A TUTORIAL ON GENERATING (rather than finding)
SMALL BUSINESS IDEAS
GENERATING SMALL BUSINESS IDEAS: PART 1
Finding vs Generating Business Ideas
Where's the best place to find small business ideas? This is going to sound really corny... the best place is in your own head. Still reading? Good. This is about generating small business ideas - not about finding small business ideas.
You'll see lot's of successful Internet entrepreneurs selling books or software that is guaranteed to show you how to duplicate their success.
It doesn't work like that!
Finding something that's unique, that you can create yourself and that people will pay for is difficult, but it's the only reliable, long-term way to make money on the Net. Take my word for it.
Ready?
If you're like most people, small business ideas don't just "pop" into your head while relaxing in front of the TV, so let's start with some research...
GENERATING SMALL BUSINESS IDEAS: PART 2
What People Buy Online
| Software | 29% |
| Books | 17% |
| Music | 16% |
| Computers | 16% |
| Travel | 10% |
| Other | 12% |
What does the top three have in common?
They can all be sold as either hard goods or electronic goods.
A popular myth on the Net is that hard goods don't sell as well as electronic goods. They do, but you'll save yourself a lot of time and headaches by going for an electronically deliverable product from the start.
A small business just can't sell hard goods at competitive prices - in most cases anyway. But with original electronic goods your small business can compete because production cost is almost zero. You set the price.
--- sidebar --- 
7 years ebusiness experience,
37 pages worth your time!
- Get the book - |
Here are some of the advantages of electronic goods:
- Very cheap to produce and reproduce, making it doable for small businesses
- No inventory hassles
- No shipping hassles
- Less hassles means less staff - which means less hassles...
Small business ideas based on electronic products are preferable simply because it's usually something that you can do - right now - from home - without spending a mountain of money.
I wrote a 37-page book on making money on the Net where I discuss this in more depth. This is a good place to start. Click here for more on the book.
Ok, so electronic products are the way to go if you have a small business - but what should it do?
GENERATING SMALL BUSINESS IDEAS: PART 3
Aligning Your Ideas With Key Human Needs
Always mould small business ideas around a key human needs. Security, for example, is a key human need - and because insurance companies provide security, they're in business.
They're giving people what they want.
Here are some key human needs, divided into primary needs (red) and secondary needs (green):
Acknowledgement
Adventure
Beauty
Challenge
Control
Education
Fitness
Food
Freedom
Friendship
Health
Hygiene
Independence
Information
Knowledge
Leisure
Love
Money
Power
Privacy
Protection / Shelter
Relaxation
Security
Self esteem
Sleep
Stability
Status
Time
Water
You might think that fulfilling a primary need is ideal. It's not.
Internet users are upper middle-class people. With the exception of health, they normally have their primary needs covered. Before you can sell to them you first have to convince them that your product is superior - make that far superior (people generally resist change when it comes to primary needs) to what they're using now.
Would you be tempted if an ad said free food?
No?
How about free course in basic Internet marketing?
See?
GENERATING SMALL BUSINESS IDEAS: PART 4
The Rules For Small Business Ideas
What do all good small business ideas have in common?
They obey these rules:
The quality must be beyond question.
This is always the first rule of any business. Good products have a way of selling themselves. Bad ones will make you wish you still had a day job. There's no compromise here. Get this one right before you do anything else.
It must be unique.
Or it should at least be presented in a unique way. The information in my Search Engine Yearbook is not unique. Anyone willing to spend 5 years researching search engines can do without the book - but that's my unique offer. I sell time. Readers get 5 years worth of research & experience in a neat package.
There should be an EXISTING demand for it
Small business owners often make the mistake of trying to create a demand for a new product. The simple truth is that creating a demand for your product is very, very expensive - that's why companies like Coca-Cola can do it and you can't. They have millions to spend on marketing. For a small business you should focus on satisfying existing demands.
It must be user-friendly
Off the top of my head, I can think of two really fantastic Internet products that never achieved commercial success because getting them to work was a nightmare. Don't expect the customer to download any additional software or plug-ins to get the thing to work. They won't.
It must be legal
Remember that the Internet is international. Is your product legal and safe everywhere? There's no need to go read up on the commercial laws of every country in the world. Just create a straight-forward, original, honest product and you'll be safe.
It has to be credible
If you're a well-established company with a proven track record, skip this step. If you're not, develop a product that can incorporate an evaluation version. If it's a book, give the table of contents and chapter 1 away for free. If it's software, offer a time-limited trial etc.
It should support repeat-business
This is not really a MUST, but it's a big plus if you can add it. A large part of Pandecta's success lies in our base of faithfulrepeat buyers. Quality comes into play again. Our Search Engine Yearbook readers know that it's a great product - and I make absolutely certain that they know there's a new Search Engine Yearbook every January. They all (well almost all) come back each January because they already know what they're getting for their money... and just to make sure we give them 25% off the regular price. Repeat business is pure gold.
GENERATING SMALL BUSINESS IDEAS: PART 5
Finding Your Product / Service
Before we dig in, keep in mind that there's only so much I can cram into a web page. If you're serious about succeeding online, consider getting a copy of "Ways To Make Money On The Net". It's an immediate download - and it will save you buckets of time and money later on. Click here for more information.
Ok, here's the overview:
STEP 1
Work through the secondary human needs listed above. Pick one that fall in your area of expertise - or better yet, one that really interests you.
For example, I'd choose independence, because that's something I can offer by giving people the skills to start a small or home-based business on the Internet.
Now refine that until you hit a do-able niche. Stay with me. This works.
From independence I got to small business advice. That's still too broad. We have to find a niche where we can be number 1. Small business advice specifically for Internet entrepreneurs... still too broad... more than just advice, I'll offer them experience. Better yet, I'll do all sorts of e-business experiments. I'll test everything from affiliate programs to selling stuff on eBay and report my findings... etc. etc.
Don't stop too soon. If it's too broad, you won't be able to compete. You'll waste a year trying and end up refining it anyway. The best small business ideas are laser-focused on a niche.
Niche niche niche! It's soooo important.
STEP 2
Ok, so I'm going to sell small business experience. The next step is to decide on format.
Software
I'd probably have to cut a cd and sell that, because software downloads are often too large. The truth is that I don't have fantastic programming skills and I don't want the hassle of having to ship the cd.
Electronic book
This has become a fairly popular product format. It's harder to get repeat business with an e-book, but from my experience with the Search Engine Yearbook I know its possible.
Free on your site
Why not? People love quality free stuff. Traffic could build to the point where you can make money promoting affiliate products and selling advertising space. Personally I'm not a great fan of this approach, but there are people who say it can be done. You could also consider giving limited information from the book away on your site with an "order" link for those interested in learning more. That's an approach I've had success with. In fact, you're on such a page now. This page (and others) are what we call "teasers" for the "Ways To Make Money On The Net" book I mentioned above.
Restricted access
A very efficient way of selling information online is to place it in a password protected section of your web site. It's not that difficult to set up. The downside is that people don't actually receive the product, which deals a blow to its perceived value.
E-mail
Sending the product via e-mail is, at the moment, a good option. You could, for example, create separate e-mail courses on creating a business plan, product development, promotion etc. The only downside is that people get so much junk email that your legitimate email is likely to get filtered out before reaching some of your customers. Sending products via email is becoming more of a hassle and will only improve when someone finds a solution to junk email. Hey, there's a great small business idea! It's a mammoth task, but the person who pulls it off will be a billionaire.
--- sidebar ---
7 years ebusiness experience,
37 pages worth your time!
- Get the book - |
STEP 3
Choose your price.
What does the competition charge?
Can you do better without cutting profits too much?
Do a search for your product on Yahoo! and go through the top category to find some competitors.
Who is your target market? Will your typical customer be willing to pay $20 or $200? Don't "settle" for what you'll be happy with - not when it comes to price. A higher price will add perceived value. Experiment until you find the barrier where sales start to drop off. Also keep in mind that your product should always exceed the customer's expectations.
What is your profile customer's age & income level? Younger buyers buy more impulsively but usually has less money.
High prices also leave the door open to competitors to develop something similar and offer it for less.
Low prices mean more sales - more sales DO NOT necessarily mean more money though. 10 items @ $5 each is less than 7 items @ $10 each. The main benefit of low prices is that - if you have a good quality product, you reach more people and therefore generate more word of mouth.
STEP 4
Test your product on your site before you spend time and money developing it.
Describe the product in detail. Ask visitors to pick a price they'd be willing to pay. When your product is ready for distribution, give a couple of copies away to people who are willing to sign up as beta testers. In exchange for the free product, they should, for example, agree to fill out a questionnaire after using the product for a month.
GENERATING SMALL BUSINESS IDEAS: PART 6
Traffic
Whatever you sell, you absolutely HAVE to get people to your site. I can't possibly go into all the details here, so I'm sending you to my Search Engine Yearbook. It really shows you everything you need to know about search engines and everything you didn't know you needed to know. It's also a great example of an quality e-book if you're thinking of creating one yourself.
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