16 June 2011 ~ 11 Comments

How Important Is a Needs-Based Business? – FA056

Audio

Tim and I sometimes agree, and well, sometimes we don’t. And that’s okay, because it makes the show interesting, right?

In this new episode of Foolish Adventure, we have a bit of a debate about what’s more important: building a business about something we love, or building a business to meet a customer need?

After you listen to the show, let us know your thoughts in the comments…


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  • http://www.simplemanblog.com Brandon

    Great episode guys. I loved the Millionaire Fastlane book, and have spoken with MJ a few times via email. Nice guy too.

    I totally agree with the the point of building your business around a need and not necessarily your passion though sometimes they may overlap.

    But you can still Fuel your business from your passion. So if you love fishing, you build up your business so that you can get a fishing boat and go fishing everyday. So your passion to do that drives you.

    For MJ, I believe it was wanting a Lamborghini.

    Also, particularly online, the need your are filling with your product or service needs to be built around a persons pain points or deep desires. People aren’t really doing this.

    They see a certain amount of monthly searches for “How to Get a Job” and so they build a huge site around this and try to promote some Clickbank product.

    People don’t want to buy an e-book to fill this need. They want instant info about this for free.  There are probably better examples but that one comes to mind. :)  

    I guess my long-winded point was it needs to be a need, but also you must get in the mind of your customer and make sure that it is a need that people are willing to pay for.

    OK. I have rambled enough.

    Great show guys.

    Brandon

  • http://www.andrewsviewoftheweek.com Andrew Reynolds

    This is exactly where I am right now.  I don’t have a business yet – just started
    thinking and researching what I can do a couple of months ago.  I am looking to set something up that would
    help me retire early from a long high tech career.  The decision I’ve made so far is to keep
    working for a few more years to complete some savings and investment goals and
    then set up a part time business that will provide some supplemental income
    plus be a creative outlet (and to keep me out of trouble with my wife).

     

    The dilemma for me is that I could set something up based on
    what I’ve done in my career or do something with one of my passions
    (woodworking, hiking, history, marquetry, quilting, etc).  While I could do a thing from my past career
    I fear that I’d lose interest or that I’d get sucked into the whirlwind that is
    Silicon Valley and not be retired anymore.  On the other side the fear is taking a hobby,
    making into a business and losing the enjoyment and passion of the hobby.

     

    At this point I am thinking of just taking one of my
    hobbies/passions and build a web site and info product around it to see if I
    can build anything worth while and if I can keep my passion and interest
    going.  I have started a bit of personal
    blog just to see if I can keep up a regular writing schedule and keep a decent
    quality.  It’s not focused or anything or
    ready for prime time but it is helping me figure out how much I can do part
    time and what I like to regular write about. 
    Possibly might become part of a product/business some day.

     

    Thanks for the show today. 
    I’ve listened to all of them and they’ve helped my thinking a lot.

  • http://www.tyroneshum.com tyroneshum

    Hey Izzy and Tim,

    Everytime I listen to your podcast I feel like I already know you as friends and it’s amazing how I feel connected to all your content. I just wanted to say that MJ has a very cool story and I had heard of him through Pat Flynn who interviewed him for one of his podcasts. I speak with Pat every week and he shares with me inspiring stories like these and it’s really cool to learn from everyone of them.

    I want to share my opinion on this as I’m more inclined to say for beginners I would recommend them to start off with a needs-based business. Reason is there’s already proven market stats to help them determine if people need that service, product or information and you can see how to improve on what is currently in the market. Just from my experience as I’ve met a demand in a very specific niche (dragonboating) in the past it was much easier to sell and offer a product there, than to go out and start a business on something that was not known by the market place, e.g. toilet deodouriser – which I tried for 6 months and failed because it was not what the Australian market wanted.

    Also too, passion can come into a need’s based business and can be shown through different ways. Just as Tim had pointed out he was passionate about customer service and building the business for his pool business, but hated the pool products – which I could relate too. Though it’s definitely possible to outsource and hire people to run your business whilst you focus on the aspects that you enjoy or are passionate about.

    Anyway I think I’m starting to get side tracked, and I just wanted to say how awesome your show is and I’m one of your biggest fans.

  • http://FoolishAdventure.com Tim Conley

    The best of both worlds would be to be passionate about a needs-based business. This is really rare though, but worth looking for.

  • http://FoolishAdventure.com Tim Conley

    Thanks for listening to all the shows. Let us know what business you end up starting.

  • http://FoolishAdventure.com Tim Conley

    Thanks for listening Brandon and rambling is welcome at Foolish Adventure. Great points even with the rambling. :-)

  • David M.

    Great podcast. I can say as someone who has started a “needs” based business that it can be a very good way to start and to make the jump from a corporate job. 

    For all entrepreneurs I would caution against relying too much on your business sale value as your retirement plan etc. Most people don’t build a business they can sell as they are too closely ingrained in the business. Others expect 15x (i.e. S&P style) multiples. Inc magazine had a great article a while back showing small business multiples (which were really closer to 2-8x) and talking about how with the babyboomers retiring soon there would be a drop in valuations as more businesses would be on the market. Probably a great opportunity for someone who wants to do a roll-up in one of these industries!

    Cheers,
    David M.

  • http://FoolishAdventure.com Tim Conley

    Great points, David.

    DeMarco doesn’t say that most businesses don’t sell, but his book is focused on his method of building a salable asset.

    We’re already seeing depressed business sale prices now in the US, while seeing a bubble in startup investing. I guess value-based investing isn’t popular right now.

    Buying other businesses makes a lot of sense even with Internet-based sites — especially those that have a system to generate cashflow.

  • Pingback: Needs vs. Passion Based Business | a 4-Hour Workweek blog

  • http://twitter.com/rasmusl Rasmus Lindgren

    Hey guys

    Let me start out by saying fantastic job on the podcast, I probably found you a bit late, but you create excellent stuff.

    In this episode you have a great discussion, but I kind of miss your actual recommendation on this. You do an excellent job of discussing the two approaches to starting an online business, but I would really like your input on this.

    Traditionally I’ve always adviced people to find the market first before the actual product. When that is said I still think that you could select a niche you’re somewhat passionate about in order to be able to focus on this for a longer period.

    There are “needs” in most niches, so I would however do serious research into where the this need is (and find the market first). If you got an idea on how to reach your market, you are in a much better position than if you “just” got a product.

    As a tribute to Izzy I also tried to make a video where spend a little too much time explaining this :)
    http://my4hours.com/needs-vs-passion-based-business

    I know that my hair get’s cut off, I’ll promise that I’ll do better the next time :) .

  • http://FoolishAdventure.com Tim Conley

    Rasmus,
    I just responded to you on your site.