How to Come Up with a Winning Business Idea

70% of all businesses that get started typically fail within the first 5 years. There are a lot of factors that play into this statistic.

However, one factor that I want to address today is the manner in which people go about coming up with business ideas. You see, most people tend to go about the process backwards, which sets them up for failure.

Most people come up with the idea first, and then try to sell it. That’s how you get restaurants suspended from cranes, foot stickers, and meat water.

Successful entrepreneurs go about it differently. They talk to their target market enough to really understand what their pain points are, and how important those pain points are to them. They figure out what the real, expensive, and bothersome issues are. Then they create a product that’s meant to meet the need.

But that’s only the first step in a series. The next step is to figure out how to articulate the reasons why your idea is going to make their life better. As Business Insider puts it:

“How will your customer benefit by switching from “the way they’re dealing with it now” to addressing their need using your solution?

If customers adopt your solution, explain how they will be able ot address their unmet need significantly better, faster, cheaper, or cooler than they were formerly able to do so. Be as specific as possible.”

You’re going to need that specific statement, because the next step is to ask. Ask your target market what they would think of your proposed solution. Would they pay for it? How much? Does that figure leave you enough money to produce the solution while simultaneously making a profit?

You don’t have to scrap the idea if you don’t get rave reviews right away. But you might have to tighten up your idea, or figure out a better way to help people understand it.

You’ve got a winner when the people in your target market move from saying, “Wow, that’s a neat idea,” to saying, “Where can I get that?”

You need to do this for every audience that you are trying to appeal to, even if one segment of your audience will be using the product free or nearly free.

For example, when I built ColoradoHomeHelper.com I really had to appeal to two target markets.

The first market was home buyers. I had to entice them to come to my site and use it to locate the home of their dreams--and to leave their information with me. Sure, it was free, but “free” wasn’t compelling enough. Why? Because if they weren’t solid leads there would be no engine to drive the paying market--real estate agents who had a desperate need to find and work leads that would actually be productive for them.

And even though I was a real estate agent and understood, intimiately, the pain of generating and working bad leads I still had to be able to explain why my lead generation system was a better and more cost effective solution for other real estate agents than, say, their tired old shopping cart ads down at the local Kroger. That meant talking to them to find out if I could convey what I needed to convey.

This entire process is better for more than product development and product pricing. It also gives you a major head start on the third problem that plagues most start-ups: marketing.

Many entrepreneurs have absolutely no idea how to market themselves effectively, especially in this era of content marketing, where less than 20% of most content actually generates conversions.

If you lay this groundwork, however, you’ll know some important details:

Ø  Where your target market actually spends its time, what they read, and some of the places that you can go to reach them.

Ø  The exact language that you need to use to appeal to their problems and to present your solutions. It is only a short leap from this knowledge to finding appropriate keywords.

Ø  If you listen closely, they’ll reveal a host of other things they are concerned about--which means you’ll actually real clues about the kind of content that will appeal to them.

Knowledge is power. Build your knowledge the right way and your product, pricing, and marketing will all come into alignment to build a customer base that will be excited about your product and loyal to you. But it all flows from creating your ideas in the right way, which means making the commitment to be a problem-solver and an entrepreneur before you have all the details of your product worked out.