Monday, April 19, 2010
Business Ideas Revisited
An old business partner came to me recently with a business idea that I had to tell him would not work for some time.
It was actually a fantastic idea but when I began to question him more and more about it, I saw the major problem. It was a service for seniors that would actually not be paid by the senior themselves -- but instead their family would cover it.
Ok, this is what I call a "guarded-gate-keeper" problem. This means that you will have to first sell one person on what your service is and then they have to sell another on that same service. In other words, you are trying to make someone that knows nothing about sales or marketing into a salesperson to their own family.
This is wrong in so many ways. Yet it is a VERY VERY common mistake when people are thinking about a business idea to implement.
For one, you are targeting two different clients each with their own problems and concerns they are going to bring up. So if you can sell a hundred clients out of every ten thousand and of those hundred were only able to get one client...double Ack! The marketing costs to reach ten thousand people per client would kill you alone.
Ok, after we discussed it further we found a way to get around the original client and straight to the decision maker. However, when we researched this a bit (and I know from previous experience), the target client RARELY has enough money to deal with the problem (where the original target did but would not give it up or we could have sold it to them in the first place).
I told my old partner, let's think this through a lot more before putting anything into it. We know the service would be used. It's a fantastic idea. But we cannot reach the people that have the money to actually buy it just yet. We know there is a similar business that knows how to get around the guarded gatekeeper problem but we would first have to educate people into the service (another HUGE mistake for a beginner business).
Lesson? Everyone has a good business idea but when you begin to apply basic business knowledge (1. Is there a direct customer that will actually pay for your service and has the money to pay for it? -- 2. Do you have to educate people which almost never works for a starting busienss), it almost always falls apart.