What is the biggest mistake that first-time lifestyle entrepreneurs make?
Do you know what it is?
Most people just starting out look out at the world of possibility and ask themselves this question: “What can I do that will make me money?”
When really, the better question is how can you turn your interests and passions into products and services, in a way where you’re adding value to your customer’s lives through an online business you can run from anywhere in the world.
The answer to the first question will lead you down a thousand paths all promising ways to “make money“. Some may work, some may not, but even when profitable this perspective still focuses on money as an end unto itself, when really it is a means to an end.
The answer to the second question is an enduring promise of novelty, excitement and contribution. Asking how to take the things you’re interested in and passionate about and turn them into online businesses that impact others while generating income sets up the scaffolding for success even before you take the first step.
Being a lifestyle entrepreneur is about using the skills of entrepreneurship to construct and live the lifestyle you’d pursue if money was no object.
The Passions to Products Formula
In this video from Lifestyle Entrepreneurs Academy in Las Vegas we take some of the ideas generated by attendees from the Discover Your Identity exercise and turn them into business ideas in real time.
I’ll show you how to identify the market and validate if there is an opportunity to enter it with a specialized, niche-focused business.
Then we’ll look at how to position your business near the top of the search rankings by securing a domain name with what I call “embedded purchasing intent”
Finally we’ll look behind the curtain and explore the supply side of the business equation. I’ll talk about how to find drop-ship manufacturers and set up fulfillment centers so all your inventory flows seamlessly without you having to receive or ship anything yourself.
Grab a pencil and paper, let’s get started turning your interests and passions to products and service!
Passions to Products – Transcript from Lifestyle Entrepreneurs Academy, Las Vegas 2013
So let me put a container on all this stuff with Lifestyle Entrepreneurship. This is not about building the next Apple necessarily. This isn’t about coming up with the next Google. This is about identifying a place where there’s transactions taking place and looking at an industry that you’re already interested in or want to learn more about. Then finding a way that you can enter it in sort of the quickest go to market route and expand out from some initial product or service that you’re offering into additional ways you can make money in this space.
So, today I want to go through this framework that I call the Passions to Products framework. What I want to do is start to make this more interactive. From yesterday’s exercise why doesn’t somebody throw out an industry, an interest, a field of knowledge, something from the identity diagram that we started out with. We’ll actually use that in real time to go through this passions to product framework instead of pulling out an example from my previous experience.
Male: Playing with puppies.
Male: Well, yeah actually. We talked about it for like ten minutes afterwards.
Jesse: Okay, great. Let’s do it. So, Brad says, “Playing with puppies.” Maybe that’s a subset of like dogs, dog care, and dog services.
Male: Yes, that kind of stemmed out of my conversation with Bradley. We were talking about remember when I brought up the doggy daycare? Then you sort of threw in that he knows people who do dog massages, high end services for puppies who belong to wealthy people.
Male: I’d like to do that too.
Identifying Products Based on Your Passions
Jesse: Great. Let’s start there. So, this whole exercise is about identifying the economy that’s grown up around the things you’re interested in and passionate about. So, in this case we’re going to go with dog care, playing with puppies. And what we want to do is start to identify both the products and the services that support this industry or this niche area of focus, this field. Let’s just put up here Dog Care just to be a little bit more general than playing with puppies. Let’s start to brainstorm. We’re going to cover at least 5 to 8 specific ideas in the next thirty or forty minutes here.
So, products, let’s start there. What products exist that a group of grownups that comprise this economy around dog care and I’ll start to throw out a couple. So, one would be something as simple as like dog collars, dog accessories, things that dogs actually wear. Right? Let’s say dog collars. What else do you know, Brad? What else do dogs wear? Let me just put out there that dogs don’t like me and I don’t really like dogs. So I’m just flying by the seat of my pants here.
Male: The things like that like dog instruments or accessories or what have you.
Jesse: So, leashes, right?
Male: Chew toys.
Male: Personalized kind of items. You know, like for when…
Male: Chips. We got some electronics for example.
Jesse: Maybe dog sweaters, clothes. What else falls under the product sphere within dog care?
Male: Cleaning devices to clean up poop.
Male: Look at that target market. It’s more of a high end market. I would also say some of the personalized like I love Fifi shirts or frames for pictures.
Jesse: Right. So then let’s say if we do one level of abstraction products—so not specific things that dogs wear that you actually us on a dog but something that’s in the ‘I love dogs’ field, right? So you’ve got clothes that humans wear maybe shirts, bumper stickers, who knows.
Male: And the additional products you create you also have the barriers, essentially like installation of doggy doors.
Jesse: Right. So, like cribs, cages, whatever. What would you call that?
Male: Dog infrastructure. [Laughter]
Jesse: Dog Infrastructure. That’s too long of a word. I’m just going to write cages. Good. Now, let’s move over and start to list out some of the services that reflect the space. So, this goes back to your original idea. What would you call that? What do you call someone that you hire to play with dogs? Or where do you take someone if you’re going to play with puppies to use your exact language.
Male: Well, we had, there were two categories really. One was like dogs or watching, kind of caring for someone’s dog like dog management.
Male: It’s called doggy daycare.
Jesse: You got it! So…
Male: You know one business that would make a lot of money doing that was these guys who had like a doggy day care that was really first class, high end right by the air port.
Male: Oh, drop off.
Male: Drop their dogs right before they went on vacation.
Male: Yeah, it was all high end, posh for the pets. They were making a killing.
Male: This is in Canada?
Male: Yep. They were making a killing.
Jesse: So, like you’d take them there and you drop your dog off then you get on a plane and go somewhere. And it’s just… Right. So, dog walking, doggy daycare, dog hotels I guess. What else do we have in services?
Male: This is where it gets creative like Rent-a –Dog. And it wouldn’t necessarily be the same dogs. I’m serious about this like there’s a lot of dogs used for therapy. And like my girlfriend was looking at getting a dog and she was trying to decide if she would adopt one and go through the whole process. But she just really needed one for comfort for like a month. That’s the kind of thing where if you have dogs from a pound you could kind of fill a social need. Watch those dogs and also like rent them out even as cheesy as it sounds, guys who want to bring a dog to the park to like pick up girls or whatever. For a lot of reasons people might want to rent a dog. For modeling or anything.
Jesse: Okay, great. That’s news to me. So, Rent-a-Dog for emotional support, for picking up girls…
Jesse: You rent a dog to take it to a movie? Doggy dates?
Male: A film director looking for a type of dogs.
Male: Dog modeling.
Male: Like Lassie.
Male: Entertainment dogs.
Male: Actor dogs.
Jesse: Model dogs. Dog sledding. Dogs with the little barrel of whiskey around their neck.
Male: Dog training.
Jesse: Dog training. There. Good.
Jesse: There, there we go. There we go. So grooming. Is there really such thing as a doggy massage?
Male: Doggy yoga. They have doggy yoga.
Jesse: Oh, wow. That sounds very LA.
Jesse: Massage, yoga. TRX. Training for dogs. So this is good. All right so now we have like 10, 15 sort of specific ideas. Now how do you identify whether or not there’s a market that exists for any of these products or services? Well, what we do is we’re going to pull up our friendly search engine and let’s pick one of these as an example here. Who wants to make a choice? Let’s start with one on the products category. Anybody have a preference?
Male: The first one.
Jesse: Dog collars? Okay, you got it. So, let’s do this exercise and everybody with a computer that’s online can do this real time. So, this is validation. So this is meant to be a search engine result box. Somebody do a search for just dog collars and tell me what you see. What we want to know is the SERP, the search engine results page, how many total results are there?
Male: Nine million.
Jesse: Nine million. What’s the first three organic search results? Not the ads.
Male: Petsmart, Dr. Foster Smith.com and Walmart.
Jesse: Okay, great. So, two really big brands and one that seems to have figured out SEO pretty well. How many ads do you see? Again, here we’re looking at these little boxes represent the ads and at the top and on the right you have the potential for up to eight ads on the right and three on the top.
Male: Yeah, it’s full.
Jesse: Is it?
Jesse: Great. So then…
Male: And there’s a box in-between those two where Google’s selling on its own.
Jesse: There you go. You’re way ahead of me. No, but it’s good. So what we’ve just identified is that with just the general term dog collars we’ve got nine million search engine result pages and we’ve got what I call a full slate meaning that the maximum you can have is three ads on top of the organic search results and eight along the side.
And then I believe you can either six or eight Google specific results that is like through Google Store or some Google sponsored store function. Those generally appear around here. Then of course all of these are bracketing the actual search results, which is the organic space here. Then you have up to ten on each page then of course it goes across the other pages here.
That’s all well and good. And actually dog collars is sort of specific enough where—so what does this tell you? What does this tell you that you have a full slate of advertisers and Google’s piping in their own products as well?
Male: There’s a big market. Also a fair amount of competition.
Jesse: Yeah, so without even looking into how much these people are willing to pay what we’ve just identified is that for the search term dog collars there’s at least eleven companies that are willing to pay money to be right in front of you at the time that you do a search for dog collars. What we want to notice is that there’s not even what I call purchasing intent built into this term.
So, in other fields if we went through and did another one you may or may not see a full slate but the organic search results might not even be stores or like economic related. You might have Wikipedia, you might have e-how, like how to walk a dog videos, you might have YouTube of dogs doing tricks depending on what you’re searching for. That doesn’t necessarily indicate that there’s a market in that exact niche.
So what we want to do now is append this search result and add the word ‘buy’. So now, somebody do a search for ‘buy dog collars’ again on Google. Somebody tell me what you see here.
Male: It’s quite similar to the last one.
Jesse: Is it?
Male: Yeah. Just different top organic searches.
Jesse: What do you have on the first three organic search results?
Male: GunDogSupply, Wayfair and Overstock.com.
Jesse: Okay, so now those are three separate ones than what we had just for dog collars. Now you can make an argument either way that being Walmart of being PetSmart and being visible on the top results for just dog collars is good but now we have people that are optimizing to be visible when you search for ‘buy dog collars’. What we’ve done is now we’ve started to embed purchase intent into the search term. Purchasing Intent.
Append Your Search with Purchasing Intent
And then you can take this one step further and do something on the other side such as ‘buy dog collars online’. And just for fun let’s do a search for that. Then what we’ve got here is just other variations. These are just sort of general but with a little more thought we could identify what would be the other potential variations that people would be searching for when they’re looking to make a purchase in this space. You could do something like ‘get dog collars’ or ‘purchase dog collars’ or ‘get dog collars online’ or ‘buy dog collars now’. Then this is just, again, appending the initial idea that we’ve generated, which is really just one of 15, which in itself is just one of the interests that we identified from the Identity Diagram yesterday.
Did anybody do ‘buy dog collars online’? What do you see there? May or may not be a material difference.
Male: Yeah, there’s only two on the page searches.
Jesse: There’s only two ads?
Male: On the top and there’s eight on the right.
Jesse: Got it. So, it’s close to a full slate. And I guess the takeaway here is if you get too specific then you might rule out. You can sort of deduce where the equilibrium is. If you add more appending what you’re searching for around the actual item itself. If you did ‘buy dog collars in Vegas today’ that may give you a whole different search results and if you put in a city name that’s going to sort of isolate down to a retail store.
So, for the purpose of looking at an online business that we can build that’s product focused in this space we want to leave off things like city names, states for the initial Market Validation. Now, let’s say this has anybody seen heat maps before? Right? You’ve seen something that looks sort of like this? And if you haven’t there’s things like KISSmetrics Or Crazy Egg or other services that show you for a search result where the concentration of click activity on the search results page.
Check out this video of where eyes and clicks go on a typical Google search results page:
Across the board it seems to be right around the top one to three organic search results is the most highly clicked on area. Maybe the top one or two on the ads above and one, two and/or three on the side, both a little bit less. So, those two combined give you a pretty good amount of information for just a one minute searching exercise.
Where would you want to be if you were a business in the space of selling dog collars?
Male: At the top.
Male: First organic search result.
Jesse: Yeah. Exactly. Or even in the top three, really, to be honest. Now, here’s where things get sort of interesting. Say you do—let’s keep it at ‘buy dog collars’ or ‘buy dog collars online’ and if you pull up something like GoDaddy or BlueHost or some other domain registrar see what is available for BuyDogCollarsOnline.com. And here’s the reasoning. If you’ve identified that there’s a few million search engine results page, a full slate of advertisers and that’s for the actual search term ‘buy dog collars online’ well then you’ve identified without even knowing how much these people are spending per click that there’s an active market here.
Again, without looking at this type of entrepreneurship as creating a new product category or anything what we want to do is identify that there is transactions taking place and a lot of people already in the market. Then what we’re going to do is look at how can we enter into this narrow field and dominate. One tactic to do that is to actually get the domain, which is basically the search term that we just validated has advertising competition so that in terms of search engine optimization your actual domain can become one of the top results fast!
The URL itself is probably one of the most important determinants’ on whether you’re going to end up high on the organic search results, which of course is where we want to be because how much does it cost you when somebody clicks there? Nothing! So, did anybody do a check on GoDaddy.com if BuyDogCollarsOnline.com is available?
Male: It’s available.
Jesse: It’s available. So, boom! There is one actionable idea right there that you could potentially go after, Brad.
Male: It’s probably sold since we sat here.
Jesse: Exactly. So, this is the front end, right? And if you’re a dick you can click through all the ads and run up the tab for these other people in the space. But it would be good if nothing else to click through a couple of them and see then how focused, how specifically focused on dog collars the different companies that are advertising are to be visible for the search term. Does this make sense? You guys follow so far?
Because something like Wal-Mart or Pet Smart it’s just a drop in the bucket compared to their overall product offering. What we want to identify is whether there’s anybody else in this space that’s just in the business of selling dog collars. We don’t necessarily have to go through and click those now but even the names of the companies themselves would be an indication.
So, for example, if I was looking specifically for dog collars and I saw a URL or a company that was called Buy Dog Collars Online, well I would probably trend towards clicking on that one then going to Wal-Mart. Or maybe not. That’s what I’d do because I know that then there’s somebody that’s specifically focused in that space. Wal-Mart of course has the connotation of lowest prices so it’s sort of a toss up.
But in terms of entering the market as a niche focused online business if you own that domain and then you have a supplier relationship specifically for dog collars then you can enter this market that we’ve identified as competitive because of the full slate of ads and fairly quickly get a footing in the search results, ideally in a way that you’re getting free traffic to a site that you own.
Now we’ve sort of looked at the front end here. This is our search engine validation technique. Now if you pull up let’s say—there’s one more thing you can do. If you click through and you just have a spread sheet or you start to bench mark in your mind the average price that people are selling different types of dog collars for and get a general idea for what these products are going for then that’s your front end, the actual customer focused price that’s being laid out.
Finding Suppliers & Drop-Shippers
But then on the back end if you pull up something like Alibaba.com, HKTDC—actually, I’ll write these down for you guys. So, let’s do backend. These are suppliers. You’ve got Alibaba. Anybody not heard of Alibaba? Anybody heard of HKTDC? Good. Anybody heard of Global Sources?
What these are is just like Amazon or eBay or even Google or any other search engine is going to show you the customer facing presence that brands have that are selling products or services online these are sort of the behind the curtains. These are all massive sites. Specifically, Alibaba is I believe a Chinese company and it either is still partially owned by Yahoo. Or it might not be anymore.
HKTDC stands for Hong Kong Trade and Development Council. It’s actually an arm of the Hong Kong Government that promotes trade. One of Hong Kong’s biggest industries is sourcing and intermediating manufactures in China with purchasers and exporters all around the world. And Global Sources is as the name suggests a repository for where you can find products, again, most stuff or at least 50% tends to be made in China. So, take that however you want. But they have the lowest cost and generally are easiest to do export and import with.
Recap and Q&A
So, here what we want to do is just as a quick recap we took from the general interest you have, identified one. Then we started to look at the economy of products and services that grew up around just one interest. We isolated one, dog collars. We did a search just for that. We took note of what we saw. There was a full slate of advertising competition. Then we did ‘buy dog collars’. Then we did ‘buy dog collars online’ and took note of how those changed and who was visible in the results.
Then if you click through and get a general idea for the price that they’re selling to customers and other additional aspects such as free shipping or what the guarantees are, are two other main criteria that effect purchasing decision. Then we look at the back end and simply do the exact same search on these product focused, supplier focused, essentially search engine.
So, for example if you pull up Alibaba.com and do a search for dog collars somebody’s done that, tell me what you see. There’s probably going to be ten thousand or more manufactures or suppliers that are in the business of producing dog collars and are looking for people like you, entrepreneurs who want to buy them in some quantity.
Male: Two thousand suppliers.
Jesse: Okay, two thousand. Still, plenty to choose from right? So, Alibaba is sort of like the Amazon of suppliers in the sense that you have star ratings, you can see reviews, you can see Alibaba does accreditation and certification on suppliers so you know that they’re legit. There’s ways to contact or put in a request for a quote.
And really where we’re going with all this is in less than an hour you can get a pretty good picture of the industry that’s build up around the specific product, dog collars, in terms of seeing how many people are competing for the term and how much potential transaction activity is taking place on line. You’re taking note of the end price to the customer.
And then looking at something like Alibaba.com or HKTDC or Global Sources and seeing what’s the price from a wholesale or supplier standpoint. And that combined gives you a general idea for the gross margin that’s available in this space. Does that all make sense?
Male: Here’s a general question about the suppliers and you might have covered it in those first seconds but when you talk about suppliers are you also including manufacturers? Say I wanted to make a widget from scratch, put my own stamp on it and have like a mold or something totally new is that what you’re saying or is it somebody that have just like a whole lot of choices and you select what you want kind of thing?
Jesse: You actually have both. So, somebody like PetSmart probably has their own brand just like at CVS or something they produce their own generic brand but they also carry brands from companies that do dog products in general. So, in either case a company that is designing some type of a customized product will still be working through manufacturers that you can find on some of these sites but they’ll do a couple more iterations so it’s not an off the shelf product style.
I would reckon that with a little bit of searching that you could find the exact types of products that you would see on the PetSmart website or the Wal-Mart website right here on the wholesale supplier side search engines. And then it really is just sort of matching and seeing what’s the supplier price and what’s the average customer facing price. And where’s the spread that exists.
Resources and Next Steps
Hopefully by now you can see that generating ideas and validating their potential is a pretty quick and fun process!
For more on idea generation, check out Lifestyle Design 101 where I walk through an example of the Discover Your Identity exercise referenced in this post.
Once you have some initial ideas, or have at least identified your interests and passions, it’s about using the Passions to Products formula to list out all the potential products and services that you could offer based on those interests. For another example of the Passions to Products formula, check out the Resources page.
Next I’m going to share with you my talk on “How to Build a Website in 10 Hours for $1,000 or Less” (I’ll update this link when it’s live!) and I’ll share with you a 3-step process to get a custom-designed, fully-functional website for your business online quickly, efficiently and cost-effectively using online talent platforms.
Let me know what ideas you’re working on below, I’ll jump on the comment threads and help bring yours to life!