When I think about one day starting my own business I generally put my options into three categories:
- The Big Idea: Come up with the next big idea that will either completely revolutionize an industry, or maybe even create a brand new one. Examples of this in my mind are companies/ideas like Microsoft and Under Armour.
- Build a Better Mousetrap: Improve on an existing idea or business model, even a very simple one (like a mousetrap), thereby giving my company a competitive advantage. Examples include the Apple iPhone, a specific niche of investing and our friends at Game Wager.
- Execute and Outperform: Take a classic business and just do it better than your competitors. This can include anything from the restaurant business to air-conditioning service to private equity investing.
While there are shades of grey in between these categories, and there are numerous sub-categories one could create within each, I think this provides a framework for aspiring entrepreneurs thinking about how they will successfully start a business. Each option presents its own challenges, opportunities, positives and negatives that must be weighed.
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Positives |
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Negatives |
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Big Idea |
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· Huge profit potential (e.g. Bill Gates) · Clear competitive advantage with little to no competition |
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· Much more difficult (i.e. lower chance of success) · Waiting for a big idea could be a non-starter |
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Better Mousetrap |
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· Likely defensible competitive advantage · Large profit potential (e.g. Apple’s run the last two years) |
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· Not as much upside as Big Idea · Competition can adapt quickly |
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Outperform |
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· More business opportunities (i.e. easier to do) · Good profit potential (millions of small business owners can attest) |
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· More competition · Likely lower profits than Big Idea and Better Mousetrap |
Everyone would like to come up with a ground-breaking idea and reap the huge rewards that it can lead to. However, the majority of people will not generate such an idea and must rely on one of the other two options. The fact is, that does not mean one can’t be an entrepreneur – in fact, it might mean you have a higher probability of success.
I would love to hear your opinions on these observations.
