Hello All! Today we have a guest post by Kristoph Matthews of SmashingEntrepreneur.com. Do you have business ideas? Kristoph can help.
The mood seems to be improving as we hear the media speak of increasing productivity and hiring in our economy. Many experts even say that we’re finished with the recession following the huge financial industry melt down from years prior. Are the pundits right, though? Consumers still aren’t spending because of higher food prices, and just walking along the streets of San Francisco I’ve noticed things haven’t changed so much. I have no idea whether things are on the upswing, but I also know that it doesn’t matter.
As entrepreneurs and investors, we cannot be victims of external circumstances. My first foray into the pursuit of wealth was through the commodities markets, and I was disappointed to see trades I had made go sour due to bad conditions in the market, even after I had done my research. I realized that it’s just impossible to have complete foresight regardless of one’s skill level. In any case, I knew I had to take full responsibility and couldn’t blame the markets, and considered how I could maximize my chances of making consistent money, regardless of how the economy and markets shifted.
Essentially two ways to make money exist:
1.) you can either invest your time, ideas, energy, or money into other people (e.g. by investing in or working with other companies),or
2.) invest in yourself (by starting a company).
Notice I mentioned investing in people, and not necessarily stocks, gold, or financial instruments. This is because creating wealth in the end is all about creating value for other people. Despite how the economy turns, you can profit if you address people’s unchanging desires and needs.
Whether you choose to invest in a business or create one yourself, you should consider the following three criteria of businesses that don’t have to compete:
1. The niche must be one in which the customer is trying to avoid an intense pain or satisfy an irrational desire for something.
Sure, people don’t buy lettuce because they have an irresistible craving for it, yet it sells. It’s a commodity, however, and it will only sell at the lowest price offered. In times like these where consumers’ budgets are already strained, they will compare products and choose the lowest price if it’s a common product. If it’s something that they consider to be a necessity, they will figure out some way to pay for it.
2. The customer must be proactively looking for a solution.
You never want to be in a business where customers need to be approached and convinced of the value of a product or service. The business should address a benefit, need, or solution that customers are already searching for.
3. The customer must believe that few or no alternatives exist to the products/services in your business of interest.
If your business can be compared to others, yours has to compete (usually based on price), causing sales to reflect economic trends such as consumer sentiment. Create or invest in something so unique that customers have no choice but to go to it.
I hope this gets you to think of money making ideas by the value they create for other people, and not just by how they are trending. Trends can change and are largely unpredictable, but peoples’ needs will remain. I’ve helped people at Smashing Entrepreneur develop ideas for making money such that they haven’t had to compete with big companies or worry about unpredictable economic trends. The main thing they learn is that it’s not about creating something that’s cool, or selecting a trendy market, because those things can change. It’s about figuring out what people need or want badly and offering it to them in a remarkable way.
You can see more of Kristoph at SmashingEntrepreneur.com – A young entrepreneur’s guide to harnessing passion, ideas and business to live an epic lifestyle.
A recession proof business sounds like a good way to go, eh? I recently heard that the wedding industry has fared quite well during this recent downturn, possibly due to those “irrational desires.” Do you know of any others?