Is a Good Business Idea Enough?

Many people think that good business ideas are what make startups into billion dollar multinational corporations. Think Netflix, Facebook, Uber and all the other greats – they have all grown from that first light bulb moment to companies the world cannot imagine doing without.

But good ideas are not enough. As we will discover, some startups were based on really good ideas – concepts which on paper look solid – but eventually, they failed. Where did they go wrong? Lets examine a few examples:

1. Lack of a solid business revenue model

Some startups are forced to close when they fail to demonstrate that the product they have can make enough money for investors to feel it is a worthwhile venture. Epiclist is the perfect example of this. It was an app that allowed users to track other people’s trips as inspiration to plan their own. The founders developed the app and it was insanely popular, peaking at 10,000 users within a few months of launching. However, because they failed to come up with a sufficiently convincing monetization plan, they failed to secure enough funding to continue their operations.

2. Choice of team

WebVan is another American startup that was based on a great premise but failed – this time because of an incompetent team. While several other factors contributed to their failure, a competent leadership might have helped steer the venture away from danger. The founders hired a team which had no industry experience and subsequently made a string of poor decisions that ended up in huge losses.

3. Poor product design

In 2012, Google released Google Glass into the market, and unlike many of its other products, it was a failure almost immediately. On paper, a pair of smart glasses that could perform various functions seemed like a solid idea. However, in reality, the designers failed to consider privacy concerns. Worse yet, it was plagued by safety issues. This lack of investment in the product design made the idea an instant flop.

4. Didn’t solve an actual problem

The best products solve an existing need in a client’s life. A business idea could be clever, but if it does not actually resolve a problem, then no one will buy it. Coca Cola learnt this the hard way when it launched a new product called “New Coke” which was supposed to enhance the taste of their traditional recipe. The thing is, no one had ever complained about the original flavour. In fact, people loved it. So, when New Coke was brought into the market, it did badly. Coca cola was stuck with tonnes of unsold inventory and made huge losses.

Indeed, great ideas could one day become great businesses – that is not in dispute. What needs to be acknowledged is that there are other factors, and these could be the difference between success and failure. They’re worth looking into, aren't they?