Coming up with new business ideas is the exciting part. You are charged with energy. You see possibility in your new idea. But before you run out to build a prototype or sample and test your brilliant new idea it may be useful to look at why some start-up ideas frequently fail.
On the Quora site a start-up founder, consultant and adviser mentioned that almost anything selling technology into restaurants will likely fail particularly if it solves a problem for diners rather than the owners. As he says, ideas that failed include cheque-splitting, menu systems and order-from-your-table systems. It makes sense because will these new concepts bring in new business for the restaurant owner. If your product can reduce costs or increase sales for a restaurant, then it’s a different matter.
Another area that you need to be careful about is competition. Bandwagon ideas often fall flat. A simple example is that of a small coastal town that had one successful fish and chips shop. A competitor opened down the road, closer to commuter traffic, and grabbed the foot-traffic sales. Two years later another fish and chip shop opened on the other side of the main road in the town. It’s no coincidence that this new owner saw the other two fish shops doing well and decided to open another. Now, imagine someone who saw all three fish shops and thinks that fish must sell very well in this town and decides to open a fourth outlet. But this didn’t happen because the third fish shop that opened didn’t even last a year. Now only one fish and chip shop remains.
Yet another sure-fire way to fail is to make something you think people want rather than making something people actually want. You’ve got to test your new product in the real world to see if it will be wanted or not. You can’t read the minds of customers and if you try to guess what they want, you’re doomed to fail. The best way to work out what potential customers want is to test your product and gain information from actual customer behaviour. You wouldn’t believe how often founder/owners who have been successful try to get into new markets without knowing what customers they are targeting and the demographics and psychographics of those customers. I worked with such a founder some time back and it was scary to find out how little he knew about the new customers he believed he was targeting.
If you want a resource to guide you in avoiding common errors new founders make, to understand the problem or need, address the problem, build a solution to address the problem, find out the willingness of the customer to pay for the solution and develop and deliver the solution consistently, then take a look at “Breakthrough Ideas”.