As a teacher of digital entrepreneurship, I’m always intrigued by the choices my students make about their first business prototypes. What types of digital business ideas appeal to them, and why?
Out of our five basic business types, beginners are drawn to online stores and matchmaker businesses. I think this is because online stores and matchmakers have familiar role models (Amazon! Airbnb!), and their typical revenue sources (sales and transactions) are easy to understand.
But just because they are familiar doesn’t always make them the best starting point.
Perhaps the biggest challenge I see with beginner stores and matchmakers is the problem of testing. Too often, the things they are selling don’t exist yet. Either the products aren’t real, or there aren’t yet enough service providers on their matchmaker site to connect with.
Of course, there are still valid things you can test with a business prototype for product or service that doesn’t exist yet. Will people sign up to be notified of a future launch? Will they provide feedback about the upcoming business? Will they promote it, or support it?
But the fundamental problem is that it’s more difficult to learn from your business prototype when the business isn’t real. Are people not engaging because they don’t want what you’re proposing, or because they don’t think it will ever happen? Even if they do engage now, will they truly be interested later when you ask for their business?
By not being able to test and improve something real, you are giving up many of the advantages of prototyping. You are learning less.
I have two pieces of advice for people prototyping businesses that aren’t real yet.
First piece of advice: consider practicing on something real first.
Don’t neglect pure content and community prototypes, which can create real value for visitors right away, and have plenty of monetization options. Generating advertisement revenue, affiliate commissions, influencer fees, and sponsorships are just as real a test as product sales, and can quickly teach beginners how to improve their business ideas.
Students seem reluctant to help existing small businesses go digital, but it is truly one of the best ways to learn digital entrepreneurship. The products and services already exist, working with real clients accelerates the learning, and the businesses themselves are deeply appreciative.
Second piece of advice: if you are going to stick with a hypothetical product or service, start with a small piece and make it as testable as possible.
For an online store prototype, can we sell at least one thing? Or obtain a request or commitment that moves the customer as close as possible to an eventual sale?
For a matchmaker business, is it possible to recruit at least a few service providers first, and try to find customers willing to engage? The grand vision might be to become the ultimate find-your-gardener or find-a-tennis-coach destination, but can we start with a few gardeners, or maybe even just one? A beginner will learn much more about their business idea from trying to make a real offer, than building an empty matchmaker site or app.
Business prototyping is a learning game, not a revenue game. Basic prototyping skills are not hard to acquire (compared to ‘coding’ in general), but the bottom line is this: Real things are easier to test than fake things.