Is it Frothy or Not? Can You Build A Business?

Posted: Feb 28, 2012 12:01 AM

Since so many people are either out of work or leaving the work force, starting their own companies becomes a palatable idea. I was talking with a few friends the past few days about entrepreneurship. We were discussing the frothiness of certain business ideas. Is it getting frothy, 1999ish or not? All of us had been through the wars, and have long memories. Over the past 90 days I have seen more than 80 business plans or heard ideas, and these friends of mine had heard about as many.

They said they are seeing some frothiness because of framing. Entrepreneurship is not an attitude like this, “Hey, I’d like to get a piece of that action….(especially since I don’t have a job, yet)….Let’s see, what can I come up with that might sound good and have a chance of getting funded?” That’s more being driven by greed instead of need. Like pushing a noodle by thinking of developing something. It’s central planning. Somebody trying to dictate to the market, and do it with other people’s money.

True entrepreneurship is different. It’s solving a problem with a solution. If the solution is innovative enough, and the problem big enough it will scale up and create a lot of impact. You will know if you have a good idea because the market will validate it. You’ll have customers and your customer base will grow. They will instantaneously “get” what you are selling if you have positioned it correctly. That’s the market talking, a horizontal play.

Start ups that have really long sales cycles burn through their working capital. Some are on the right track, might be ahead of the market. Some are on the wrong track and the length of the sales cycle should be telling them something. If they are listening to their customers, they have a better chance than if they try to dictate to them.

I saw a tweet the other day that sort of bugged me. I follow FAKEGRIMLOCK and the mechanical dinosaur tweeted: WHEN WORLD IS WRONG, RIGHT ANSWER IS CHANGE WORLD! #BEONFIRE. Normally, I love his tweets and agree with them. But this one hit me funny. The world might be wrong. However, it depends. If all your target customers aren’t buying from you, the world isn’t wrong. You aren’t solving any problem that they have. That means you don’t have a business, or you need to pivot to solve their problems/needs.

It’s very difficult when you are passionate about an idea. Emotionally, you get tied up in it and you think the world is not as smart as you. There are some cases where you are right and the markets wrong. But, most of the time other factors are at work that are causing you problems. Figure out why. Take a step back and have an out of body experience and see how you can change what you’re doing to match the problem people are telling you about.

Entrepreneurs can’t go through life believing the world is wrong, unless they build something to change it. If businesses and people flock to the change, the entrepreneur was right and will make a handsome profit. Otherwise, they fail and move on. Simple as that.