You’ve got an amazing idea for a business, and you just know it’s going to change the world — or at least your part of it.
But is your big idea enough to make you a successful entrepreneur? Unfortunately, the answer is “probably not.”
There’s a big difference between having an idea and executing on it to turn it into a profitable reality. As the saying goes, ideas are a dime a dozen; it’s what you do with them that matters.
The Entrepreneurship Experiment.
For many entrepreneurs, life revolves around their business. They pour everything into it — time, resources, passion — and soon, they’re unable to separate the business from their identity as a person. And since 75 to 90 percent of startups ultimately fail, those entrepreneurs who have their identities wrapped up in their businesses end up viewing themselves as personal failures and will never try a new venture again.
However, when you approach entrepreneurship as an experiment (instead of, say, your life’s calling), you’re giving yourself permission to fail. This means if your big idea doesn’t pan out, you can improve on your next big idea with what you learned from those early mistakes.
Questions to Ask Before You Start Your Experiment.
Once you’ve established a healthy entrepreneurial mindset, you can begin turning your experiment into a thriving business. You just have to start by asking yourself the right questions.
1. Am I selling aspirin or vitamins?
There are endless business models across every industry, but there are only two real business purposes: solving an existing pain point (selling “aspirin”) or creating a whole new category (selling “vitamins”).
If you’re selling vitamins — introducing some new category to the market — you’ll need to come up with a hook for your business. The key is to create a built-in way for your customers to develop a habit of using your product or service. For example, Facebook hooked its users on sharing and checking in frequently (OK, constantly).
What about aspirin? To build a successful business that alleviates a pain point, you need to know your market. Find out whether there are enough people afflicted by the problem to create steady demand, and determine how much they’re willing to pay for relief.
2. What’s my ambition?
Every entrepreneur has an ambition, and the more honest you are with yourself about what’s driving you to start this business, the greater your chances for success.
Keep in mind that any ambition is a valid one. You might be setting out to save the world or simply to put food on the table for your family. Maybe you just want to get rich. Whatever your ambition, understanding your ultimate goal is the key to creating a workable business plan that will get you there.
3. What’s my business model?
A successful company can boil its business model down to just a few words. For example, McDonald’s is “cheap fast food with a smile.” Apple is “reliable, prestigious tech,” and eBay is “the world’s biggest online garage sale.”
So what’s your business all about?
If you can describe your big idea in just a few words that people immediately understand — and get excited about — you’ve got a real shot at creating a sustainable business.
Take the time to answer these three questions in relation to your big idea. Answering the first question in depth will help you build a business strategy, while the second and third questions will help you fine-tune your methods and messaging to get your business where you want it.
Helpful Resources for Defining Your Experiment.
When you’re trying to define what you’re selling and how you’re going to sell it, these three books can help you refine your idea:
1. “Hooked: How to Build Habit-Forming Products” by Nir Eyal: For entrepreneurs selling “vitamins,” this book helps you understand feedback loops and learn how to create habitual customer behaviors.
2. “The Power of Habit: Why We Do What We Do in Life and Business” by Charles Duhigg:Another read for the vitamin crowd, this book illustrates how habits are formed and why you should strive to change them.
3. “Running Lean: Iterate from Plan A to a Plan That Works” by Ash Maurya:This book covers several key issues for entrepreneurs selling “aspirin,” including how to move quickly to reach your audience.
By asking yourself these hard questions and developing an experiment (rather than a business), you’re allowing yourself to fail while setting yourself up for success. You’ll understand exactly where your business is going, and you can create a detailed roadmap to take you there.
Kuty Shalev is the founder of Clevertech, a New York City-based firm that designs, develops, and deploys strategic software for businesses that want to transform themselves using the power of the Web. With a background that includes a Big 4 accounting firm and an MBA from Columbia Business School, Kuty is able to provide a critical business foundation for his clients’ technology ambitions.