In my initial model for side projects I acknowledged a missing element; the market. Now for many side projects this doesn’t necessarily matter, they’re more about satisfying the project creator than anyone else. However, if you want that project to grow into an economically profitable venture you need an audience who are willing to pay for the product or service you create.
The missing dimension then is ‘the Market’ and for the purposes of the model I would picture it as a force pushing or pulling through the aperture created by the overlapping space between the three existing elements of Personal Passion, Professional Competence, and Tomorrow’s Plan. If you have a good overlap in those elements you possess a good base from which to try and pull in interest, or alternatively it means there is a good portal through which market interest can flow, unimpeded because the three existing elements are positioned well.
Before I talk further about this 4th dimension it’s worth highlighting the impact of the first three in trying to start an economically viable venture.
Personal Passion: increasingly companies are trying to reach us through creating compelling brands that seek to radiate personality, authenticity, and passion. If your business is founded on your own genuine interest you should find it easier to create and sustain a compelling brand. Customers, suppliers, and collaborators should warm to your own love of the business.
Professional Competence: people prefer to buy quality goods where they can, and they expect good service, if you can deliver a professional experience you’ll get recommendations and referrals. Professional competence is also about efficiency – do your skills allow you to consistently deliver quality on time, again and again in a manner that you can sustain or will a lack of essential skills disrupt or distract from your offer?
Tomorrow’s Plan: starting something successful is hard, as famously set out by Thomas Edison as “One per cent inspiration and ninety-nine per cent perspiration”, so being committed to what you do is a great foundation for a business. If you’re not committed you may come off the road at the first speed bump. I think customers also like a business that appears confident and upwardly mobile. It’s nice to buy something from a company that is growing and developing.
If any of those three elements are missing I believe it compromises your attractiveness. In fact the respected Business academic and startup expert John Mullins, author of the New Business Roadtest, suggests there are three key factors a startup’s team has to be able to deliver on:
- Mission, aspirations, propensity for risk – are you appropriately driven, ambitious, and conscious of the risks required? (Tomorrow’s Plan)
- Ability to deliver on Critical Success Factors – do you have the skills and will to make the decisions required of the business (Professional Competence?)
- Connectedness up, down, and across the supply chain – are you connected to enough of your stakeholders (buyers, suppliers, champions, expert supporters) to adapt and adjust as the business changes? (this is less obvious but Personal Passion for a subject can include knowing the right people, being authentic with them, and having that network to draw upon)
Understanding your Market (and Industry)
Mullins also has another four domains in his seven-part model though – and these are a good way to illustrate the 4th dimension of my model – the Market.
By Market I mean – who wants your work anyway? who are they, where are they, how many of them are there? how much will they spend? how often will they spend it? Without enough people paying enough to cover your costs and make a profit you have an expensive hobby not a business!
Mullins proposes firstly to split Markets (audiences for goods) from Industries (groups of suppliers of goods) and this is a valuable insight – for example the market for smartphone apps looks attractive – a growing global customer base, a simple route to market through established online stores, and potentially low overheads. However, as an industry it is saturated – there are so many apps and app-producers that the odds of any given app making money are extremely low unless you can cut through the noise somehow and get noticed. Interesting market, challenging industry. Likewise there are attractive industries with few competitors but the market may only consist of a small number of customers all wedded to existing offers.
Understanding the Macro and Micro views
Mullins then uses macro and micro lenses on both Markets and Industries. At the Macro level how big and attractive is the overall market for your work, but also at the Micro level who exactly is your segment of that market? Who is your niche demographic and how attractive is that group to sell to? It may be that the overall market is growing but your niche is shrinking – or vice versa. Likewise at the Macro level how is your industry faring, what are the major trends? And then, going Micro, can you sustain any competitive advantage you possess against other competitors in the short and long term?
Mullins’ premise in his model is to research and test your idea against the realities of running a business. In his parlance, conduct a road-test before you commit to investing.
You may still have a satisfying side project, you may have a lifestyle business that provides a little extra income, but it may not be a route to riches. In a future blog I’ll take this process up further and look at the Lean Startup methodology as a means of testing the business element of your side project out.