I just had a client step away from her dream idea. It was a bit heart-wrenching, but we both know it’s for the best. Thing is, she’s got the bug now, and has learned some valuable lessons about what makes for a viable startup idea. I thought I’d blog a little about the topic in the hopes of inspiring her to get back on the horse, and maybe giving a few other entrepreneurs out there some things to consider:
1. Low startup costs. Look for ideas that don’t need outside funding, at least at the outset. You’ll save time (no fundraising) and increase flexibility (nobody to convince before changing your approach), among other benefits.
2. Go high touch, go low touch, or go home. I like high touch, direct sales businesses, where your marketing costs are basically you and your ego, pitching and trying to win big ticket sales (e.g. business to business services). I also like very low touch businesses, where you make money in your sleep, because customers purchase without having to be sold (e.g. dating sites). In between can get tricky. Beware of the idea with a large marketing budget – especially on the consumer front.
3. Make sure you know the end game. Usually that’s either to grow profitably and sustain your lifestyle, or grow fast with the goal of selling the company.
Bonus tip 1: Take a phased approach. A startup is like a challenging problem you’ve got to solve. It’s always easier when you break it into bite-sized pieces. Develop a smart hypothesis. Test it. Tweak it. Repeat. Build on that foundation with another phase. And so on.
Bonus tip 2: Copy something that’s already working. There’s no shame in being a copycat – at least you know the demand exists.