What it takes to turn a passion project into a successful business venture.
By John Spence
Starting a business is a dream for many. Yet, the journey from passion to profitable business can be challenging. It is not just about what you love. It is about what will succeed in the market.
This article blends three powerful ideas: Jim Collins’ Hedgehog Concept, my Formula for an Effective Strategy, and The Principle of Product-Market Fit. Together, these will serve as a test to see if what you love can be turned into a sound business idea.
Just One (Prickly) Thing
Jim Collins, one of the most respected business experts in the world, has a framework to assess the viability of a business idea. He calls it the hedgehog concept. The name originates from an ancient Greek parable about a cunning fox who tries to catch a hedgehog. Despite the fox’s many strategies, the hedgehog does one thing very well – rolling into a ball to defend itself. In business, this concept translates to focusing on one main thing. There are three critical questions that can help define this singular focus:
What are you passionate about?
What can you be best in the world at?
What drives your economic engine?
In other words, it is not enough to just love something. Your passion must be something you can excel in and, crucially, something for which there is a paying market. I have met a lot of entrepreneurs that were deeply passionate about their ideas, and exceptionally good at what they did, but unfortunately no one wanted to buy it. When that is the case, what you have is not a business, it is a hobby.
Meeting the Hedgehog Concept is just the beginning.
All or Nothing
Next is my formula for an effective strategy. To win in the marketplace, your passion project must meet these four criteria.
- Your product or service must be unique and compelling.
- Your target market must be willing to pay any reasonable price for it.
- Your product or service must be difficult, if not impossible, for the competition to copy.
- You must be able to consistently deliver it with excellence.
Any business idea that does not fulfil all four of these elements will struggle to stake out a winning position in the marketplace.
No Customer, No Cash
Finally, before diving headfirst into starting a business, thorough market research is vital. Speaking to potential customers – beyond your circle of family and friends – is crucial. Engage with people who fit your target customer profile. Their interest (or lack thereof) in the product or service strongly indicates the business’s potential success. If your target market is not extremely excited about what you have to offer, reconsider or refine your idea. The goal of this research is to ensure a high degree of product–market fit.
Often described as the ‘holy grail’ for both startups and established companies, product-market fit occurs when a product satisfies a strong market demand. This fit is vital because it indicates that a product not only meets but resonates with the needs and desires of its target audience. Product-market fit is essential for sustainable growth and success; without it, even the most innovative products can struggle to gain traction.
Being passionate about your business idea is essential. If you do not believe in your product or service, nobody else will. But as I outlined above, you must be able to step back and evaluate its viability. If your potential customers are just as passionate about what you want to sell them, the profit is sure to follow.
John Spence Bio
John Spence is a globally recognized business coach, leadership expert, keynote speaker and author. Among other accolades, he has been named by “Thinkers 360” as one of the Top 50 Global Thought Leaders and Influencers on Coaching. With a rich history as a CEO, lecturer at prestigious institutions and contributor to strategic partnerships, Spence is known for his engaging and impactful approach, leaving audiences with actionable insights derived from his extensive experience.
