Using a non-negotiable list to do decide if a business idea is good or bad.
Most start-ups fail, in fact in a good year 9 out of 10 will. Even if the business can generate sales, less than 97% of all entrepreneurs out there ever do more then on million in annual sales.
You’ve heard business ideas are garbage without execution, but before you execute, you need to make sure the business idea you want to build is truly aligned with your values, otherwise you could build a business you hate.
Recently I explored building a new kind of dating app, in this article I’ll share my non-negotiable list and in the video below I’ll share exactly what I did, and learned using that value system.
Whenever I consider launching a new business, I first want to make sure it is aligned with my value system, if it isn’t. I’ll kill it and forget about it.
Here they are the four that matter most to me.
#1 – PASSION I must have a burning passion for the business model. Stop doing shit you hate. Starting a business is exceptionally hard, so I refuse to put my time, resources, and thoughts into something I don’t love. For me, I am single, and I learned online dating has a horrible ROI for what I put into it. For the time you spend, the return is terrible. Fake profiles, endless chats back and forth, and poor quality dates are very common. It was a big itch I wanted to scratch, so I knew I had the passion for it.
#2 – MUST BE SUBSCRIPTION BUSINESS – I’ve run both a subscription based business that generates recurring revenue, and sold to one time customers. I only want to sell a service or product that has subscribers. A customer that buys from you month after month is far more valuable than someone that only buys once. Users of online dating apps return monthly, so it is definitely subscriber based
#3 – LOW STAFFING COSTS – Human resources are expensive, so I want to keep this cost low. It’s not uncommon for employees to run 50-70% of your operating expenses. On top of that there are payroll source deductions, taxes, and multiple other hoops the government makes you jump through with staff. If that’s not enough of a hassle, you’ll always need to contend with wrongful dismissal claims, even from poor performers, and the drama of who is sleeping with who in your office. Whenever possible, I want to keep my headcount lean.
#3 – MUST HAVE A BIG UPSIDE – I refuse to put effort into a business that has very little growth potential. I know for a fact that on line dating has huge upside; recently POF sold for more than $550 Million. If you can build a successful platform, and acquire users, a dating app can be very lucrative.
Establishing your non negotables is one thing, but now you must confirm the business model is actually aligned with your values. To do this I use tools like Clarity.fm, Google, Alexa, and YouTube. But I don’t stop there, it’s not uncommon for me to spend days researching a business idea and talking to as many people as possible.
If it looks good and I learn it’s still aligned with my non-negotiable list, I’ll proceed, if not, I have no issues killing the idea and walking away from it.