The first step is always the hardest. The same goes for starting a business.
Do you ever wonder how Elon Musk came up with the idea of PayPal? How Larry Page came up with Google? Or Evan Spiegel with Snapchat?
It might seem like magic (or complete luck), but there’s actually a specific approach to coming up with good business ideas.
In today’s post and episode of Noah Kagan Presents, I break down my formula for creating new business ideas.
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|Struggling to come up with an idea? Get my 10 starter business ideas|
Let’s dive into the exact way I’ve built my own businesses.
Common Mistakes Made by Wantrepreneurs
Know anyone who’s a wantrepreneur?
Maybe it’s you, or maybe it’s a friend who’s always talking about being “sooooo close” to creating that 7-figure affiliate business and only working 3 hours per week.
These wantrepreneurs are people who play business and dream about starting a business “someday”… but mostly end up doing nothing.
Here’s what goes through the minds of wantrepreneurs trying to come up with a business idea:
- “Digital products are the trend now! It’s low cost, high margin. What a no brainer! I’m going to make a lot of money, travel the world, and work from the beach.”
- “Developers make lots of money! I’m going to take a course on Udemy and learn how to code. Then I’ll get my business idea and start building my million dollar app.”
- “SaaS is the future! Subscription and recurring revenue is the best business model. I’m going to be super rich in a few months!”
See the pattern?
All wantrepreneurs want is to make money and get rich; full stop. And they want to do it as quickly as possible.
Their logic in generating a business idea is working in the wrong direction. They’re always looking for the most trendy business model first in hopes of becoming rich.
When their plan doesn’t work out at the end of the day, wantrepreneurs blame everything else except their half-assed business ideas or lazy action plan.
How I Came Up With an 8-figure Business Idea
Not to brag, but my old boss told me AppSumo would never work.
7 years later, AppSumo reaches nearly 1 million people a week, SumoMe helps over 150k sites a day, and the Sumo Group as a whole is an 8-figure business.
How did I come up with these ideas?
Your first step is to recognize what you truly want. Before getting into market research, building a business plan, or setting up a LLC, there’s an easier solution…
Figure out your own pain point where you desperately need a solution. Then, build the solution.
I’ve used this approach myself. For example, here’s how I came up with the parts of Sumo Group, which have become an 8-figure business collectively:
- AppSumo: Daily deal site, getting discounts of the best digital tools for entrepreneurs. Why? Because I love free stuff!
- SumoMe: Free tool to increase website traffic and build your email list. We made it because we want to grow traffic and sales of AppSumo.
- Monthly 1K: Our previous digital course on starting your own business. It was created because I was tired of answering questions about how I build successful businesses one by one.
I’m building something I want, so at worst, I’ll have one customer…
And in most cases, there will be lots of people like me who have the same problem and want a solution.
Solve a Problem for Yourself
Here’s another big difference between entrepreneurs and wantrepreneurs: entrepreneurs solve actual problems (not just come up with random ideas). And the best way to start is to solve a problem for yourself.
Entrepreneurs don’t start a business wanting to get rich quick, wantrepreneurs do. Entrepreneurs find a pain-point and create a solution, while wantrepreneurs find the most up-to-date market trend, jump in and hope to make money from it.
These are some great examples of businesses that solve a problem for themselves:
- Spanx. An innerwear brand is invented because Sara Blakely couldn’t find a comfortable innerwear to pair with her cream-colored pants.
- MistoBox. A subscription service of fresh coffee beans is created because the team wanted to try out coffee beans from different roasters around the country.
- Barbell Apparel. A denim wear for athletic people is built because the founder can’t get a denim to fit his lower body without compromising the style and comfort.
If you’re thinking, “Wait, Noah… How do I know the idea is going to make me tons of money?”
Here’s my answer: You don’t for now.
You’re in the very first step, and your ONLY focus right now is coming up with a valid business idea.
Focus just on finding ideas you want. Validating your ideas, marketing your products, and branding your website? It comes later.
Start with Your Shower Thoughts
What are all the problems you have where you can’t find a solution?
Even if the product exists somewhere, that’s OK. If you haven’t heard of it, it means there’s room in the market — or you can beat any competitors doing better marketing down the line.
These business ideas are what I call “shower thoughts.” Write down any idea that comes to mind, even the dumb ones.
Seriously, go off-the-wall crazy. After all, Facebook began as a website names and faces. Dumb ideas are not necessarily bad.
You’re not trying to come up with the most brilliant idea worth billions right now. Step one is: look for a problem you’re facing yourself, create a solution.
The Challenge: Spend today thinking of, and writing down, all your shower thoughts. Even the dumb ones.
My 10 business idea shower thoughts shared on my podcast:
- Someone to sell all your stuff at home.
- Different colored socks make you happy.
- Zoroastrian princess matchmaker.
- Website Sumo or other saas product optimizer.
- Help me spend my money. Right hand person.
- Clothing shopper.
- Trip planner.
- Home automation expert.
- Mountain bike chooser.
- Free new food samples.
Leave a comment and tell me how you did on this week’s challenge!
Links discussed in this podcast episode: