratching their own itch” (aka solving their own problem). They create a solution and realize it could be useful to other people or businesses. That’s how Basecamp founders Jason and DHH created their latest product HEY (it’s an email provider like Gmail minus the tracking bots PLUS it has a built-in blogging feature -strongly recommend).
“We built HEY to scratch an itch; we needed to communicate with people outside our company and the standard options were invasive, needlessly complex, and frustrating to use.”
The Basecamp team developed this platform for internal team communications and then realized it could be valuable to the world. And this is quite a normal story in business. Sara Blakely started her business by solving her own problem -creating Spanx.
Even if you don’t have a painful problem of your own to solve, your business still needs to solve a problem. If it doesn’t do that, then why would it exist? So you’ve got to find a problem that’s painful enough that people will pay to solve it and that YOU are well-positioned to solve.
This brings me to the second “P”, the people you serve.
Start a Profitable Business Pillar 2: The People
Because, if you don’t know what problem to solve, then you have to find out what problems your people have. So ask yourself, what kinds of people do I think I can help? What kinds of people do I love working with?
Maybe in your corporate life, you found out that you really have a knack for working with software companies to help them create brand messaging that doesn’t sound like robotic business-speak. So then consider who are the people within that hypothetical software company that would be the ones deciding to hire someone like me? Probably the marketing team. Great -so now you’ve got your target group of people.
The thing about choosing a target market is that you need to choose people that have money to buy whatever your business is selling. So, even though you loved working with high school students from your years as an English teacher, they aren’t a great target market when it comes to profitable business ideas.
This is another common misstep when starting a business (in fact, that CB Insights found it’s the second highest reason that startups fail). So, for our English teacher friend, I’d encourage them to move to the third “P”, the product (more on this in a sec).
Now what if you’re thinking, “Gee… I want my business to be for EVERYONE. I want absolutely everyone in America to buy from my business.”
That’s the third common misstep we see starting business owners making. They fear that if they are “too niche”, they won’t attract enough customers. They fear that by being specific, they’ll alienate people. They want to be the solution for everyone.
But what they don’t realize is that, by trying to be appealing to everyone, they’re appealing to NO ONE. It’s actually through getting specific that you become known and end up with more customers and faster growth.
As the great contemporary copywriter, Ash Ambirge stated:
“Don’t try to be Germany. Be Oktoberfest.”
In other words, it’s difficult to stand out from the crowd when you’re trying to be all things to all people. But, when you become Oktoberfest, all you have to aim for is beer. People are still coming to Germany, even though you’re marketing yourself as Oktoberfest. Germany is still promoting their greater interest as a country.
Alright. So you’ve identified your target people. Now what?
Now, you do some very light stalking of those people. Find where they’re hanging out (online and IRL) and go there, mingle. But mostly -watch and LISTEN. Listen to any complaints, frustrations, questions -what are the pain points they’re talking about? Be on the lookout for problems you could potentially solve.
Ready for “P” number three? Yes! On to your product.
Start a Profitable Business Pillar 3: The Product
“Product” here just refers to that thing your business sells -whether that’s a web design package, a photoshoot, an online course, or a coffee cake. To define your product, just finish this sentence, “People pay me to _______.” Whatever you put in the blank is your product.
Not sure what people might pay you to do?
A good place to look is at the intersection of your skills, interests, and innate talents. Make a list. But, a word of caution here -don’t try to fit all your skills and interests under a single business umbrella (this is the fourth common misstep we see would-be entrepreneurs making).
Instead, to narrow down your options, either:
- Start with your fastest-path-to-cash skillset or
- Go with your I-will-do-this-even-if-it-takes-10-years passion.
What are your fastest-path-to-cash skills?
They’re those things that you know how to do that you can obviously sell (hint: they’re probably the same skills your current employer is paying you for). So all you have to do is take your skillset on the road and start freelancing.
And the passion? That’s for when you’re prepared to stay in your day job OR you have a very cozy nest egg saved up (OR a rich Aunt Martha who never had children and decided to give you her life savings so that you might could start your business).
Let’s have some examples, shall we?
If you work in marketing… you likely have content or copywriting skills that you could translate into freelance copywriting.
If you’re a hair stylist… you could start a mobile hair styling business or teach workshops for people who want to style their own hair.
If you LOVE traveling… What’s an aspect of your traveling that you could teach others about? Maybe it’s travel hacking or traveling solo.
Once you’ve defined your Problem, People, and Product, then you have a good business idea. The next step would be to take that idea through what I’ve nicknamed the “3 Circles of Validation”: self, social, and sales.
And that’s exactly what we’ll teach you in our upcoming live workshop, “Validate your Business in a Weekend” -it’s totally free and PACKED with actionable intel.
Originally published at https://www.foundryy.com.
