Three types of business ideas

Three types of business ideas

Lesson Details:
November 25, 2020

Video Transcription: In this video, I want to talk about the three different types of business ideas. This video is brought to you by Appy Pie Academy. and you may have thought well business ideas their business ideas they're all the same but no they're actually not all the same let's kind of categorize them so that you can have some context of how to evaluate each type the first is what I call commoditize and by the way this is my categorization this is something that I came up with you're not gonna kind of see this elsewhere this is not traditional business theory but I feel like this is easy to understand so commoditized business ideas our things that we know and have seen many many times local cleaners roofing business has home repair dentists doctors there's a million such businesses throughout the world every city has them we know them and the steps to pull them off are known a hundred percent precisely because they've been done a million times before even if you don't know the steps maybe there are many people who do and your job is to find out what are the steps get that mentor who is super expert usually a person who's done that exactly the business before and follow those steps as accurately and in this as disciplined manner as possible so you get all the steps right and you execute exactly what's needed to make that business a success and the product and market risk can be minimal because it's known if the demand is known like if you cleaning business you know that it's needed lawn care business you know that it's needed so as long as you provide the service well and you don't start it in an area that already has too many such businesses competing then you should be just fine precisely because it's you know it's a needed business and there's no market risk and the product risk can be minimized by you just executing it well the only problems are but it does are those businesses are not too cool and sexy you know they're not the shiny new mobile app or whatever and not to investable because you know if you have a local cleaning business that's not something that a professional investor might invest in because there's no higher growth there's pretty much no like billion-dollar opportunity but that's okay because those businesses make money themselves they don't need investors for money they can just make money through their own revenue now there's another kind of business as opposed to commoditize business idea on the flip side of that there are innovative business ideas typically using some kind of a new technology that pops up and these make up like new and cool startup ideas like a new Eber things using AI meaning artificial intelligence VR virtual reality maybe drones maybe some some things that are new cool and unique that other people either haven't done or have or very few have done these tend to be very risky because you are doing all the experimenting in the commoditized businesses there's no experimenting they've been done it's known here very little is known you are the inventor you are making the discovery so it's risky now it's it's it's okay to say risky but actually it's more than just a word when you are on the wrong side of risk at the end of that not at the beginning when you're planning and you can say oh yeah I can tolerate risk but when you experience the bad side of what you're risking and you lose money and the business dies that feels absolutely terrible so don't take the word risk likely it's actually very serious one of the most serious things that can be and the biggest risk of course in these businesses is market risk like the new uber now of course we know it works but like when it first started we had no idea so there was a chance that the market wasn't going to adopt it and that's the risk also there's a huge product risk in that it's often complicated to build but the market risk typically outweighs the product risk typically product risk is manageable you ultimately can launch the product the biggest issue is will the market adopt it nobody knows because its innovative but these things have bigger potential these are investable typically and they're typically high-growth because you're trying to dominate a whole new space and you have this tremendous opportunity now let's talk about a third type of idea and that's what I would call hybrid ideas some combination between the two for example tutoring online marketplace like you know tutoring is a commoditized business every city every neighborhood in the world has some sort of a tutoring business maybe it's just individuals maybe it's a office but it's a thing now tutoring online where you can hire tutors online that's kind of new and innovative right same with online courses kind of like what you're taking now courses have been around for a long time but the hybrid is the online part of it where it's accessible online or something like ruber for cleaning services right so cleaning services has been around for a long time but Oberer kind of for them not specifically uber but maybe like easy order service where they just come to you and you order it through an app okay maybe that's a hybrid take on these two ideas so when you evaluate your idea is it a startup business is it a commoditized business so now you're aware of the risks of them and how to look at them and what are the issues involved with them.

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