Most of my more recent blog posts have been focused on specific internet marketing concepts, such as SEO, SEM, content marketing, social media, etc. However, if you have been reading my work since our earlier days, you already know that we started out covering a broader spectrum of business subjects. Today, I am taking a step back and delving into an entrepreneurship-related topic – how to formulate a successful business concept that you can build out into a real revenue machine.
What Exactly IS a Business Concept
If you ask a dozen entrepreneurs and business consultants, you could very well get 12 different variations on the same definition of the term “business concept”. My basic definition would read something like:
A business concept is a full, well-thought out construct of all of the key items required to build a profitable business, including overall offering, specific products/services (at least to start out), who would pay for that product/service, how the product would be delivered to the target audiences, and why the concept is unique enough to succeed.
Several other sources have taken a stab at creating a definition. For example, BusinessDictionary.com provides the following definition:
An idea for a business that includes basic information such as the service or product, the target demographic, and a unique selling proposition that gives a company an advantage over competitors. A business concept may involve a new product or simply a novel approach to marketing or delivering an existing product. Once a concept is developed, it is incorporated into a business plan.
This is a great definition, a bit more thorough than my own swag above. Notice how important both the idea itself as well as the intended execution matters. Of course, this definition, like my own, covers many important areas that should be included. But the language remains a bit broad, for example, “unique selling proposition”. The words themselves suggest a meaning, but for newcomers to this phrase, it can appear to be more “pie in the sky” than concrete in nature.
Curiously enough, it seems that different resources have varying understandings of what a business concept should be. Some consider it synonymous with the term “Value Proposition”, which is far too simplistic of a comparison – value proposition is part of the overall concept. Yet others discuss it in broad, nonspecific terms as something you need to include as a small piece of building a business plan.
All of these definitions are technically accurate, but they fail to hone in on the “secret sauce” that makes something unique or valuable. At the end of the day, execution matters, but only if the concept was sound in the first place. With such vague direction on how to identify a workable business concept, most folks employ some guess work. Let’s look at how that plays out all too frequently.
How Most People Cook Up Their Business Concept
One way we know that content marketing is reeling out of control is when the shtick gets too thick. Some of the biggest offenders in my mind are the naive mantras of “Do what you love“, “Chase your passions“, and “It isn’t work if you love what you are doing.”
In a perfect world, yes, doing what you love would pay the bills. But doing what you love is not enough.
I love to play fretless bass guitar, but no one will be surprised to learn that making a living at music is extremely difficult and doesn’t pay very well, aside from the few who hit it big. Almost every week I meet someone who is following their passion and starting a business, only to learn that most of them have no idea how to make a business succeed.
The same folks often say they will make it succeed through “hard work and perseverance”. I love the dedication, but if that were all it took to make a company grow and sustain profitability, we wouldn’t see over half of businesses fail within five years.
On the other end of the spectrum, we have people who aim to take a good idea and add innovation to it. Perhaps they can make a more effective, less expensive, or easier to scale product than an existing competitor. I must say, there is potential to make this work, but the barriers to entry are higher than with wholesale new ideas that add value. Still, if you can’t figure out your own business concept, it may make sense to piggyback on something that another company already vetted out. In the end, though, you aren’t creating anything new by taking this approach.
These are the typical ways people approach new ventures. But there is something else that matters even more than the above.
The Most Important Success Factor Is…
Any successful business concept must fill a real need that is positioned to continue into the future without the business concept in place to provide relief.
There are several underlying points in that statement:
Fill a Need
Let’s face it, any good business solves one or more problems on behalf of their customers. Following your passion fills a need, except that need is YOUR need, not that of the customer. There is no amount of hard work that can make up for overlooking this important requirement.
When building your business concept, really think about how you can take advantage of your passion or inherent skills to fill a need on behalf of some target audience. Then build the business to support that set of products or services.
Continue Into The Future
It’s not enough to understand that some people have a need. You have to quantify the opportunity.
- How many people need help?
- Is the market growing or shrinking?
- Is there already an established player with command of the market?
These are all of the analysis points you will need to consider before ever making an attempt at forecasting performance. You can’t possibly guess what will and will not work without some due diligence up front.
Following along with the idea of filling a need, how thorough of a solution do you have in mind? There is a huge difference between a product that can speed up healing from a cold and a product that prevents them in the first place.
The more of the solution you can provide, the more likely you will be to get repeat customers, build a reputation as the best solution to the need, and to grow your profitability moving forward. Really think about how you can maximize the relief provided, because there are dollars available to the smart people who push the limits as far as they can go.
There are a lot of moving parts at play when launching a business, building a business plan, and growing your revenues over time. But before you start working 80 hour weeks and hoping your idea will pan out, be sure you have formulated a very well positioned business concept that will solve a key need for some niche, both today and into the future. If your concept does not pass that test, it’s worth taking a moment to re-evaluate the scope of your offering. In the end, you will save yourself a lot of time and effort, and reduce the risk of failing along the way.
What’s the most unique thing about your own business concept? How can you expand that idea out to provide even more relief for prospects and customers?