Create a New Business From an Old Idea
Can't come up with a unique business idea? It may be better to improve upon an old concept instead.
There are no original ideas left.
Sure, it's kind of a cynical thought, but try and brainstorm a completely new concept, whether for a business, an advertising campaign or even a limerick, and you'll start to think it's true. It can sometimes be a stretch to come up with anything that hasn't already been thought of.
It's the reason someone once famously said there are only three original jokes and all the others have been derived from them. It's why Hollywood remakes old movies. And the dearth of original ideas is why businesspeople sometimes pay other businesspeople to come up with a new concept for their own products or services.
Fortunately, if you're an entrepreneur trying to come up with a new business model, you don't have to be completely unique. For instance, you probably wouldn't attempt to sell fingernail clippings in a bag, no matter how groundbreaking and unique the idea is. In fact, if you're starting a business, you probably shouldn't do something that's never been done--after all, think of the learning curve your target market will have to tackle. But you would be well advised to take an old idea and make it new.
That's exactly what David Friedberg did. It was around 2001, Friedberg figures, when he was 20 years old and living across the road from a bicycle rental shop. Every day that it rained, the bike shop was closed. "It became pretty noticeable," recalls Friedberg, now 26 and already an ex-Google executive and the CEO of his own company, WeatherBill, in San Francisco. After watching the bicycle rental store owner get rained out day after day, Friedberg started noticing how many other companies--think golf courses and car washes--were taking a financial bath whenever it was wet outside.
"You don't really think about it, but 70 percent of businesses are affected by the weather every year, across regions and industries," says Friedman. "The weather affects so many different types of businesses, whether in negative or in positive ways, like taxi cabs in New York, which are often full in the cold."
Friedman was a business product manager at Google when he had his "a-ha moment." It occurred to him that he should start an insurance company--a very old idea--but gear it specifically toward companies that want to protect themselves from losing money on a rainy day--a new idea.
It may not sound new. After all, insurance companies generally protect you if you're hammered by a hurricane, slaughtered by a sandstorm or frozen under the tundra. But we're talking about the car wash that doesn't want to lose an entire day of income when there are five inches of rain. That's why Friedberg developed, with his "computer science friends," an elaborate website where anyone can log on and buy a contract to protect themselves from unseasonable weather. The site is completely customizable and automated. A farmer, for instance, could receive money every time the temperature dips below 67 degrees in a particular month. Or if a ski resort has a week and a half of beautiful, balmy weather in January, the owner could automatically receive a check without having to report the weather.
"There is no claims process," Friedberg says proudly. Instead his company uses a third-party weather station, EarthStat, that independently confirms data and sends daily reports to WeatherBill, which then processes the checks and sends them out.
Narrowing Your Focus
Despite such success stories, there are risks to developing a new business within an old framework, says Lenann Gardner, an internationally known sales consultant and author of the new book, Got Sales? The Complete Guide to Today's Proven Methods for Selling Services. "You have to get people to change their behavior to support this new corporate strategy, and that's a difficult thing to do. In fact, it's one of the hardest things to do, to change human behavior," says Gardner.
Narrowing your business's focus is one way to attract customers to your new take on an old concept. "Nobody wants to do business with a business that tries to be something for everybody," asserts Gardner. Granted, tell Wal-Mart that, but she's right. Stores known for having a little bit of everything thrive because the stakes aren't too high for customers shopping for soap, cat food or a lawn chair. But as a general rule, the more someone is spending on an item, the more likely they are to seek out a specialized business.
Take buying a house, for example. Garry Aloia is an owner and managing partner of My First Home, a business that caters specifically to first-time homebuyers. Aloia, who also co-owns parent company New State Mortgage, came up with the idea when he realized that because agents are driven by commissions, "human nature takes over. If there's a bigger commission involved, that customer gets more attention," he says.
First-time home buyers--who make up about 40 percent of the home buying market--are often purchasing smaller residences and are likely getting less attention, reasons Aloia. To remedy the situation, Aloia's My First Home, based in Merrilville, Indiana, near Indianapolis, employs real estate agents who are paid higher salaries--25 percent more than the average agent--but who don't receive commissions. Aloia doesn't see his business as a traditional real estate office, but rather as a home-buying educational and assistance center. The office is even set up to look like a home, complete with a fireplace and coffee. The company offers seminars to first-home buyers, as well as advice and tools to help them figure out what their monthly budget should be after they move in.
What Aloia's business is doing is what all entrepreneurs, whether veteran or novice, ultimately should be doing. "I try to put my feet in the shoes of the customer," says Aloia. "I ask myself, 'How can I make their life better and simpler?'"
Modernizing the Wheel
Some business models only need to be slightly tweaked to appeal to the modern consumer. Want to update the traditional dentist office? Put it on wheels. While cleaning teeth is an industry almost as old as, well, teeth, putting an office in a van that can travel anywhere from giant corporate campuses to nursing homes is a much more recent concept. The rise of mobile dentist offices in the last few years shows that catering to people's busy and complicated lives is a nearly surefire way to improve upon an old concept.
Then there's the Pearson Ford Fuel Depot in San Diego, which has received a lot of attention for its one-of-a-kind gas station that offers a full range of clean-burning alternative fuels from ethanol to BioWillie, a type of biodiesel made from soybeans and promoted by singer Willie Nelson. Gas stations may be becoming synonymous with global warming, but by offering an alternative, this fueling station has managed to drum up publicity while serving an emerging niche market.
Capitalizing on consumers' nostalgia is yet another potential approach. In true throwback fashion, State Street Barbers, located in Chicago and Boston, gives modern hair cuts to men in an environment decked out to look like a ritzy salon in the 1920s. Patrons are given a cold beverage when they walk in and can get a hot lather shave with a classic straight razor and hot towels.
In the end, it's easier to be original and unique in an established industry like home selling or insurance when you have plenty of capital funding behind you; it's another story if you're running a fledgling startup in your parents' basement, and you feel you have to take any client with a pulse and a wallet. But whether you're a big fish in the ocean or a small one in the pond, the principles are always the same. If you're going to tweak a formula, "throw out the way things have been done before," advises Friedberg. "Figure out your end goal, and then forget about what all of the other people have done, and come up with a new way to do it."
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