Most entrepreneurs know they want to become an entrepreneur before they actually have a specific business idea. They have an inner desire to create, to build a product or a business out of nothing, to control their own destiny, to shape their own future or perhaps a grander vision to shape the future of the world.
All they need is an idea.
If your desire to become an entrepreneur pre-dates your million-dollar idea, then you probably have to make a choice about which of your many ideas to pursue.
Recently I had the pleasure of being a mentor at the Lean Startup Conference in San Francisco. It’s a great conference, and I was a lightning talk speaker there a couple years ago. This year my role was to sit at a table and attendees would rotate through asking me questions about lean startup business models, agile software development, customer development, and more. It was a lot of fun.
I had a number of great conversations, and one was particularly memorable. She sat down and told me how she had dozens of different business ideas but wasn’t sure where to start. She had the advantage of a sabbatical from her day job, and she wanted to take a couple months to see if she could build a business around one of those ideas. But which idea should she start with?
How do you choose your business idea?
First, let’s clear something up here. You’re not going to come up with “the idea.” That’s an outdated concept, and if you don’t believe me pick up a copy of “The Lean Startup” or any one of the many other great contemporary business books about lean startups.
Instead of coming up with “the idea”, you should come up with “the path.” You choose a general path that is some combination of customer segments, problem hypotheses, and product ideas. And then you follow lean startup and customer development methodologies to figure out what your customers actually want, what they will pay for, and build a much better business around something your customers will go crazy for.
But let’s go back to my mentee’s problem. She had a bunch of very different ideas. How does she decide which one to start with?
If you’re in the same boat as her, try asking these questions to narrow down the list:
#1 – Which ideas have common customers?
If you’re following lean methods, then you’ll know that your first idea is almost certainly wrong. So don’t get too emotionally tied up with it. Instead, look for themes across your ideas.
Is there a particular type of customer or demographic that you see in common across your ideas? Perhaps that’s a customer type that you feel an affinity to or you have a lot of experience with. If you narrow down your list of ideas to those with a common type of customer, then you can start talking to those customers about problems they face in their day to day life, and perhaps their feedback will help you select which of your ideas is better to focus on.
#2 – Which customers are easiest to reach?
Look again at your list of potential business ideas, and try to identify which ones serve customers that are easiest to reach. If one idea is for astronauts, and you don’t work for NASA, then you might have a hard time finding astronauts to talk with.
If three of your other ideas will serve college students, and you live in a college town, then maybe you should start with one of those ideas since it will be easy to find potential customers and talk to them about their problems and your ideas.
#3 – Which ideas serve the narrowest niche?
Based on the first two questions, you should be thinking deeply about your customer base. Is your product idea truly for all college students? Because that’s a pretty big market to reach, and you should narrow it down.
Look for business ideas that speak to a very specific niche. Perhaps it’s not all college students, but college students from a specific part of the world, who face some particular problem because they are studying in a foreign country, and you have some expertise or ideas that will help ease their problems.
Now you’re starting to identify a customer base that is narrow enough you can find them and serve their specific needs. Instead of doing shotgun blast advertising to every college student in the country, you know exactly whom you need to reach with your idea.
#4 – Which serves a customer empowered to buy?
Your notebook full of ideas should be getting much smaller now. You’re looking for a business idea for a specific customer segment that you can reach and you may have multiple ideas for them.
Now look at the shorter list of ideas, and think about the million-dollar question: Which of these products serves a customer who is actually empowered to buy?
There are many great products that can be built for mid level personnel is large bureaucratic organizations. The problem is those mid level personnel often have no buying power. And so building the perfect organization system for a receptionist with zero buying power is probably a dead end.
If you have a great idea, and your customers really want it, but they don’t have the power to buy your product, then you don’t have a business yet. Businesses require paying customers. So you need to find a customer base that can actually buy your product.
#5 – What are you passionate about?
At this point, you have a pretty short list of business ideas, or you might not have any business ideas left! Sorry about that, but these have been important questions for you to consider.
There’s still one very important question to consider. Which idea are you most passionate about?
Actually, that’s the wrong question … remember, a lean startup is no longer about having the best idea, but finding the best product-market fit and building a product that your customers actually want.
Therefore, let’s rephrase the question…
Which customer are you most passionate about?
Lean startup methodologies can feel like you are applying some bland scientific methods to the business world. And that’s partially true – lean startups are the closest equivalent of the scientific method in the business world.
But scientists don’t conduct experiments in a particular area of science just because there is more research money there (well, hopefully not). They pick topics that they are passionate about, knowledgeable about, and which they can find funding for.
If you’ve got a long list of business ideas, and you don’t know which to pursue, then look for those that serve a customer segment that you are passionate about. If you’re successful, you’re going to work with these customers for a long time and hopefully build a great business with them. So make sure it’s a customer base that you’re passionate about!
It doesn’t end here.
Put yourself back in my mentee’s shoes. She has several months off from her day job. During her sabbatical she hopes to narrow down her list of business ideas and ideally get a good business started. Maybe she won’t go back to that day job.
What should she do next?
And that was the most important, and most obvious, part of my advice to her. Go talk to your potential customers! Take that narrowed list of ideas, and find some customers you think should benefit from them, and talk to them.
But don’t talk to them about your idea – open your ears, ask good questions, and close your mouth. Listen to the problems they face, and see if they match up to one of your ideas.
Learn their problems, find solutions to them, and build a business around that. It will inevitably be much better than anything on your current list. But don’t throw away your list of ideas … When you are successful you can go back to the list and reminisce about all the bad business plans you could have written about them.
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