3 Very Sensible Ways To Choose The Right Idea For Your Business
Are you starting a business and having a hard time settling on a niche idea?
It’s a common problem that everyone faces when they start up.
Which niche should you choose when you start a business, or should you choose one at all?
Here are some common questions and fears that might be spinning around your brain wheel:
Do I have the right skills to create a niche?
I worry that I might be a bit of generalist and not good at one specific thing.
I'm not sure which path I should go down and if I choose the wrong one, will I be wasting my time?
I'm worried I might waste hours following one niche business idea that turns out to be a nightmare!
When you’re given advice at the start of any new business journey, it can leave you confused.
So one common piece of advice is to choose one niche business idea.
That is, one idea that involves a specific problem, for a very specific audience, such as 'Pilates for pregnant mothers' or 'safety cycle helmets for London commuters'.
In truth, I actually find this advice misleading.
That's because choosing a niche serves up too many options, resulting in you spending months or years trying to decide what to focus on.
So what should you do?
Read the first part below, and the second part with all the answers will arrive next week.
(Oh, and check out the PS at end of my email to find out about The Brainy Lounge!)
Simon | The Chief Brain
3 Very Sensible Ways To Choose The Right Niche For Your Business [Part 1 of 2]
Finding your niche can be a tricky undertaking.
It paralysed me for years, just as it paralyses many others when launching a business.
When I was 30, I bought a copy of Tim Ferriss’ Four Hour Work Week, and I simply couldn’t focus on one idea.
I scribbled pages of notes. I spent hours trying to work out things like drop-shipment prices between the UK and Hong Kong. I spent aeons looking at e-commerce stores like Alibaba for goods that I could buy and white-label.
This went on for weeks, and eventually, I got so fed up that I gave up and went back to working for someone else.
Still, the dream of wanting to work for myself dripped like a leaking pipe in my head.
Drip, drip, drip.
Not much happened as I worked my 9 to 5 job.
I got married.
I bought a house.
I moved to the countryside.
And life was rather pleasant.
Still, the leaky pipe of wanting to work for myself dripped at the back of my head.
Drip, drip, drip.
Then a few years later, whilst working for an advertising agency, I thought I’d found my niche!
It was in eco-living.
I was going to start a blog and teach people how to quickly transition to a 100% green life by asking them to pay me for advice. It was an idea called ‘The Green Fastlane’.
However, one month later, the blog had gone nowhere.
I had spent hours planning and writing a 5000-word post about how to go green. I published it, then guest-posted on a climate change website and promoted it on Digg and Reddit, but not much happened at all.
I wrote another article called ‘The 2050 diet: How To Save The Planet And Eat Sustainably For A Planet Of 9 Billion People For $10 A Day’.
Again, not much happened in spite of my attempts to publish it (and it was a good article too!)
A few weeks later, I found an eco-living expert who’d written and advised people for years on the topic. He told me bluntly that I’d be wasting my time helping everyday people live a greener life. He’d struggled most of his life trying to make it work, while supporting a family.
He said that he’d fill a village hall full of well-meaning, middle-class parents who’d turn up to a free event and feel worthy. Then they’d go home and do nothing at all.
The reason The Green Fastlane flopped was that although it was an idea, it wasn't a 'Business Idea', i.e. one that could earn me a decent living. And the fact that it was a niche idea didn't matter one bit.
A friend of mine, Ian, said wisely that, 'there might be a gap in the market, but is there a market in the gap?'
I mean, there’s a gap for chocolate teapots in the market, but I don’t see any on Amazon. That is, just because it’s an idea (niche or not), doesn’t mean that there’s money to be made. My Green Fastlane idea was a good example of that. A nice, niche idea, but not something with any commercial nouse.
How many of us have come up with an idea, but not really thought through what its commercial potential is?
What I want to stress is that it doesn't matter if your idea is niche or not, it needs to be a Business Idea with commercial legs that will bring you an income.
So I decided to do something different; radical even: I ditched the idea of the niche.
I ditched the popular advice about creating a niche business.
Yes, you can read about the importance of the niche in books and articles, you can download templates with exercises to help you find your niche, but in reality, for me, it wasn’t working.
Or I wasn’t making it work.
Whichever way round, it became a distracting process.
I’ve met enough people setting up their own businesses who’ve had similar problems – lots of niche ideas that don’t have enough commercial potential.
So today, I use three very sensible ways to judge the potential of a 'Business Idea'.
It must do one of these three things:
Disrupt the market, or,
Do something 10 times better than the competition, or,
Do something 10% better than the competition.
Let’s look in more detail what these three things mean:
1). ‘Disrupt’ the market with a brand new idea.
Google did it with Adwords: they charged people to put ads on their search results pages.
Steve Jobs did it with made the iPhone
Netflix mail-ordered DVDs by post to you.
These are big ‘disruptive’ ideas that really shook up the consumer world and their marketplaces.
They attracted oodles of free publicity and word of mouth marketing on top of all their other marketing.
If you have an idea that could become disruptively big, then ‘bravo’!
If your idea could get you famous, rich and make a meaningful change in culture, then this is the bracket you need to be in.
But it’s an area that demands a lot from anybody.
It means hiring big teams, big venture capitalist investment, possibly years with little-to-no profit and living in the red. It’s a lifestyle business that demands seven days a week, 12 to18 hour days working, few holidays before any stability or profit.
Few are up for this.
And it’s not my scene either. I have a wife and three kids who I want to spend my time with, and for me that’s more important.
Yet for others, they have other values. It’s their life, it’s all consuming. However, it’s not great for holding down relationships outside of work, with friends or family. It’s full steam ahead seeking VC backing, renting out an office space, getting a threadbare team together and then extreme work.
There is also a great risk because you’re launching a product that might not work out.
Remember the Segway, and how that flopped? It took years to even get from prototype (in 1994) to its release 7 years later – all before finally failing. We tend to hear of the few businesses that did well, not the many that flopped. History only remembers the few ships that made it round the world (and not the many that sank).
And if your idea does work, and you get there first, it might mean success.
But then something else might happen: you have to take a rearguard action because you’ll face a flock of imitators who’ve seen how well you’ve done and then will try and do something better and cheaper – all without having to put in the years of effort that you did.
Steve Jobs didn’t get the idea of for the Mac’s beautiful desktop by himself.
Jobs went into Xerox, saw their latest graphical interface technology. This involved moving graphics around a screen to perform a computer action like opening a file with a mouse (rather than having to type in text to achieve the same effect). Even though Xerox didn’t quite know what a goldmine of an idea they were sitting on, Jobs did, and he pinched Xerox’s idea. It was a foundational moment for the creation of the Macintosh.
Yes, it’s a risky strategy trying to be the next Elon Musk, so you have to think hard before going down this route. It’s only for the bold and the extremely committed.
However, you might not be feeling bold, so picking your business idea might need another approach.
Something a bit less taxing. And this is where it starts to get a bit easier to choose an idea, and have a better chance of success. This leads me to the second option:
2). Do something 10 times better than the competition.
It might sound odd to say, but when you have competition, you make life a lot easier for yourself.
Take something small like writing a headline for a blog article.
If you are trying to find the right headline for your Facebook ad or your new blog article, take a peak at the headlines that the bigger competition are using, because they’ve chosen the terms that really count. Then you can go and do something better (well, ten times better, ideally).
And it’s the same when coming up with a new business idea
Look at what exists and make it better. Make it, say, 10 times better.
Okay, ten times here doesn’t mean precisely ten times better. It represents the need to launch a business that is vastly better than what’s on offer right now. You take something that a competitor is doing well, you dissect where it’s weak, and you produce something much, much better.
Take Casper mattresses.
This businesses has rocketed in size since they launched in 2014. What’s made Casper successful is how they looked at the competition and did something significantly better. They decided to cut out the middleman of the retailer and deliver mattresses straight to people’s homes and collect them if they’re not happy with them.
Brewdog, the famous Scottish beer brand started out this way too.
Owners James Watt and Martin Dickie from Fraserburgh, a town near Aberdeen in Scotland, got fed up with average beer being sold to beer drinkers – beer that tasted dull, looked bland. Beer in the UK at that time needed a kick up the rear end.
Brewdog’s idea was to create a craft beer that had real taste and was a rebel against the norm.
Even though their beer was extremely tasty and their beers have been a roaring success, it was their clever communications that worked.
Positioning their beer as a ‘punk’ beer, they placed a dwarf dressed in a punk outfit outside parliament with a placard that read ’the world’s smallest protest’.
In this protest, Brewdog made a call for the more sophisticated 2/3 pint, and to ditch the standard full ‘down-in-one’, bland-tasting mass-market pint of beer.
The dwarf, and Brewdog, drummed up much free publicity for the 2/3 pint to be introduced and showed how tasty craft beers like Brewdog’s would be the ideal beer for any 2/3 pint glass.
Brewdog is now is an originator of the craft beer movement in the UK. Despite a lot of competitors imitating them, Brewdog’s punk attitude and its product has given them a leading place in the market that is hard to copy.
What I like about the 10 times better approach is that you don’t have to invent something new.
You can see the flaws in what the competition doesn’t do too well. You can sit down in a cafe, have a strong cup of coffee, open your laptop and see your competitors’ websites. Then it’s time to get your brain wheel spinning about what you can do that’s at least ten times better.
Remember: where there is competition, there is a market (not lack of opportunity).
If there’s a market, it means there are people who are willing to pay right now, which means you don’t have to try and reinvent the wheel and invent a new market. Instead, you can take a market of cusomters that are there already and make a competitors’ product a lot better.
Take a look at the iPhone case brand Mous, who make unbreakable iPhone cases. iPhone cases are an established market yet iPhones have a reputation for being easily breakable even with an iPhone case.
Mous decided to make iPhone cases significantly better than the competition.
If you look at their making of Mous video, you can hear their story about how phone cases weren’t protective enough, nor pretty. They spent yonks testing their new protective cases on iPhones until they got one that was vastly better than the competitions’ phone cases.
Look at the video here about how it works, it’s nothing but entertaining.
However, some of us don’t want to either reinvent the wheel, nor spend too much time making a wheel that’s hugely better.
Some of us are okay with making something just a little better.
Which leads us to our third and final option…
Do something 10%-20% better.
I know two small business owners who live nearby and they ran a successful tea business for years, selling premium and niche teas, until they retired a few years ago. Their business thrived, even though their tea is only a bit better than the their competitors’. They would admit that it wasn’t 10 times better than the competition, nor has it ‘disrupted’ the marketplace. And yes, their tea can be easily copied in theory.
Yet, their business boomed for years with a product that was 10%-20% better.
They’ve focused on telling people about the benefits and results of their great-tasting,10%-20%, tea to clients who trusted them to deliver.
Yes, the upside of producing products or services that are 10%-20% better is that you don’t have to risk too much.
You don’t have to spend hours experimenting with a new product to see it fails (like The Segway). You don’t have to risk seeking high investment in product development, and then see that money get no returns. Instead, you can take an existing product or service, find out where it’s weak and do it just 10%-20% better.
Open up a laptop, surf Amazon, find a product that you could do better with and - hey presto - you’re off!
Okay, it won’t make you Elon Musk. But if you’re looking to get a business up and running or turned around, or just want something to pay the bills and bring in a steady income, starting looking for a 10%-20% idea might not be a bad start.
In fact, it’s probably where most businesses start: doing something that’s a little better than what went before.
It’s iteration, not huge innovation that got them going. It might not get the attention of Forbes magazine, but not all of us are in business to shake the world up.
Some of us have other things going on like families and friends, the desire not to work 24/7.
And this business model works just nicely for this. If anything, this was the basis of the 4 Hour Work Week: finding a product that exists and making it a little better for people. What’s more, if you want to make it something that’s 10%02% better, then you can look to make it 10 times better in the future. That’s up to you, there are no set rules.
If you are trying to invent a new product for a new market, be extremely careful.
It’s high risk, it involves a lot of product development and time to get people to believe in it. It often involves oodles of money to create, and when it’s launched, it’s very hard for people not to copy and improve what you’ve done even if there are patents in place.
Instead, think of an existing product.
Most products and services exist because there’s a need and people are already paying for them. It’s slightly Darwinian, but there’s a reason why some products continue to sell well, and others don’t.
So, if you are confused about finding your niche (which is perfectly understandable), then think of these three ideas for creating a business idea:
Disrupt the market with a brand new idea (the riskiest, but most rewarding, and you become extremely unique in your market)
Make something x10 better (it takes a while, but you will have a very strong uniqueness)
Make something 10%-20% better (it takes less time, and is quick to do, but it’s harder to be unique)
Yes, no one is there measuring whether your product is precisely x10 better or 20% better than the competitions’.
They’re indicators to say a ‘little better’ or ‘a lot better’ or ‘radically better’.
Yes, the instruction ‘find your niche’ can paralyse a mind into over-thinking and inaction.
I know that there are free templates online where you download a pdf and put your niche ideas into colourful boxes and ‘hey presto’ you have found your niche.
However, they leave me stuck in theory land, imagining what could be done, and talking endlessly to friends in the pub about what you might do.
I’m a bit more practical about about business ideas.
Yes, three ways to find a niche business idea is to find what someone else is doing, copy that, and do 10%-20% better.
Or even x10 better.
Or more even. Be a disruptive devil, but do so with your eyes open
You just have to ask yourself: “which type of risk do I want to take?”
That’s it for today, but if you want to let me know how helpful you found this piece, leave a comment below or email firstname.lastname@example.org.
PS. If you enjoyed this, why not read our eBook The Wasp Trap about how to create the first five lines of a sales page that will get customers staying on your site, and not bouncing away. Click here to read.