A startup founder says these are the 3 questions you should ask yourself before starting a business
Ben Koren, founder and CEO of Frameology, tells Business Insider he had at least 15 ideas for a business before settling on one for a website that prints and frames photos.
"Starting a company is extremely risky, so one of the hardest things is figuring out which idea has the greatest chance of success," he says.
Thankfully for Koren, he's made a career out of analyzing ideas.
Before launching Frameology earlier this year, Koren analyzed companies as a private equity investor to determine whether his investment firm should invest in them, how much it should invest, and at what valuation.
Koren says the experience taught him to ask three crucial questions before taking the plunge.
"If you feel comfortable with the answers, it means you're onto something," he says. "If you don't, don't worry. A better idea will come along soon."
1. 'Does this solve a problem that real people have?'
While it's a simple concept, Koren says it's also quite powerful: To build a successful business, you need to solve a problem - it's the surest way to get someone to pay you.
Koren started Frameology because he couldn't find any place that would both print and frame a photo that he wanted to gift his girlfriend.
"Focusing on your own problems is a great place to start because you can easily comprehend them," he explains. "And if you have a problem, there's a good chance that others have it as well."
2. 'Is the market opportunity compelling enough?'
"Most people think that you need a large market for a business idea to be compelling," Koren says. "That's false!"
He explains that it's actually much easier to build a great business in a small market because there tends to be less competition. While you'll eventually need a big market if you want to raise venture capital, Koren says you can start with a small market and then expand into a larger one.
"The important thing to focus on is competition," he says. "If you are the only person offering a particular good or service, your life is going to be much, much easier, and your business is much more likely to succeed."
Koren says he settled on the idea for Frameology because the market for picture frames seemed ideal: Existing online photo goods retailers focused mostly on albums and cards, not frames, he says. And while you could buy a picture frame online, no other company printed the customer's picture to include with the frame. What's more, he says that although the market for picture frames itself is medium-sized, the market for gifts is huge.
"By building a service that made creating the ultimate personal gift as easy as a few taps on your phone, we had an incredible opportunity to expand into a much larger market," he says.
3. 'Can I do this better than anyone else?'
"This is perhaps the most important question that most entrepreneurs overlook," Koren says.
He explains that if you're solving a real problem in a compelling market, people will want to copy you - the key to success is being able to do it better than your competition.
Investors tend to look for an 'unfair' advantage when investing in startups - something that ensures you can win against the odds.
For Koren, he says that advantage came from his dad.
"My father had been in the picture frame business for 30 years. I worked at his store on school breaks and basically grew up in the business. We knew everyone in the industry, which means that we could source better product at better prices than anyone else," Koren says.
Even if a larger company tries to copy Frameology, Koren says he's not worried because he feels confident he can do it better.
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