The Simple 4-Step Method to Find Your Profitable Business Idea
If you’re reading this right now, there’s a good chance you want to start a business. Or you already have. And if so, you’re probably doing some agonizing about your business idea.
No, I’m not a psychic, but I have spent an incredible amount of time during the past five years planning, strategizing, and growing my own company Rich20Something. So I know a thing or two about what it’s like to be in your shoes.
Coming up with and testing a great business idea is one of the most challenging parts of entrepreneurship. And you can’t get around it -- it all starts with an idea.
While I was working on my new book (plug!), I developed a simple four-step solution to determine whether you’re headed for a business breakthrough—or simply a breakdown. Here’s how it works.
How to Find Your Profitable Idea
Before we go any further, I have one favor to ask of you: Don’t start freaking out, OK?Most people get really weird or anxious when it’s time to start developing ideas for their business. Lots of people love the idea of brainstorming ideas, but can never actually find an idea that they like enough to execute. Or often, they don’t think it’s “good enough” to execute. I’m not sure why or how, but as soon as we think of a potential business idea, most of us seem to get this bug that makes us believe whatever we think of isn’t “good enough.”
Potential or aspiring entrepreneurs seem to face two huge problems when it comes to developing an idea:
1) We don’t think we have any good ideas, so there’s nothing we can possibly see succeeding. This is the guy who’s always telling you about a new project he wants to start, and then you find out two weeks later he’s already completely abandoned it.
2) We think we have too many good ideas, and we are completely confused as to which one we should run with long-term. This is the guy who always has twelve projects brewing at the same time, all in various stages of progress, none really doing well.
While these seem to be opposing concepts, they often ensnare us in the same dilemma: half-starting and eventually quitting.
So where SHOULD you be focusing your time and energy? How do you know if your idea is good enough to “make it”?
First, remember two things:
1) As I said before, you don’t need a million-dollar idea. This is VERY important to keep in mind, as it’s very easy to feel like we need to be thinking BIGGER in the beginning. What I’m telling you to do is to think a bit smaller -- at least at first. Case in point: If you look at high-level competitive martial artists, you’ll see that even the most spectacular wins are usually the result of world-class fundamentals. Even against elite competition, doing the basics uncommonly well is usually more than enough to come out on top.
If you can master doing simple things really well right now, you’ll still make a ton of money AND prepare yourself for more advanced things later.
2) All businesses -- services and products, online or offline -- are a direct response to a problem. The purpose of a business -- the only reason it exists, in fact -- is to solve a problem.
You should be actively thinking of how you can solve other people’s problems. On a day-to-day basis, you should be thinking about things you and others around you struggle with, then finding ways to solve those headaches through an idea, device, service, or piece of software. Better yet, start pretending you’re Olivia Pope and become relentless in your approach to problem-solving and “fixing” things.
Coming up with fresh business ideas shouldn’t be something that you just do once a year when you need some money. If you want to be an entrepreneur, you must fundamentally change the way you look at the world, always seeking out opportunities to serve other people and get paid in return. With this in mind, your well of creative inspiration will never run dry.
Here are four places I look first when I want to come up with a new business idea quickly:
1) Things you’re already good at (hobbies/skills). Everybody has SOMETHING that they’re good at. The problem is, most of us take our skills for granted. We don’t appreciate the fact that the knowledge and abilities we have at our disposal could be very valuable to someone else:
• Maybe you’re bilingual or you can play an instrument.
• Perhaps you know how to organize the HELL out of a closet.
• Maybe you’re really good at cooking, or building websites.
• You might have even successfully completed a few triathlons.
All of these are things that other people would like to be able to do for themselves on a regular basis but in many cases can’t.
Understand this: TIME is the only real commodity we have. We make money so that we can pay other people to do things for us in order to gain more time. It all comes back to time.
If you’ve spent considerable time learning to do something -- either in school, as an apprentice, or even as a hobby or recreational activity -- that time has immense value. Rather than learning to do what you’ve done or putting in months (or years) of work grinding away, many people will be more than happy to pay you in order to get what they want much more quickly. You can teach someone else how to do something. Or if you don’t want to teach it, you can simply use that skill to provide a service and do the work for them.
2) Things you’ve done for work. SPOILER ALERT: “Learned at work” skills are a great place to look when fishing for your first profitable business idea. If you’ve ever held a job, that’s proof you have at least one skill or idea that somebody is willing to pay money for!
Like most people, you may be under the assumption that your hourly wage or salary reflects the actual value of your skills, but here’s the thing: There is no “actual” or innate value of a skill, service, or idea:
Washing dishes could be a seven-dollar-an-hour skill or a fifteen-dollar-an-hour skill, depending on whose plates you’re cleaning.
Building a mobile app for your employer could be one of the hundreds of other things you do every year as part of your sixty-thousand-dollar salary.
Or the same mobile app could be a twenty-thousand-dollar side project that you work on in your free time, while still making sixty thousand at work.
Your salary doesn’t reflect true value; it just reflects your employer’s estimation of how much they can afford to pay you after they’ve accounted for all their expenses and made a healthy profit. If you have a boss, you’re not making as much money as you could be for your time. Period.
Here’s a partial list of all the things taking money out of your paycheck before you even see it:
Management and executive salaries.
The list goes on and on! By the time your salary is up for discussion, it’s less about what you’re worth and more what they can afford. In some cases, a job that deserves one hundred thousand dollars is getting fifty thousand or less!
Can you negotiate your salary? Absolutely. But even at the highest level of negotiation, it’s very unlikely that you’re going to make as much money within a company as you’ll make taking that exact same expertise and applying it outside of the company for your own gain. The skills you acquire along your journey are yours to use as you wish, at a price that you command. Now you just need to identify which of your on-the-job skills is ripe for the picking, start developing your idea, and then find your customers. (Don’t worry, I’ll fill in the how-tos as we continue.)
3) Things people ask you for. Besides the seemingly interminable amount of time spent in school, I think one of the biggest turnoffs for me about a career in medicine would be the relentless questions from well-intentioned civilians looking to “pick my brain” off the clock about a medical problem they are having, rather than setting up an appointment to have it properly examined by a physician with expertise in that area.
“Do you have a quick second? I wanted to get your opinion on this lump in my neck."
"I’ve been having this weird pain in my chest. It’s a bit like indigestion, but it’s a little bit sharper. I always get it after I eat spicy foods. Any idea what that could be?"
On and on these questions would go. But that’s how it goes with many professions. For example, if you have a friend who is an attorney, you might find yourself shooting him a text that says something like, “Can you go to jail for unpaid parking tickets . . . hypothetically?”
We do the same thing when it comes to personal matters too. If you have a friend who’s always getting dumped and you just broke up with your boyfriend of five years over some steamy texts between him and that bimbo at work who you knew he had a crush on, you’d know exactly which friend to call and vent to about that douche bag, wouldn’t you?
The point here is that whether you realize it or not, we lean on experts to help us figure things out -- and if people keep asking you for help, advice, or insight in a particular area, there’s a good chance that others look at you as the expert or “go-to” in their circle of influence.
You have to start paying more attention to things that people ask you for. If someone asks you to help them with something, your mind should immediately begin assessing whether this is something that could become profitable.
Let that subliminal capitalistic brain fire up! Do you have friends who are always asking you for diet advice? What about people who are constantly asking for your insights into their relationships? Do friends and family call you to watch their dogs when they go out of town? Start paying attention to the things that people require of you; then eventually, you’ll get paid to do things that you used to do for free.
My girlfriend’s brother, Caleb, started a moving company because he was tired of people asking him to move their junk for free. He bought one of those Ford F-350s, and people started coming out of the woodwork: “Can you help me move my ten-thousand-volume book collection?” “I’m moving on Sunday. Think I could ‘borrow’ your truck?”
Caleb is a nice guy, so typically he said yes. They were his friends, after all. Until one day, he had an idea . . .
Friend: “Caleb, I need someone to help me move this three-thousand-pound sectional couch. Can you come over with your truck and help this weekend?”
Caleb: “Sure, my rate is sixty dollars an hour.”
Friend: “OK . . . great! See you then!”
And just like that, a business was born. He paid attention to what the market was already asking him for and just gave the people what they wanted. He started getting more and more business, then used some of that money to buy another truck and begin expanding.
If people ask you for something, it could be worth charging for!
4) Things you want to learn
After teaching college test prep for a while, my second successful freelance business—which I also quickly scaled to over a hundred thousand dollars—was a web design company called Primal Digital. And guess what? I barely knew anything about web design in the beginning!
The idea started on a whim. I’d already had a bit of success with my first business as an SAT tutor, and I was looking for something that I could do from my house. I was not an expert by any means. I knew just enough to get a basic, one-page site up on WordPress, and that was about it. It’s almost embarrassing to think about as I type it now. I set up my web design company’s one-page website with a very fancy theme, to give the appearance that I was much more established than I actually was, and proceeded to start posting on popular freelance job boards like Upwork (Elance/oDesk at the time) and a few others. Within a few hours, I started getting bites for $1,000, $2,000, and even $5,000 jobs! WTF?!
What I want you to focus on right now is my relative lack of knowledge about the subject area. How was I able to get away with this?
My first few clients were happy to pay me because even though I wasn’t a world-class expert, I still knew more than they did about building a website. Remember, for someone who doesn’t use computers much outside of Google and Facebook, even setting up a basic WordPress blog is a damn near mystical process.
I worked my way up doing simple work, and as my skill set improved, I was able to charge more and more for my services. I essentially paid myself to learn how to build websites.
You could do the same thing easily. Find a skill or idea that you’re a beginner in but that you want to become really good at. Then gradually improve that skill set and find customers who are willing to pay you as you learn. It’s like paying yourself to go to school for something that you actually care about. You don’t have to start as an expert. It’s OK if you haven’t done this before. You’ll get better with time—and you can get paid in the process.
Starting a business is one of the hardest things you can do—and as some of these examples should demonstrate, the answers can often be quite counterintuitive. But you don’t have to do this alone.
If you thought the strategies I shared for validating your ideas and standing out were helpful, you’re going to love my new book Rich20Something: Ditch Your Average Job, Start An Epic Business, Score The Life You Want.