Not every great idea is a business. And not every business needs a great idea. So what does an idea need to have to be successful? It comes down to three fundamental pillars.
What makes a business a business?
I can’t count how many times I’ve sat down with people who asked me to sign an NDA because they had a Big Idea that they wanted to share with me, only to discover during our meeting that there is no viable business to back it up. Either it’s not a market fit, or there are similar products out there doing the same thing for a much cheaper price, or the cost of developing the idea would far outweigh the profits gained.
Not every great idea is a business. Sometimes we get stuck on our Big Idea, but without discerning whether that there’s a market for it, it’s unlikely that the idea will succeed in the real world. The Segway was a clever invention that had tremendous funding, resources, and publicity when it was first released in 2001. Yet it ultimately failed as a business, because it had no clear target market and failed to solve a real problem for consumers.
At the same time, not every business needs a great idea. Uber took a common idea, taxi services, and turned it into a successful business by figuring out a better way of delivering that service. Some of the best businesses, rather than inventing revolutionary products, revolutionized the way people experience that product.
So what does an idea need to have to be successful? It comes down to three fundamental pillars (and Ptex Practical Pointers) that form the foundation of every successful business, also known as the Three P’s:
This doesn’t just refer to employees—although hiring the right people is crucial. This refers to all stakeholders who have a vested interest in your company: employees, advisors, suppliers, and vendors. Invest heavily in all of these relationships. Respect your employees. Ask for feedback from your stakeholders. Express appreciation for your suppliers and vendors. Ultimately, a business is made up of people, and the more your stakeholders want to see you succeed, the more successful you’ll be.
Having the right processes in your business is key to enabling you to grow and scale. As Michael Gerber famously says in his book E-Myth, “Organize around business functions, not people. . . Let systems run the business and people run the systems. People come and go but the systems remain constant.” Putting the right systems and processes in place allows your business to operate without your constant presence. No matter how great your product is, without solid processes in place, you’ll have a hard time managing your growth, and ultimately scaling your business.
Finally, we come to the product. The best people and the best processes cannot fix a bad product. To have a viable business, your product may not need to be groundbreaking, but it must do what you promise it will do, reliably and consistently. The best way to ensure this is to get frequent feedback from customers. Ask them what you can do to improve their experience with your product and business, how you can provide them with a “wow” experience, how likely they are to recommend your product to a friend or colleague.
And there’s a fourth bonus pillar—
At risk of stating the obvious, your business isn’t a business unless it’s making money. No matter how wonderful your product, unless you’re a non-profit, you need to make sure that the business makes more money than it spends.
Those who get caught up in the trap of falling in love with their own idea risk investing much money, blood, sweat, and tears into a venture that’s unlikely to succeed.
And on the flip side, those who try to create a business without delivering on their core brand promise won’t last.
So if you’re thinking of starting a business, make sure you’re investing your energy in these four fundamentals—People, Process, Product, and Profit. Doing so will help you deliver true value for your stakeholders, scale your company, provide an extraordinary experience to your customers, and maximize your profit potential.
When’s the last time you asked your customers (or potential customers), “What can we do to WOW you?” If you haven’t, it’s never too late to start. Please report back and let me know if you do! I’d love to hear your story.