Ideas vs. Opportunities

Looking at how ideas and opportunities fit into becoming a webmaster.

Ideas

Finding a good idea is an important part of the webmaster process, but a good idea is nothing more than a tool in your hands. It is the one of the first steps in the process of converting your creativity into productivity. In general, most people overestimate the quality of their business ideas. This is due to the media constantly pointing out oversimplified accounts of the ease with which such ventures as Google, YouTube, MySpace, and other internet companies have made their founders wealthy. Another reason is that most people who work at normal jobs are sheltered from the harsh reality of the business world where the success rate is low and there is a big cost of failure. Consequently, they underestimate the importance of what it takes to make a business succeed. Sitting around speculating about how much money you can make is fun - doing the work to make that money isn't always.

Finding Ideas

Many entrepreneurs draw on past experience and notice patterns that lead to the recognition of an opportunity. For example, during travel to Europe the eventual founders of Crate and Barrel frequently saw stylish and innovative products for the kitchen and home that were not yet available in the US. When they returned home, they created Crate & Barrel to offer those products. One of the most popular places that entrepreneurs draw experience from is their past jobs. The recognition of ideas is a creative process that can be intuitive or inductive and, therefore, is driven by different sides of the brain. The left side performs rational and logical functions, while the right side operates the intuitive, creative, and non-rational modes of thought.

Coming up with ideas has always been one of the easier things for me but it seems to be one of the hardest things for most people. I think one of the reasons for this is because the question is too easy. When people ask me what they should do I ask them how do they spend most of their time outside of work? What activities do they do the most? What subjects do they talk about the most with their friends? What subjects do you know the most about? Most people, in my opinion, are experts (or close to it) in about 0 to 3 subjects. Those are the areas you should be concentrating on.

Opportunities

A business opportunity occurs when favorable circumstances allow for money to be made. An opportunity has the qualities of being attractive, durable, timely, and is related to a product or service that creates or adds value for the end user. Opportunities can be created when there are changing circumstances that lead to knowledge and information gaps in an industry or market. In other words, the changing circumstances create a situation where there is unmet demand. Don't make the amateur mistake of estimating unmet need by looking at total demand. Many amateur entrepreneurs fall prey to the "1% myth". They look at big companies and say to themselves "Even if we only get 1% market share we will still make a lot of money".

Opportunities vs. Ideas

One of the biggest mistakes non-business people make when they get into business is they mistake ideas for opportunities. Just because you have an idea, doesn't mean it is an opportunity. For an opportunity to exist there have to be 2 conditions present. First, there needs to be an unmet need in the marketplace, and, second, you have to have the ability to satisfy that need. The first condition (finding an unmet need) means there has to be a situation where there is not enough supply to meet demand. This doesn't mean that because there is a high demand for a product there is an unmet need. Online shoppers spend billion of dollars each year buying books online. So, if you set up a web site to sell books online does this mean you are filling a need? No, because Amazon.com is already filling this need and they are doing it very well. The second condition (having the ability to satisfy the need) means you need to have the particular skills to be able to capitalize on the opportunity.

If either one of these two conditions is missing then it won't work. If condition #2 is true (you have the skillset needed) but condition #1 isn't (there is no unmet need) then it isn't an opportunity. If condition #1 is true (there is an unmet need) but condition #2 isn't (you don't have the skillset needed) then it is still an opportunity - just not an opportunity for you.

The people who are able to satisfy condition #1 (find unmet needs) but not #2 (find areas that meet their skillsets) are able to come up with great ideas for web sites but can't execute them. They may be the kind of webmasters to create a certain concept, but more competent competitors easily overtake them. While those who are able to satisfy condition #2 (finding areas that meet their skillsets) but not #1 (finding an unmet need) are the type that of webmasters that set up a good site but the site will have no competitive advantage over other sites because it probably won't be original or will be operating in an incredibly crowded market.

Idea Analysis

The process of screening and analyzing web site ideas is a key step in determining which are actually opportunities around which a plan, and then a site, should be developed. You need to be able to analyze the attractiveness of a web site idea. Some of the criteria for evaluating an opportunity are:

	THE MARKET - Market size (how big is the market), market structure (is the industry mostly made up of big players, small players, or a mix?), growth rate, and cost structure
	ECONOMICS - Time to break-even, ROI (return-on-investment) potential, and capital requirements (how much money will I need?)
	EXIT - Exit strategy and mechanism (If something goes wrong can you sell your business? how?)
	COMPETITIVE ADVANTAGE - Barriers to entry (how hard is it for new people to come in and compete with you?)
	PERSONAL CRITERIA - Good personal fit (does it match my skills?), opportunity costs (what else could I be doing with my resources?), desirability (how bad do I want it?), and personal risk tolerance

When it comes to finding out whether you have the ability to take advantage of an opportunity there are two requirements - skills and passion. First, a good rule of thumb to see if you have the skills you should ask yourself, "How will my web site be better than my competitors' web sites?". If you can't answer this question then you are in trouble. And your answer has to be honest and specific. By specific I mean you can't simply say, "I'll have better content". In that example you would have to have your content mapped out and point out the content that is better than your competitors and how you will actually come up with the content and how long it will take.

Secondly, when it comes to passion, you need to ask yourself whether this is something you really want. This is a very personal decision and your answer needs to involve a lot of self-honesty. Many people think they want to get into something when they hear how much money other people are making at it, but they need to take an objective look at themselves and the idea to see if it is a good fit.

Advice

Stay away from trendy sites. You don't want to be an imitator. There are too many webmasters out there trying to be the next HotOrNot by setting up a pic-rating site. Or trying to by the next big social networking site by setting up a site where people can create profiles. By the time you set up your site, the trend will have cooled off. If you're always looking at other sites, then you will just be a follower and not a leader. Imitator sites should only be done as novelty sites - Millionpennyhomepage.com was a good one.
Stay from links pages and directories. There isn't much of a competitive advantage here.
Look at unwanted markets. Sometimes established "unwanted markets" can offer opportunities simply because people ignore them. Most people assume that mature industries that have no growth are bad, but the general lack of interest can lead to a lack of innovation that can create an opportunity. A non-web example of this would be satellite radio - an industry that was ignored for half a century.
Stay away from "network-effect" sites. As a small or medium webmaster you want to stay away from sites like social networking site, dating sites, or job sites. Without huge volume these sites are worthless.
Don't bother setting up an "Everything Site". Some people make the mistake that the broader the site is then the more successful it will be. You'll see this now with people trying to setup the next Craigslist. You don't want your site to be too broad because it will lack focus and identity.
Look at big categories from a niche perspective. The biggest areas aren't necessarily the ones where you want to be. Because they are the biggest areas they also tend to be the most competitive. The biggest category on the internet is probably sex. If you are planning to create a site about sex, then you should create a site about celebrity sex tapes or something like that. Instead of creating a site about poker, create a site about poker chips.
Don't chase the big blockbuster idea. It is too high risk. It will have to be perfect in order for it to succed.