It Seemed Like Such a Good Idea at the Time

Whether you're considering starting a new business or expanding your existing business, there are obvious but often overlooked factors that will be key in determining your success or failure. Rarely, if ever, is any business idea a sure thing, and I've got plenty of personal experience in launching ideas that sank like rocks thrown into a pond.

Picture this: You've come up with an idea for the best magnet ever. Everyone tells you that your magnet will be able to pull metal of all kinds from long distances. Your magnet will be absolutely covered up.

You finish your magnet, put it on a table with metal balls and shavings all around, and…nothing. They are so close that they are almost touching your magnet but nothing is making the slightest move toward it.

In spite of all the planing and enthusiasm and passion that you poured into your magnet, it doesn't work. It's disappointing and sometimes bewildering, because it seemed like such a good idea at the time.

As I said, I've got my own versions of that scenario that have played out in my career. Years ago I launched an entirely new division of my business that featured me, paired up with a business expert, to do two-man presentations on popular business topics to corporate events and meetings.

I thought I had properly scoped out the potential market simply by asking friends in the business who would be typical buyers of the concept. The problem is, they were my friends, and thus inclined to say nice things and be enthusiastic about my new idea. When I took the idea public and waited for the orders to roll in, I was met with resounding silence from the marketplace.

It had seemed like such a good idea. I thought it was the greatest idea since roller coasters. Turns out that I was pretty much the only person who thought it was a good idea. So, back to the drawing board.

That's all part of the process, and I can promise you that I'll have more ideas that won't work. But there's a lesson that applies to any of us looking at new business ideas or to expand our services, product lines, etc. A magnet needs a market, and we have to get clarity on that part of the business equation in order to give our new ideas a fighting chance to succeed.

Who's Going to Pay You for It?

To have a viable business you have to have people who want to buy what you're selling. Seems pretty obvious, doesn't it? It's like the ultimate “duh.” Countless businesses fail because someone came up with what seemed to be a great idea but never identified the real world market for it.

When debating the pros and cons of starting a new venture, expanding a business's offerings, adding products, etc., I have sometimes been accused of being a bit of a Grinch. I plead guilty, because I'm usually the first person to ask the question, “Who's going to buy this?” “Who will actually give you money for this?” and “How are you going to reach those people who might possibly buy this?”

Spreadsheets Don't Buy Anything. (Friends Usually Don't, Either.)

Famous last words: “I've run the numbers, and if we only sell 300 of these a month, we'll make a profit. If we sell 500, we are solid gold!”

I know people who spend more time playing with spreadsheet dreams of what they imagine and hope will be than they do on the viability of whatever it is they want to sell. It's so easy to fall into the trap of encouragement by friends who have no skin in the game whatsoever. “It's a sure thing!” “You are going to get rich with this!” “This is a goldmine!” Then you start doing the math and spending your money before you've sold a thing.

Famous last words of a failed business: “But everybody loved the idea.”

Worthless. Worse than worthless. It's dangerous to try and launch, build, or change a business based on you and your coworkers, your friends, or theoretical, would-be customers all loving the idea without seriously researching and understanding if people will go beyond the love and get to the money.

To succeed, you must have absolute clarity on who will willingly give you their money and how you will reach them. Until you've figured that out, you don't have a business, you only have an idea. Ideas are fine on their own, but at some point someone's got to buy something, or your idea is simply a hobby. Who is your customer, and how do you get to them?

A Great Idea in the Wrong Market

A few years ago I was asked to invest in a startup company that would be a bricks and mortar grocery store as well as offer online ordering with home delivery. The proposed location was great, the upscale concept was great, and the management team was great. It was a great idea, and I believed there was a market for it, especially given the location of the store. I was all in.

But then the plan changed. Instead of having a physical store, it became just an online grocery with home delivery. The founding partner made a case that a grocery home delivery business alone would be a hit in Nashville.

It might have been a great idea for other markets, but in Nashville I didn't feel there was a market for it. In San Francisco, Chicago, or Cincinnati, maybe a good idea with a market. But not here. Not yet. My feeling was that Nashville simply wasn't “urban” enough to support a home delivery grocery business, because Nashville is very much a “get in your car and go” town. It's not yet a “bring it to me” town, not even in the downtown area.

The team pressed on, started the business (without me as an investor) and, after a valiant effort of about a year, closed the delivery doors and called it a day. Two of the three original aspects of the business had still been valid—that the upscale concept was great and that the management team was great. But one aspect, home delivery, wasn't great. I still believe that it would have worked with a physical store in the proposed location. But it ended up being a good idea in the wrong place.

Just Follow Your Passion. If…

I hear it all the time. “Follow your passion and the money will come.” Okay. That can be true, as long as you are really, really good at doing whatever your passion is, and as long as there are people willing and able to pay you to do it. If your passion is building very expensive, ultra-quality, craftsman guitars, as it is for my friend Alan, there'd better be people willing to pay the high price he charges. Happily for Alan, there are. But just because you love to do it doesn't mean anyone's willing to pay you to do it. A magnet needs a market.

There are other factors to consider, as well. After you've identified your market both in terms of who your potential customers are and where they are, you have to know who else is in the same space selling the same thing.

In my grocery home delivery business example, I offer San Francisco as a better location for that kind of business. But in San Francisco a cursory search online turns up Safeway, Mollie Stone's, Instacart, Google Shopping Express, Good Eggs, Amazon Fresh, Envoy, Red Sea Market, and the list goes on and on of grocery companies that deliver. Is the market too saturated to support a new magnet in town? It's a question that has to be answered.

“I'll Put It on the Internet.”

It's a phrase that I feel as if I hear almost daily from someone who has an idea for a business: “I'll put it on the Internet.” I am flabbergasted by the number of seemingly reasonable, intelligent people who think that all they have to do is put their product or service “on the Internet” and then just wait for the money to roll in.

Recently, I had lunch with a good friend who is a brilliant business consultant and coach with a great training program, a new book to launch, plans for speaking at meetings and events, and a new webinar series. She had asked for my thoughts and advice on her venture, so I began with a series of questions that we used as a basis for our discussion:

“Who is your market? Is it individuals or is it businesses?”

“Is what you do about personal growth or business growth?”

“Is the purpose of the book to get you coaching business, speaking business, and/or webinar business? Or are all of those businesses designed to help you sell more books? Or is it both?”

“Who is your target market for speaking? Corporations, associations, small businesses, business owners, entrepreneurs?”

“If your hope is to sell thousands of copies of the book to individuals, how will they know that it exists?”

“How will corporate meeting planners and potential coaching clients know that you exist?”

“What will differentiate your coaching, speaking, and book from the multitude of other choices out there?”

“Why is your price, whatever it may be, better than the prevailing price of similar resources on the Internet, which is ‘free’?”

“How do you offer more value at your price than everything on youtube.com and TED.com, which is all free?”

“What do you really want to do? What do you love doing the most?”

The questions went on and on with our ultimate goal being to help her get clarity on exactly who her market is and how she will win in that market. Her answer to many of my questions was some version of “I'll put it on the Internet” or “I've got a company that's going to ‘push it out there’ for me.” She was counting on success with the book “once it gets online.”

This particular entrepreneur is smart enough to figure it out, and I have no doubt that she will. What's really smart is that she is willing to ask herself those very tough questions before launching a business based only on hope and wishful thinking.

The Most Crowded Market in the Universe

The opportunity of the Internet is that everyone buying anything goes there, whether it's in the consumer arena or business to business. The great and almost incomprehensible challenge of the Internet is that everyone is also on there trying to sell something. It is the most crowded market in the universe.

I had a friend who was launching a video training program online. He said, “Joe, all I need is 100 people to sign up each month and I'm gold!” My response was, “How in the world are you going to get 100 people a month to sign up for this?”

His thinking was that you can put anything on the Internet and enough people will buy it to make your business viable.

Sorry. Rarely is that the case.

If your magnetism strategy for attracting business is to do it on the Internet, then you need to have something working for you to make that a feasible place for you to set up shop. You've got to have clarity on how you'll get to that potential market you're going for. Some of the obvious factors in your favor might include:

• Having a platform of existing customers who already follow you online.
• Partnering with some entity that has existing customers they will share with you.
• Powerful search engine optimization (SEO).
• Effective social media that drives business to you.
• Using PR and align with bloggers.
• Advertising.

Any or all of these can help make your Internet business work, but there are a thousand other factors that come into play. All of them are much easier said than done, and even doing them might not create anywhere near the results that you need.

Take social media, for example. I hear people say, “I've got to get something up on social media. Maybe I should tweet. That will get some business coming my way.”

Really? I mean, seriously? That's your strategy?

The subject of doing business on the Internet is worth an entire book on its own, and there are multitudes out there to choose from. Regardless of whether your marketplace is the Internet, a specific customer-targeted niche, or your neighborhood, you have to not only get clarity on who your market is, but keep on refining that clarity as your market changes (see the chapter Who Moved My Market?).