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Evaluating Ideas for New Businesses and Startups
Posted by Scott on 1st October, 2009 | 32 commentsSo you have a few ideas for new businesses to start — good for you, the wheels are turning! How do you decide which one to pursue? Some pointers, key things to look for:
-Make sure you’re passionate about the idea. It may be a good idea, and it may fill a niche, but launching a forum about shampoo brands may not be your cup of tea and thus, you’re not going to pour your heart into it. I know you’ve heard this before but stop ignoring the advice! You really have to love what you do to be great at it.
-Make sure it can be monetized. Sites that target big spenders (car buyers, digital camera/consumer electronics buyers, travelers, business owners, CEOs, IT pros, web developers, etc) will monetize far better than sites that target the general public, general interest people that are just browsing around, people looking at general news, people socializing and chatting about their favorite color. Can it be easily monetized, say, with Adsense, or will you have difficulty finding advertisers, getting subscribers, etc?
-Evaluate the SEO value. Traffic from Google is free, so it’s best to design your business around this, and make sure to create a business that is likely to benefit the most from SEO. Are people actively searching for content that your site features? Dealighted.com features deals and coupons that are very recent. People are aggressively searching for deals and coupons every day, and particularly, recent bargains and deals that expire, so the site’s SEO value and potential are high. Contrast this with say, a very niche site about say, gardening, which people are still searching for but less aggressively.
-Will it run itself? If I opened the Scott Wainner school of business, lesson 1 would be: let the business run the business. Don’t become a slave to your work. I’m not, and you shouldn’t be either. I work a lot because it’s fun and I like to grow the business, but I don’t have to. That’s because I meticulously setup automated processes early on, and I created businesses that are primarily comprised of user generated content (dealighted = aggregated user content, TechIMO=a forum, ResellerRatings = user reviews of online companies). The more day to day work your business requires to keep it afloat, the more you’re just going to be treading water. When I work, I grow the business–very little effort goes into maintaining the existing revenue, traffic, and day to day goings on (though I also have a small team to help with the day to day, but we’re also talking about a fairly sizable business here).
-Does it fill a niche? Is there demand? Has it been done 50 times already? Don’t worry if you have competitors. There’s often room for one more, especially if you can do it better. But, do worry if the market is totally saturated with mature players, and you’re going to beat your head against the wall trying to gain traction. Look for markets where there is demand that is not fully being met.
-Do you know how to set it up yourself, or will you require a lot of startup cash and third party help? This can be a big deciding factor. If you’re a web developer trying to decide between setting up a user generated content site, or a tractor supply store, I’m going to advise the former — use your skills.
-How sticky is it? Will people visit it once in a while, or daily? How fresh is the content? One of my gripes about ResellerRatings is that while it’s a hugely important resource and it will most assuredly make or break any online retailer’s reputation and sales, consumers use it more of a periodic tool than as something to check out daily. That was one reason I created Dealighted, which people get addicted to and visit every day because the content is fresh, relevant, expiring, and has to be looked at daily. That level of stickiness due to addictive, continuously updated content, is a very important consideration for success.
You can test out my sites against each of these. With each successive creation (SysOpt, then ResellerRatings, then TechIMO, then PhotoPost, then Dealighted), I got smarter and smarter about what a new business should look like. By the time Dealighted was launched, I had learned to incorporate every one of the above key requirements, and created a hugely successful site as a result.
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Thursday, October 1st, 2009 at 7:39 am and is filed under Web Business. If you like this post why not subscribe to my full text RSS feed. You can leave a response, or trackback from your own site.
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Interesting to see what you made out of this tiny comment on your previous post.
Thanks for this well written outline on evaluating business ideas - really helpful.
Btw, just 84 days left until Christmas
Thanks for posting this; it’s very useful. I especially like the ‘will it run itself’ part because that’s what I look for
In germany many new businesses and startups fails because many of them have no correct business plans. I think this is the most important thing! Thanks for sharing this information.
Well I don’t know about that. I’ve never had a business plan. It might help someone that needs formal structure.
Scott I agree with your comment, and I don’t think businesses have to necessarily have a formally structured plan to succeed, but at the very least they need to have the sort of thing you out lined here in your article which applies to online world, but anyways… it is the idea idea that you need to think about the potential for your business. Referring back to Kreditkarte’s comment, I think that’s why alot of offline businesses fail, because they just jump into the business without knowing what they are getting into.
I know from my personal experience, my father opened bought a pizza shop, he had no prior experience and learned about pizza making as he bought the business but he never really investigated it thoroughly, end result he didn’t make much money, and eventually sold the business.
Till then,
Jean
agree with your post, we must need to be evaluate our ideas for new business and think about seo values.
I think it must be hard for anyone starting an online business selling physical products right now. The credit crunch has hit hard and the average Joe is going to struggle to compete with the big boys (Amazon etc) on price due to their buying power.
The key would be to offer better/more personal service and differentiate yourself.
I personally prefer the margins on advertising and affiliate sales to physical products, but who knows what the future holds.
I really like the way your posts are going, keep up the good work.
Thanks
James
Yes you definitely have to differentiate yourself if you are going to sell a product that many other people already sell. You have to give them a reason to buy from you instead of the competitors who are often cheaper.
I too prefer marketing affiliate products as it avoids all the customer service and order processing issues.
Very well written, it was surely a good read indeed. Thanks
it is really Evaluating Ideas for New Businesses and Startups..with have a nice article….
I have made website in Yahoo site builder but being outside of US I cannot publish website in Yahoo Merchant Solution.
I always have the problem choosing right niche. I made about 20 websites and only 2 are successful…
I agree that evaluating the SEO potential is a huge priority. Too many people get obsessed with trying to come up with some brand new idea. Then they run into the huge problem of nobody really looking for it. Ideally your business focuses on a popular enough niche that you can take advantage of free search engine traffic.
Great Post!
Yes I totally agree with your points.
Having the ideas for your new business is something, but choosing the “right one” is really important. You really have to investigate about the business that you want to jump on.
You are so right; to make a successful you really have to have knowledge about it and love it. This way work on your business will be a fun thing to do and you will have more chance to succeed on it.
Great post ,I know what to do for my internet business now.
I think to find the right niche is the most upcoming problem in every situation. Blogging, selling goods or in the tertiary sector. But if you have found the right niche and be disziplinate you will do it…
Many niches will work though. You should focus on the niches that you have knowledge or interest in to start
Yes knowledge and actual interest are extremely important. If you want to stay motivated, you should be concentrating on a niche that you really like. You’re not going to work as hard if you get bored of the niche.
I think your first point is the most important. It is great to make money and essential, but we spend so much of our lives working it would be a shame to spend it doing something that you really didn’t enjoy.
Venture capitalists want way more than an idea. At the very least, you should have a professional management team (not necessarily committed to the company full-time at present, but ready for such commitment should venture capital funding materialize).
Who said anything about venture capital? You’ve been reading techcrunch for too long. Starting a company for the purpose of a) taking on VC funding and b) selling it, is dumb. How many of those succeed vs. fail? Your ability to build a company that pays you hundreds of thousands a year, or millions, year after year, is much more likely to materialize than if you somehow hire a pro management team, get funded, and sell for $10M — highly unlikely.
Your point about it running itself is also pertinent. Something that requires a huge amount of work with little yield is not worthwhile.
Thanks for posting this; it’s very useful. I especially like the ‘will it run itself’ part because that’s what I look for
For every great business idea there are scores of others that just won’t work. You will save yourself a great deal of time, trouble and money if you put your ideas to the test before you try to implement them.
I think you´re “Qigong”. It is important to have the right business plan and know what you do to get ideas into real. But it is the most important thing for new startups to learn from their mistakes!
Cheers,
MIchael!
I’m 17 years old I will be 18 next month and there are a number of oppurtunities i’ve been evaluating and considering investing in once I am 18. I’m young, smart and goal oriented but BROKE, anyone know of a way I can get a grant or get people to invest in my success?
See
http://www.wrevenue.com/2007/10/12/10-secrets-to-a-7-figure-website-income/
I completely agree with this list and even from the top down a great refresher or reminder of what you need to look into before starting something new. I think the first on a major key of really enjoying it or just making more work for yourself.
Yesterday I bought Market Samurai and I found one niche which I think would be profitable. In fact I don;t even know anything about this topic but I will try to build some blog which will look pro
it is really Evaluating Ideas for New Businesses and Startups..
agree with your post, we must need to be evaluate our ideas for new business and think about seo values.
thanks for your nice tips. It’s very useful for me. I have got several enlightening from this post. thanks