As an advisor to small businesses and aspiring founders, I often encounter the misconception that every new business must begin with a disruptive idea. I disagree. In my experience, the most successful entrepreneurs identify a significant opportunity first and then apply innovative ideas to address it. The best opportunities arise from pressing needs, coupled with a growing customer base that has purchasing power.
For instance, technologists sometimes create a new device or app simply because they can, assuming it will appeal to everyone. Similarly, social entrepreneurs may pitch ambitious ideas to end world hunger, overlooking the fact that those most in need may lack the resources to support the venture. Ultimately, a sustainable business requires real sales opportunities.
For more detailed insights, you can refer to the classic book The Entrepreneur’s Playbook by Leonard C. Green. It echoes my perspective and offers practical advice for aspiring founders, including simple methods to identify high-potential opportunities—many of which don’t require inventing anything—before solidifying your innovative business plan. Here are a few approaches that both Green and I recommend to get started..
1. Take a simple product and enhance it (upgrade). Examples like premium bottled water (Fiji), high-end coffee (Starbucks), and gourmet cookies (Mrs. Fields) show how everyday items can be transformed into successful businesses. Sometimes, it’s about turning a common product, like a cup of coffee, into a memorable “experience.”
2. Provide a no-frills version of a luxury product (downgrade). Southwest Airlines, for instance, stripped away the extras typically associated with air travel and became a market leader, with even major airlines following suit. Similarly, in supermarkets, generic brands often deliver greater value and quantity without sacrificing essential ingredients.
3. Combine products that naturally go together (bundle). Instead of making customers shop separately for related items, offer them as a single package. Today’s smartphones are a great example, combining a phone, camera, and computer into one device. Sometimes just adding extras like training or installation makes a product more appealing.
4. Split up existing bundles into separate offerings (unbundle). This is the reverse of bundling. Home computers, for instance, are often sold with hardware and software separately, giving buyers the option of lower entry costs and flexibility. Similarly, long-term warranties are now frequently unbundled from appliances.
5. Introduce a product that sells in one market to a different one. Importers and exporters thrive by bringing products from different regions or countries to new markets. Franchises also operate on this principle, taking a proven business model and expanding it to new locations. The internet itself is a platform for transporting web services to global markets.
6. Expand a niche product to the mass market. One modern example of this is moving a product from being available only online to brick-and-mortar stores, reaching a much broader audience. This approach applies to many businesses that start small with local test markets before scaling nationally or globally.
7. Narrow a broad-appeal product to serve a niche market. With the rise of social media, many businesses are targeting specific niche interest groups, such as travellers, hobbyists, or support communities. In TV, this is known as “narrowcasting,” where specific channels are designed for niche audiences, like those focused on golf, classic shows, or history.
8. Offer a vast selection of products (think big). This strategy has led to the rise of big-box stores like Walmart, Lowe’s, and Home Depot. Online, companies like Amazon and Alibaba have implemented this model, giving customers the convenience of one-stop shopping while benefiting from economies of scale.
9. Specialize in-depth expertise and personalized service (think small). This is the opposite of the “think big” approach, seen in local hardware stores where knowledgeable staff offer specialized products and expert advice. Online, this trend is reflected in websites offering custom designs and tailored products for customers looking for a more personalized experience.
These examples demonstrate the abundance of business opportunities that don’t require inventing an entirely new product or technology. I always remind new entrepreneurs that business success hinges more on execution and the quality of the team than on the idea itself.
By evaluating the size of the opportunity, you can take a calculated risk instead of blindly stepping into the unknown. Calculated risks are less likely to lead to failure and are far more likely to result in success and enjoyment. So, before sending your next world-changing business plan to an investor, take a moment to think it through.