To Find Your Profitable Business Idea, Make Process Your Superpower
The fastest way to successfully start a side hustle or online business is to
Focus on ideas or customer segments where you are uniquely able to deliver value
Confirm that people want your product or service before fully committing time and money
There is a low probability of success with a singular business idea. By going “all-in” without confirming that people will pay for the product, entrepreneurs can spend a lot of time and money on an idea when they should be moving on.
That is why having a process to test new ideas is a superpower. It keeps momentum to find an idea that generates interest on a small scale before you fully commit. It is okay to move on from an idea, but it is critical to stick to the testing process. By doing this, it is a matter of time before you find an idea that generates income that you can build on.
Why have an idea testing process
An idea testing process is a superpower because it enables you to get from deciding to start to revenue in a fraction of the time and costs.
Creates a bias for action
Finding a side hustle or online business that works is full of uncertainty. There is a mysterious black box going from idea to revenue generating business. It is easy to get lost and spend a lot of time around the fringes without validating whether the business is desirable or profitable. Having an efficient and defined process for testing business ideas can help orient oneself to the best next step and provide a benchmark for moving on to the next idea.
“Have a bias toward action - let’s see something happen now. You can break that big plan into small steps and take the first step right away.”
This means that having a good process forces action and reduces the time spent thinking and rethinking about the next step. It provides focus and clarity to move forward rather than question ourselves and change direction without testing the idea. By continually taking action to test whether an idea is profitable and desirable, actions compound to generate results.
Reduces risk and uncertainty
A good process reduces risk and uncertainty before you invest a significant amount of time and money. It tests early whether an idea is profitable and its breakeven point. This can save you thousands of dollars from investing in something that does not have the margin to generate an income that is worth your efforts.
“The top reason why products fail is building something nobody wants.”
It also tests the riskiest assumption: “Do people want this?” It has never been easier to mock up and sell a product. We have never had more extensive networks that we can use to test sell. With tools like Canva, Carrd, Reddit, Discord, and Facebook, we can develop a mockup and landing page and generate traffic for $50 and a few hours of work. Testing whether people want the product avoids spending resources on building something no one wants.
Overcomes hidden biases
A cognitive bias is our tendency to filter information through personal preferences or experiences. Although even in the presence of data, we can still make biased decisions, hidden biases are most present in the absence of data, and our minds make overlooked assumptions.
Three hidden biases that can undermine entrepreneurs are:
Confirmation bias – the tendency to use information that confirms one’s views
Optimism bias – the tendency to overestimate the likelihood of positive events and underestimate negative ones
Sunk cost fallacy – the tendency to over-invest resources in an idea because we have already invested in it.
“The first principle is that you must not fool yourself and you are the easiest person to fool.”
A process can safeguard against these biases by ensuring that the entrepreneur quickly tests the most critical assumptions and gets actual paying customers rather than relying on anecdotal feedback.
Elements of a Superpower Process
Prioritizes
A prioritizing process gets you from a collection of ideas to a proven business model with as little time and costs as possible. Whether you are full-time in entrepreneurship or doing a side hustle outside your regular job, time is a significant constraint. It is critical to have a simple process that prioritizes ideas and tests the riskiest assumptions first. To do this, the process must provide a clear next step and metrics for profitability and desirability.
Repeatable
A repeatable process remains consistent for each of the different business models and prevents uncertainty about what the best next step is. It also helps to increase the rate of learning by enabling you to better execute over time. Finally, it allows comparing ideas to assess which provides the biggest opportunity.
Measurable
We want to generate strong evidence for a desirable and profitable business model before investing a lot of time and money. That means that we cannot rely on the words of our target customers, but rather, we need to measure their actions. The process needs to measure whether we have an idea that can be a desirable and profitable business.
Reflective
A reflective process builds in checkpoints to force a go or no-go decision as to whether to proceed with an idea after a period of execution. That period of execution needs to be time-boxed. This prevents the trap of sticking with an idea too long and thinking it will work out if I give it a while longer. Weeks can turn into months and years when we don’t have time limits. See if an idea has legs, and if not, move on.
Blueprint for a Superpower Process
Stage One: Ideate
In this stage, the goal is to uncover the customer segments you understand and the interests, skills, and knowledge unique to you that can be shaped into a business model. Find a few customer segments that you want to focus ideas around so that your learning compounds as you test ideas. The more you narrow customer segments and define your niche, the better. If you want to explore a couple of niches, it is best to do that earlier rather than later.
Around this focus, brainstorm ideas around business models that scale as one-person businesses.
Stage Two: Activate
In stage two, score your ideas based on how impactful they are to the customer, how easy they are to execute, their profitability, and how hyped you are to work on the business. Going on instinct is fine at this stage. I use an Excel document to score each criterion on a scale of 1 to 5.
Now that you have the top ideas, do a back-of-napkin profitability test on your top few ideas to evaluate their profit margin and breakeven point. Pick the idea that you want to move forward and test.
Stage Three: Create
Develop a value proposition that taps into your target customer’s desired outcome. Determine your price and develop a demo to test the idea. A demo can be an email, sales script, landing page, image, or anything that enables the customer to understand the main benefits and features. As part of this process, determine what success metrics look like upfront.
Stage Four: Validate
Test sell the product before you commit time and money to develop it. Try to get a few sales in a couple of days. Limit test selling to a period of a week.
Stage Five: Evaluate
After test selling the product, evaluate whether to pursue the idea, pivot by modifying the offer or product and testing again, or pass on it altogether. Building in these regular checks is vital to overcome hidden biases. A defined period to test sell and predetermined success outcomes are crucial to prevent weeks from turning into months without any progress in sales.
Having an accountability partner to check in with can help ensure these checks occur and provide feedback on whether it is worthwhile to pivot or pass on the idea if you don’t achieve your expected outcome.
Conclusion
Starting as a solopreneur is easiest when you focus on ideas where you can bring unique value through your interests and skills and target a customer segment that you understand.
While with some tech companies, there can be a long path to build a market, the solopreneur is different. It is easiest to build on an idea that demonstrates revenue right away. Having a process to test ideas until you find one that does that will make you superhuman.
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