Is due diligence important?

[AMLatham]

This is my recent lesson learned (again).

Soon after I began to hear whispers of the US Dollar potentially failing and that people might be looking for a safe haven to protect their wealth I had an idea. It was to provide lead generation for gold selling stores locally and hopefully nationwide a la limos.com. It hinged on the eventual rush into gold that would take place as faith in the US Dollar degrades. Had the following not been true this would have been quite a cash cow. But...

My mother to pointed out to me that she could just go onto the internet and find a place that sells gold on Google Places. She also pointed out to me that I wasn't adding any value to the process, only complicating it for the people who are looking to buy gold. As I looked at my idea critically I realized that the acquisition of gold on the part of buyers is not a problem. That gap has been adequately filled by any number of other businesses.

Because I did not think about it clearly, ask the right questions, and pull in the proper data at the start I am out a little cash and up a domain name. I have found another use for the domain, but this is a lesson that I am glad I learned the 'easy' way.

I have no process for this kind of research and as I understand it everyone comes at it a little different. My plan of action for the future is to write out a simple process to follow when looking at the practicality and feasibility of my ideas.

What process do you use when you look at an idea?

In short my answer to the thread topic is 'yes'. What is yours?

 

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[Jake]

Yes

Is it something people want or need? Can I add value? Can I do it cheaper? Are the potential profits worth my time and investment?

Have you thought about using your site to advertise online sources? One potential flaw in the idea is if there is a RUSH into gold from a dollar collapse the gold market dries up and you're essentially out of business. A slow shift into gold is what you would want if you were getting paid in $ for your efforts.

 

[The-J]

Sounds like you've hit a snag in your current idea.

Ditch it and move on.

The process I use is the one outlined in the book. First examine the idea itself: who does it help? How does it help them? What is the problem that it is solving? Is it the easiest solution (for the customer) for the problem?

Then put it through the CENTS. That's in the book and has been talked about a lot on the forum (and clarified by me). Putting it through the CENTS shows whether or not it's a viable Fastlane business model.

After it passes all 5 CENTS commandments, draft out the idea and build a plan for what products/services I plan to offer. Those will probably change as I seek market validation, which is the next step.

 

[BBarakti]

Yea, I'm on at least my fourth "plan" (that I've put various amounts of money into developing/ researching).

I can see that this entrepreneur thing is certainly testing of your resolve. Work on a plan, start gather information..etc.., then something comes up that shows it's not valid for whatever reason..

sux.

I guess that's character building though... that's what I'm going with at least.. character building..

 

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[AMLatham]

Thanks so much for the replies! I am currently in the process of ironing out the last details for my wedding in about a month which is why I have been so delayed in responding.

@ Jake: I looked at the different angles and I found what may be a gap that hasn't been filled very well in the online world. I will be filling the gap and hopefully helping people. At this point I don't even want a profit from the site. I realize that might be counter-intuitive, but if I cannot offer something of value for free how can I expect to charge for something?

There are a couple of avenues for monetization that I am considering down the road, but for now I will be offering solid, free information.

@ The-J: Done. As soon as I saw the flaws I started moving to the left and right trying to find gaps I could potentially fill. I also have a number of other ideas that I will be validating when I am done with the wedding. Most are online services and one is a brick and mortar. I will definitely be going back through the book and reviewing the process posited there.

@ BBarakti: I am beginning to see what you mean. By trade I am a maintenance technician. I have always had a manual that tells me how to diagnose a problem and how to fix it. It has been a trial learning to build something from nothing with no guidelines and no helping hand (this forum is a great learning resource as are other forums and books, but none of them will do the work for me or demonstrate principles for me, I am left to my own devices and I must demonstrate my own principles and learn my own way).

 

[leono]

Lately, I've been kind of doing the opposite in that I'm specifically looking for business ideas that have already been executed and thus have competition. Why? Because it proves the idea in some fashion or form works. No wasting time with an iffy idea that may or may not work out. From there, it's a matter of me seeing whether I can carve out a space for myself in that domain, a small space with potential for gargantuan expansion.

 

[MJ DeMarco]

It was to provide lead generation for gold selling stores locally and hopefully nationwide a la limos.com.

I don't get it .. why on earth would you do this? Because I did it?

It hinged on the eventual rush into gold that would take place as faith in the US Dollar degrades.

You've identified a possible need in an underlying commodity, not a need in the service you are providing. Once again, if no one will pay you for what you offer, you don't have a business.

I'd suggest starting a business based on an identified need, not "MJ did this 10 years ago so I'm gonna do it in this industry" -- or, a need that you've proven via your own life experience.

Lately, I've been kind of doing the opposite in that I'm specifically looking for business ideas that have already been executed and thus have competition. Why? Because it proves the idea in some fashion or form works.

Great advice -- established businesses have proven market demand. Speed+

 

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[CommonCents]

Take a look at gold selling consumers. There is an image problem of trust by the "mail it in" gold buying companies. Maybe you focus your efforts on doing lead gen w/ local jewelry company gold buying companies for people who are selling their old gold jewelry etc...

 

[AMLatham]

@ leono: That is fantastic advice. I will be stashing that in my tool box for later use. Thank you!

@ MJ DeMarco: Initially I had the idea because of exactly that. I had a moment of "wait... this could work here!" I do recall admitting it was the wrong direction to go in my first post. I don't understand why you are calling me out on a mistake I already admitted to making.

I will admit here that I am learning. It is slow, but I am still learning. I hope to follow in the footsteps of those who have gone before me. I know this will not be a literal or even similar experience.

As for the business model, lead generation seems like a pretty sound model to use in any number of industries. However, that does not make it a cookie cutter transplant to be dropped into any sector without modification.

@ CommonCents: I looked into that. The problem is as I stated in my first post. You can go on to Google and punch in any number of terms and come up with established local businesses. There is no need, no value offered, not intrinsic, not real, by what I had envisioned at the start.