AP 0872: Is It a Good Idea to Start a Business If There Is No Competition at All?

AskPat 872 Episode Transcript

Pat Flynn: Hey, what's up everybody? Pat Flynn here and welcome to Episode 872 of AskPat. Thank you so much for joining me. As always, I'm here to help you by answering your online business questions five days a week.

We have a great question today, coming from Taher, but before we get to that, I do want to thank today's sponsor, which is FreshBooks, one of my favorite companies because they help me and serve millions of other small businesses with helping us manage our business finances, from keeping track of our income to our expenses, but also invoicing. If you do any billing of any kind to students or businesses or whatever, you can create an amazing-looking, professional invoice in less than thirty seconds with FreshBooks, and then even keep track of your payments but, also, who has yet to even open those invoices, which makes it really easy to follow up with people. You can check out FreshBooks for free for thirty days to help you manage your business finances by going to FreshBooks.com/askpat. Just make sure you enter “Ask Pat” in the “How Did You Hear About Us” section. Again, that's FreshBooks.com/askpat.

Here's today's question from Taher:

Taher: Hi Pat. I'm Taher from Bangladesh and I admired you for the past six years. My country doesn't have any kind of automated checkbooks . . . and many other things that other developed countries have. There is a great possibility that I can pull off something big if I start right now. I did many searches, went to many experts and work people. Now I want to know, what do you think about it? My question is: Do you think it's a good idea to start a business if there is almost no competition at all? . . . Love you, have a nice day.

Pat Flynn: Thanks, Taher. I appreciate the question. No worries about the English, I think it was fine and I think we all got the gist of what's going on. Is it a good idea to start a business if there's no competition at all?

First of all, it depends. There's a lot of things that can work out really well, but there's also a lot of things that you're going to have to work hard just to make sure first. Because you have to be a little bit worried when there's no competition. You have to also kind of ask yourself, hmm, I wonder why there's no competition? If you could dive into that a little bit, it might help you understand what you should or shouldn't do.

The benefit is, obviously, that if you do something and there isn't any competition, you're going to be first to market and if you're first to market, you're always going to do much better, at least at first. Then you also have to realize that first to market is not always best to market. Keeping on track of what's happening after you come out and competitors who will come out of nowhere, they will oftentimes come out with better stuff. You have to make sure that you go out there and you are keeping track of who else is coming in, entering in that space, so you can sort of be ahead of everybody else. That's the benefit of actually going into a space where there is already competition. You can do market research on what is actually happening already in that space and what's missing, and you can position yourself. It's very hard to position yourself in a space where there are no positions to begin with. The standing out of the crowd aspect becomes very difficult when there is no crowd there. You're going to have to make, almost, that market happen.

Get involved with beta testing and validating first. This is where my new course, Smart From Scratch, comes into play. Going out there and having conversations with people first to make sure that this is something that people want. Yes, you wouldn't be able to do the part related to finding your competitors and researching their products and understanding price points, which is another benefit of going in where there is already competition. You'd be able to understand what the price points are and where you can come in and what value you have to add versus others.

Having conversations with people and testing and actually having beta users first, or a founding group of students first if it's a course, or software testers first is great. First of all, if you can't get anybody to test your thing, then that tells you something. Even before building it, you want to make sure that people know what it is that you're doing. I would create wire frames for it or some sort of prototype and then understand how people think about that. That information is going to be the first set of information for you to help you move forward as you build this thing out, potentially, or it could give you very quick validation in terms of, well, that's why nobody did it, because nobody wants this or people have a hard time understanding it. As you begin to have conversations and tests, that's going to give you answers for what you can do to keep moving forward.

You're going to be met with roadblocks, Taher. You will, but at each of those roadblocks, I would try to understand why that roadblock exists so that you can go back and make conscious decisions in terms of, well, that shouldn't be done this way, let's do it this way instead. Or, wow, it's very obvious people don't understand this, let's first educate them on this and see if it's something they want to be educated in. You could see how, by taking this in a very iterative process, step by step, first by validating the idea with others and then getting a test group in there, and then building out the product and going from there. That's how I would go about it.

The story I'm always reminded of is the one of how Segway kind of started. Segway is that thing you stand on and it has two wheels and you kind of move forward and backwards and you can spin around. You see them a lot in malls, where security guards are using them, or around touristy cities, people are taking Segway tours. The person who invented the Segway, he wanted to revolutionize transportation and just how people got around. There was no market for anything like that. Although Segway is there still today and it's probably doing well—it's not in the same market that it initially wanted to be in—but the only way they figured that out was through testing.

It didn't satisfy what they thought this big thing that they were going to do and satisfy, which was revolutionize how people got around—it sort of failed in that regard—but they've had to make changes. It wasn't successful in their first sort of why they wanted to do this. Because it's interesting and innovative, they were able to figure it out, and there's been other things like the Segway that have come out. Because it was so new and innovative, they didn't know how the people would respond until it came out and so, of course, people saw it and some people thought it was cool, but it wasn't anything people would want to just change how they got around, just in normal everyday life.

Taher, hopefully that makes sense and gives you some inspiration there. I would just say keep going and talk to people as much as you can and try to get a set of beta students or a group of people to say, yes, they want to try this thing out, and then go and build it. Thank you so much. I want to send you an AskPat T-shirt for having your question featured here on the show. You'll hear from my assistant, Jessica, in the next two to three weeks and we'll get that hooked up for you.

For anybody else out there who has a question and, if you want it potentially featured here on the show, all you have to do is get on over to AskPat.com and you can ask right there on that page. I also want to thank FreshBooks one more time for being awesome and offering everybody here a 30-day free trial. All you have to do is go to FreshBooks.com/askpat and make sure you enter “Ask Pat” in the “How Did You Hear About Us” section.

Finally, here's a quote to finish off the day by Ruth Gordon: “To be somebody, you must last.” Take care and I'll see you in the next episode of AskPat. Bye.