How to Avoid Bad Ideas by Listing Your Next Business Characteristics
Hi everyone!
This is my first post on IH, I'm the french developer behind the Android app Hercules. I work full time on it and make around $3,000 / mo. I'll talk more about this app in an interview (writing in progress...) but I don't want to talk about it in this post.
Indeed, even if I'm still working on my app I want to create a new online business without all the drawbacks I have with my app (yes I'm demanding!). As I have lots of ideas all the time for starting new businesses I struggle to pull out the good ones. And I'm sure I'm not alone with that issue (if you recognize yourself here, please leave a comment so I won't feel alone anymore!).
That's why I wanted to share with you a tip I use to exclude bad ideas from good ones.
First, let's define a bad idea. A bad idea is a business idea that doesn't fit with your long term goals. For example, let's say your goal is to create some passive income and not work anymore. Starting some 1-to-1 guitar lessons business would be a bad idea because you would have to work to earn money. But selling an online ebook to learn guitar could be a good one.
My tip is to write a very detailed list of your perfect next business characteristics and to run every idea you have against it. Here is mine, it's very strict but innovation and good ideas come from constraints, not freedom:
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It must be a 100% online business: no shipping, no physical product.
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Recurring revenues OR high price: recurring revenue is paramount to sustain a business, at least if I can't have a recurring revenue, I want to sell a high price product, it helps a lot for everything (ads, marketing, narrowing your audience etc.).
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I want to serve a niche, because I won't need a huge sales volume to break even. Plus serving everyone is serving no one.
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No customer support (or extremely low): I need to reply every day to several emails from my customers that bought my app and I don't want to do this anymore.
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I want to be proud of my next business and make a positive impact on my customers, enrich their lives, improve it in any meaningful way.
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An MVP should be built and shipped within 1 month.
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If it's a service, it should be fully automatized so I don't have to work on it to get it running.
The good thing with that kind of list is that I discard lots of ideas that could work but would not fit my goals on the long run. This way I narrow down the ideas that I will test to pick the winner for my next business.
I wanted to know what kind of strategy or tips do you use to avoid bad ideas? Do you have such a list? If yes what's on your list?
Cheers!
Jérémy.
I've been thinking about this for a while, and whether or not it would be helpful to crowdsource a list of the most important items to go on a startup checklist.
I think a lot of it would come down to whether or not there was a diverse enough number of items, or if everyone would end up sharing the same things.
Anyway, I like your list a lot, thanks for sharing.
Was led here by your interview Jeremy. I see a lot overlapping with the criteria I think of for my future B2B ventures. Some of my added criteria. It should:
Add revenue for customer, not save time or money
Work with one customer (no chicken or the egg / platform)
Be searched by customers on search engines
Regarding your second point: What do you consider a high price? When does it start to make sense for you?
Cheers,
Oliver
Hi Oliver, thanks for your comment.
I could add all your new points in my list too! About the high price point, I didn't talk about a high price in an absolute manner but relatively to the price of an ad to drive new customers. I want my CAC to be really inferior to my LTV so I can run profitable ads!
As you may know because you read my interview, trying to sell ads profitably when you make $5 of profit on your product is quite difficult...
That's why I talked about a high price value. Also, a high price value (if it's a one time purchase) will scale down the chase of acquiring always more customers every month to just keep your revenues stable. The best revenue model is a subscription model for me.
This is also what I aspire to create, but it's difficult to find an idea that satisfies all elements (and will be successful too!)
That's right! But difficult doesn't mean impossible :-)! And I prefer to have more constraints on my ideas than not enough.
It lets me select the good ideas that will fit my future lifestyle instead of jumping on one that can work but that I will hate after 2 years working on it because it doesn't fit this list.
I agree 100%