What’s the best way to find a business idea?
Here’s a question from Christian. He asks:
“What’s the best way to find a business idea?”
I can’t wait to dig into this question because I get asked it all the time.
In fact, we’ve spent 11+ years and millions of dollars researching the best ways to help people start businesses.
We’ve found that this one thing — finding a business idea — is the SINGLE biggest barrier for people.
The funny thing is you can go to Google and search “business ideas” right now.
Instantly, you’ll have thousands and thousands of results to choose from. You’ll find ideas like:
- Dog walking
- Writing articles online
- Social media consulting
And so on.
So that raises the question: If business ideas are so easy to come by, why is this such a huge barrier for people?
Here’s the answer: You don’t just need any old idea. You need to know:
- If your business idea is profitable (so you don’t waste your time)
- If your idea is something you care about
Anybody can hand you a list of ideas and say, “Run with this. Bye.”
But our approach is decidedly different. We’ve developed a system that guarantees you’ll find profitable ideas you enjoy.
I want to share that system with you today. And at the end of this post, I’ll give you a checklist you can use for easy reference to this 3-step system.
Let’s get started.
Step 1: Start with business ideas that suck
Here’s the most liberating part of coming up with business ideas: You have permission to suck.
There are no bad ideas, especially in the beginning stages.
Some of my early business ideas were terrible. And I’ve created more than 18 successful products.
To this day, my team and I come up with bad ideas — ideas that we spend months and tens of thousands of dollars researching — that we throw straight in the trash because they sucked.
That’s just how it works. Sometimes you have to filter through the bad ideas to find the real nuggets of gold.
But we’ve developed a system to help you quickly identify bad ideas so you can avoid some of the costly mistakes that we’ve made.
It all starts with this simple realization: You have permission to come up with ideas that suck.
Once you’ve internalized this idea, you’re ready to move on to step two.
Step 2: Ask yourself these 4 questions
It’s relatively easy to sit and come up with a list of random ideas. But without the right framework, you can’t tell if these ideas will ever hold any weight.
That’s why we use this simple exercise to get the ball rolling.
The first part of this exercise is to ask yourself 4 questions.
Question #1: What do I already pay for?
I like to lead with this question because a lot of us can’t even fathom the idea that someone would pay them for something.
But when you think about it, we already pay other people for tons of random stuff.
For example, maybe you pay someone to:
- Clean your apartment
- Change the oil in your car
- Make your dinner
When you start to make your list, you’ll quickly see that you pay other people every day.
That’s why I start with this question. It opens your mind to what’s possible.
So take a second — right now — and think of about 3-5 things that you already pay for. Write them down on a sheet of paper and move on to the next question.
Question #2: What skills do I have?
What are you great at? Write those things down.
Remember, there are no bad ideas here. Your list of skills can include anything you want.
- Are you good at cooking?
- Do you speak Spanish?
- Are you an Excel wiz?
As you make your list, you’ll start to see what people might pay you for.
For example: If you’re great at cooking, maybe someone would pay you to be a personal chef for them?
If you know Spanish, maybe you could tutor someone?
If you’re amazing at Excel, I know plenty of people who would gladly pay you to create some charts for them — right now.
I want you to push yourself to come up with a list of at least 10 skills you already have. Write down anything that comes to mind. Don’t filter any of your ideas.
Once you’ve got at least 10, you can move on to the next question.
Question #3: What do my friends say I’m great at?
This is important to think about because it can be very revealing.
Maybe your friends are always saying, “Wow, you give amazing relationship advice. You’re the only person I come to.” Or, “Your apartment is so organized. I wish my place looked like this.” Or, “OMG, you’re always wearing the perfect outfit! I’m so jealous.”
You could turn all three of those things into successful businesses.
Sometimes it’s easy to forget we have these skills because they come naturally.
That’s why I include this step.
If you find yourself thinking, “Ramit, I do not have any skills,” go ask your friends. It might seem a little weird, but I bet they’ll give you a list of at least 3 things you’re amazing at — right away.
Add these ideas to your list. Shoot for at least 3-5 ideas and feel free to ask a couple of different people if you want.
Trust me, there are things you’re great at that you probably don’t even recognize.
Question #4: What do I do on Saturday morning?
This last question comes from one of my good friends, Ben Casnocha.
He said, “When you’re trying to find a business idea, think about what you do on a Saturday morning before everyone else is awake.”
- What are you reading? Fashion magazines? Fitness books?
- What are you watching?
- What one thing could you do all day?
Another way to think of this is: If you were locked in a room with your friend, what could you talk about for 3 hours straight?
This is a great way to expose the ideas and passions. The things you would have a blast sharing with the world.
Writing these ideas down can go a long way toward helping you find a successful business idea.
By the end of these 4 questions, you should have at least 20 ideas written down. If you don’t have 20, go back and try asking yourself each question again until you do.
Once you get to 20, you’re ready for step 3.
Step 3: Use the Demand Matrix to guarantee your success
A lot of people will just leave you there and say, “Make a list. Have fun!”
But I want to take it one step further. In our courses, we always test our ideas for profitability.
That way we can virtually guarantee they’ll be successful.
And for that, I want to show you a tool we use called the “Demand Matrix.” Here’s what it looks like:
The Demand Matrix is a very simple way to take your 20 ideas from step 2 and figure out which of them are worth your time.
Before we get to that, I want to explain how this chart works.
In the upper right-hand corner of the chart, you’ve got Golden Goose. Ideas that fall under this section make great businesses. That’s because these ideas have the potential to get a lot of customers and command a high price. Think of companies like P90x and Apple’s iPhone — lots of customers, pretty high price.
Then, in the bottom right-hand corner, you’ll see Mass Market. Under mass market, you can still get a lot of customers, but you’ll only be able to charge a low price. Think of famous books you might read, like The 4-Hour Workweek. There are a lot of customers, but the price-point is pretty low.
Next, in the bottom left-hand corner, you’ve got a Labor of Love. These are business ideas that have few potential customers and can only charge a very low price. Any business idea that falls in this category is doomed to fail — before it even starts. This is your weekend hobby that nobody would pay for.
Finally, in the upper left-hand corner, you’ve got High End. This is still a great business option because you can charge a high price, but you’ll likely have relatively few customers. Think about companies like Rolls Royce and Prada. They charge a very high price but have relatively few customers.
I mapped out some of products for my own business. That way you can see where some of our business ideas fall on the chart:
High End: 6-Figure Consulting System course. Since this course helps already-successful business owners make more money, it has relatively few customers, but it can command a much higher price. Successful business owners are willing to pay a premium price to grow their sales.
Golden Goose: Our Find Your Dream Job course fits here. This is a program where I show people how to find a job they love. Obviously the market for this is huge because 90+% of us have jobs. And because finding a Dream Job is something people really want, we can charge a relatively high price for the program.
Labor of Love: This is where we put all of our business ideas that will probably never see the light of day. Some examples might include an ironing course or a class where I teach people about spicy foods. Yes, those might be things that I love and am great at doing, but there’s not a big market for those. And any market where there are people, those people would not really pay.
Mass Market: This is where my book, I Will Teach You to be Rich, falls. Books are great Mass Market products because lots of people buy them, but the price is relatively low.
See how it works?
It’s a great way to test your ideas for (1) profitability and (2) demand.
It’s not meant to be super scientific. It’s just a back-of-the-napkin way to find out if an idea has a chance of being profitable.
There’s no right or wrong answers.
To test for demand, just ask yourself, “Do a lot of people care about this?” If the answer is yes, then ask yourself, “Are people willing to pay a lot to solve this problem?” to figure out price.
Quickly you’ll see where your different ideas fall on the chart.
It’s pretty simple, but I want to make sure you go through each step thoroughly. Getting this right up front can save you thousands of hours over the long run.