When people start a business for the first time, they often do so with an idea for a particular product that they believe to be both brand-new and also acutely needed – some sort of “better mousetrap” that will put their business on the cover of Inc. magazine.
Having a brand-new product idea may be the most common way to start a business, but it’s not always the best way.
Why?
Because brand-new products usually crash and burn.
They fail for a number of reasons – weak marketing, insufficient cash flow, poor product reviews. But the most common is this: The appetite for them is much smaller than the would-be entrepreneur has imagined.
When some enthusiastic young person comes to me with a “great” new idea, I always ask about the size and variety of competition. When they say “That’s the best part! There is none!” I have to explain why starting a business with a product for which there is no proven market is a big mistake.
You might not think so from everything you see in the business media.
Journalists understand the power of a good story, and the best-loved stories about entrepreneurs are those that feature the lone and courageous person with a brand-new idea that he spends all, and risks all, to bring to the market — against huge doubt and even criticism, only to be proven right in the end with a huge success and the fortune to go with it.
But the reality of a successful start-up business is much more like this:
A man wakes up one day with a great idea: for a product, a business, an invention. It’s not a brand-new idea. It’s an improvement on something that already exists in a market that is already large and growing.
His idea is not crystal clear. It’s a notion. When he tries to describe it to friends and family members, they think it’s silly, impractical, even foolish. Yet he perseveres. He continues working on it quietly, making progress in small increments, testing and retesting different versions of his idea, hitting and overcoming countless obstacles.
While refining his idea, he is also testing different ways of selling it. Different marketing angles. Different sales copy. Different pricing, guarantees, etc.
He is, in short, finding an optimal selling strategy for his product.
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