The Right Idea at the Right Time
Look at any new startup that gets traction quickly and you’re likely to think, “wow, they really nailed the right idea at the right time.”
There are a thousand different factors that determine whether or not a new business will survive. Almost all of them are rooted in the original idea and timing.
An Idea!
I’m not crazy about calling it an “idea” because that implies you’ve invented something completely new and novel. I don’t think that’s a requirement for a new business. To me, the idea for a business is the problem, the solution, the reason why this problem/solution matters, and the person (customer) to whom this problem/solution matters most.
Perfect Timing!
Timing is everything too. Presenting your offer at the moment your customer is looking for it is key. Too often, products are too far ahead of this moment (people don’t know or care about the problem yet). Just as often, the product arrives too late (the space is over-crowded and there are too many barriers to entry).
But when it comes to bootstrapping a new product, it’s the timing for you—the founder—that matters most. Is this the right product for you to be working on right now, at this stage in your journey? What is the likelihood of you being successful with this idea, given your current circumstance? There are thousands of problems that need solving. Is now the right time for you to solve this one?
Ruminating on what’s next…
I’m in my 4th year of working on my Restaurant Engine business, and there’s no getting around it: I’m giving a lot of thought to life after Restaurant Engine. Don’t get me wrong… I’m proud of what my team and I have built. It continues to be an enjoyable and rewarding challenge to grow it. And I plan to keep the engine (pun intended) running. But I’m thinking deeply about starting the next chapter.
In the past, I’ve gotten caught up in “shiny object syndrome”, or, trying to tackle too many big things simultaneously and spreading myself too thin. This won’t happen again. I’ve come to learn the power of focusing on one business at a time. It means making a conscious choice as to what your #1 initiative is.
But that doesn’t mean there won’t come a time when you need to begin putting pieces in place to start whatever’s coming next. That often requires a period of overlap. When I started Restaurant Engine, I split my time between consulting and that business. As I start something new, I’ll keep Restaurant Engine churning by ensuring we have the systems, processes, and people in place.
Getting Better at Starting
To me, what makes the bootstrapping cycle so exciting is the never-ending learning experience. What you learn in a first business will carry into the next. That means you’ll avoid repeating the same mistakes, which gets you further along, faster.
The very real fear in starting anything new is the fear of failure. What if this flops? What if I can’t repeat the same success?
I don’t think anyone ever gets over this fear. It’s always there. But it helps to keep in mind that you have the advantage of experience on your side.
Starting something new for the first time? Then you should be hungry and eager to make your first mistakes so you can uncover those lessons sooner. Practice in public. Ship. Learn. Repeat. Improve.
The Right Idea
Having worked on a handful of different product ideas over these past few years—most of which flopped or fizzled out—I’m thinking a lot about the criteria that makes a new business idea, the right one.
Mainly, I’m looking at the characteristics that my past products lacked. I’m also piecing together what appears to contribute to the success of other products.
So here’s how I would describe my ideal criteria for a new business:
Sold to businesses.
Selling to consumers seems like such a monumental challenge on so many levels that I can’t fathom going this route. Price sensitivity. Unreliable feedback. Unpredictable trends. Inability to reach a large consumer market. The list goes on…
Selling to businesses just makes sense. Moving on…
Is for my people.
This wasn’t always high on my list, but it is today. No matter what I work on next, I want to be serving my people.
By “my people”, I mean you, if you’re a subscriber to my newsletter, or tune into my podcast. But also people who are just a few close degrees of separation from my audience.
I found I do my best work when I care deeply about the person it impacts. That usually happens when I relate personally to the challenges and goals of the people I want to help.
Scratching your own itch is the most literal way to serve your people. But just serving a group that you empathize with can get you there as well.
Impacts Revenue.
This is a big one when selling to businesses. The number one factor in a killer value proposition is whether or not a product will make the business more money, or save them money. Saving them time is a close second, because time can often be equated to money.
What also matters here is how clear you’re able to communicate this ROI potential. Case studies and stats go a long way here. But it also helps to keep the value prop clear and simple, which takes me to the next point…
Does one thing exceptionally well.
I think of this one as the ability to explain the benefit of the product in one sentence, in a way in which your customer immediately “gets it”. They don’t have to get the whole story, or all of the nuts and bolts or side-benefits. But in 1 sentence, your customer should identify with the problem, and get excited about your solution.
Notice my emphasis on benefit, problem, and solution here, and not features. I’m not saying that the product should only have one feature. It can have a collection of different features and components, but they should all work towards solving the one problem.
Delivers Long-term Value
One of the best aspects of my Restaurant Engine business was the fact our cancellation rate has been extremely low, and customer lifetime value is very high.
That’s because the product delivers an essential value that the customer really can’t go without. It’s not a tool they may or may not use on the side. It’s an essential piece to their business. The cost of canceling or removing it from their operation is very high.
I think part what makes for a high longterm value in a product is the customer can continue getting value from it, even if they’re not actively using it on a regular basis. The product (or service) continues to run and be productive in the background.
So I would be less inclined to work on something that can easily be discarded after just a month or two. I’d much prefer to provide an essential element to a customer’s business.
$99/month
My preferred target price point and model would be a recurring (SaaS) at around the $99/month mark, give or take. Anything below this range is much more difficult to get off the ground because you need to so many more customers to hit revenue targets.
But getting into the higher 3-digit and 4-digit range also turns me off a bit. Yes, these have the benefit of only requiring a few paying customers to get profitable quickly. But it often means higher-touch service, high-touch sales, and possibly selling to enterprise (which doesn’t exactly excite me).
There are cases when I think a 4-digit price point makes a lot of sense. Productized consulting works well in this range, especially it’s your first step toward starting a products business. So do educational products, events, and general consulting. But for me and where I’m at today, the next product business I start probably won’t fall into these areas.
Now, you can’t just slap a 3-digit price tag on any product. The value has to be there. This comes back to making an impact on your customer’s bottom line.
An accessible market
What often goes overlooked when thinking about the idea for a new business is the way in which you could acquire customers. I don’t think there’s a way to know what will truly work best before you’re “in it”. But there is one thing I’d look for during this pre-idea stage:
How accessible the market is to you. Let’s unpack that a bit.
The first part—how accessible a market is—means how you expect to reach large groups of people who are your target customer. These are some questions to mull over:
- How specifically can you describe your market?
examples: “HR managers at mid-sized firms”, “Shopify store owners”, “Freelance WordPress web developers” - Is there a place (online) where they hang out?
examples: Popular forums, targeted content sites, niche social networks and groups, conferences - Are they searching for specific terms and is there a high volume?
If they don’t know they have the problem, they probably aren’t searching for solutions to it. - If you were to cold-email prospects, how hard would it be to build a high quality list?
The more specifically you can describe your market, the more targeted you can be when contacting them.
How accessible the market it is to you… Are you able to insert yourself or your product in any of the above channels? Even though the market is there, are you sure it’s not out of your reach, given your current circumstances?
A growing market
You can’t make sales if there’s no one there to buy. Sometimes scratching your own itch can lead you into this trap. You might have the problem, but do many other people have it too?
Beyond the market size, I’d want to know that it the market is growing, not shrinking. More people should be entering the space than are leaving it.
Plays to my strengths.
The product should be in my wheelhouse. A problem, solution, and methodology that I’m personally interested in, have experience with, and have been fairly effective.
I don’t think it’s necessary that I personally need to be the one who programs the tool, or ultimately delivers the service or support. These tasks can be delegated. But I as the founder should know this problem well, and should be effective in crafting the strategy that makes the solution the right one.
Can be done manually.
I think this is important because it will allow the product to get in the hands of customers much faster. By delivering the service manually, at least for a short while before building out software automation, I’d be able to prove and validate the problem, price point, and solution quickly.
Plus, I happen to love the software / productized service combo. This makes for a double-edged value proposition: The software provides the capability (makes the customer more money), the service implements the solution (saves the customer time of having to do it themselves).