In a prior post, I discussed the challenges in buying a business that I’ve encountered. But despite these setbacks, the feedback that I received from that post is encouraging. Many readers, including those who have gone through this process themselves have commented that finding the right business to buy takes time. But as this process is taking a long time, I am also experimenting with a few online business ideas.
While I continue exploring local businesses for sale, I am trying to remain cautiously optimistic that I’ll find something that works for me. And while I’ll continue going down the path to buy a business; but in the meantime, I’m not putting all my eggs into that one basket.
The ability to make a full-time income with an online business has always intrigued me. And while there’s no shortage of people out there who will tell you that it can be done, and they’ll gladly show you how it can be done, just like any business, I don’t expect making money with online business to come easily.
Finding Your Passion
An online business just seems like a natural fit for me. I’ve always been fascinated with technology. In fact, I’ll go so far as to say that technology is my passion.
In the past, I talked about not getting obsessed with finding your passion and instead going after whatever interests you. And while I still stand by that advice if you don’t know what you’re passionate about, if you can find something to pursue that you are passionate about, I think you’re likely to enjoy yourself more along the way.
For me, in addition to my passion for technology, I am also passionate about entrepreneurship. I’m sure this is one of the reasons I want to buy a small business. But even more than buying a business, my passion is to start a business with a strong technology component (i.e., an online business).
My passion for technology goes back a long time. I designed websites in college. And before you start telling me how that’s not unusual, remember I was in college back when websites weren’t what they are today. Back then, most of us didn’t even have email or cell phones. How did we survive?
I also spent time back then in the text-based newsgroups that preceded what we know as the web today.
And my passion goes back even further. When I was in high school, my family purchased an Apple IIe. But before my father would let me buy any software games to play, he made me learn BASIC programming language and program my own rudimentary game.
And no where is my passion for technology more evident than when it comes to the countless hours I’ve spent working on the technical aspects of the Financial Slacker site.
Turning Your Passion Into a Business
While it’s great to know what you’re passionate about, one of the challenges when you do find your passion is that it’s easy to get lost in your passion.
I have been known to spend hours and hours getting a website or spreadsheet or database to look a certain way or perform a certain function. And while diligence is important, often the changes I’m making are so incremental that I’m the only one who would notice the difference.
And that’s one of the keys to let you know when you have gone beyond a practical limit. When you’re in business for yourself and you’re working in an area you’re passionate about, you need to set boundaries. Working for others, your schedule is mostly determined by your employer, but working for yourself means deciding how much time to spend on what.
If I spend all my time on the technical side of the business, which I may enjoy, I’ll never get any content written or get a revenue model created. And while that may be fine for a hobby, that’t not a good thing for a business.
A Business Needs an Actual Product
As I explore my ideas for an online business, the biggest challenge is determining whether a viable business can be built around the idea.
And to make that determination, I start with three questions:
- What is the product?
- Who is the customer?
- Why are they buying it?
What is the product?
This seems like a simple question, but honestly it can be the hardest to answer. To answer this question, you must make specific decisions about what you are selling, how much it costs, and what it does.
As an example, just saying your product is personal financial consulting is not specific enough. Instead, you sell a customized personal financial plan that includes an analysis of income, expense, and retirement goals and proposes a strategy for achieving those goals all for a low $3500 one-time fee.
Can you see the difference? In the second case, the client knows exactly what they get, what they will do with the product, and how much it will cost.
Who is the customer?
While you can and most likely will sell your product to anyone who wants to buy it, you should have a specific target client in mind. This is because it’s difficult to sell to everyone. There’s a common expression, “if you sell to everyone, you’re selling to no one.”
In the example case, your target client is a working-class professional between the ages of 35 and 45 with a household income between $75,000 and $100,000 and with invested assets between $250,000 and $500,000.
The more specific the better. By being specific, you can now seek out sales channels where you will find this typical client. For instance, to find potential clients, you might seek out people searching online for investment advisers.
Why are they buying the product?
This is really a two-part question and probably the most important question of the three. The first part is what problem does your client have that your product will help them solve? The value needs to be immediately and clearly understood as you don’t have much opportunity to explain your product.
In this case, the client wants to know how much they need to save and how much their portfolio needs to earn in order to retire comfortably. And your financial plan provides them with this information.
The other part of the question is why are they buying this product from you? This is how you are different from others in the market selling a comparable product.
In this case, your primary competitors are investment advisers who also want to manage your client’s money. These folks have a financial incentive to make investment recommendations that will benefit themselves (i.e., those that pay high commissions).
Alternatively, your product is a stand-alone financial plan with no hidden conflicting financial incentives.
Will Anyone Buy Your Product?
After asking and answering the above three questions, you now have more than just an idea. You have an actual product to sell. And while you may not have a working product, you have enough to go out and ask people not just if they want to buy your product, but if they will buy your product.
This is where the hard work really begins. Before you start spending money and time, you need to validate your idea.
Most of the time, you’ll be testing the validity of your product with people you know. After all, if you can’t convince someone who knows you and trusts you to buy, why would someone who doesn’t know you or trust you buy?
But because these people do know you, they are likely to tell you what you want to hear rather than what you need to hear. Just because they tell you they would buy the product, unless they actually buy it, you haven’t validated your product.
So before you move forward and start actually building your product, you need to get real buyers. You can offer a discount in that you haven’t actually created the product yet. You can even defer payment until delivery if necessary. But you need to get real buyers to agree to buy the product using real money.
Once this happens, you know you have a viable product. And with a viable product and paying customers, you now have a real business!
Readers, please share your own experiences starting an online business. Have you had success getting buyers to pay for a product before you have actually created the product? What other ways can you validate your product before spending time and money?