Why Measuring “Demand” Isn’t Paramount When Planning To Start Your Own Business

I was talking to a friend the other day about business.  We covered a lot of different subjects, but the conversation mostly revolved around how people start businesses.  I thought it might be useful to offer a few of my thoughts on this subject.

“Demand” For Products Or Services

It has been said that a person looking to start a business should make sure that there is a “demand” for the good or service that he wants to sell.  And I would certainly agree with this statement.  Who would not agree?  The purpose of a business is to generate revenue.  No one is going to pay for something that is not needed.

Try, for example, to sell snowblowers in Miami.  I doubt you would find many takers.  Why?  Because there is no demand for snow removal services in Miami, Florida.  I think you get my point.

demand2

All right then, fine.  We can agree that “demand” is a necessary prerequisite for a business to succeed.

But when you think about this a little bit more, you realize that this doesn’t help us as much as you might think.  Demand is something that’s easy to talk about, but there are a lot of nuances to using it in practice.  This is really the question:  How do you identify where the demand is?  And what if the “demand” is in a work field or area that you hate?

People don’t really start businesses based on a mechanical, robotic identification of “demand.”  Very few (if any) people get in their cars and drive around a city looking for an unmet “demand” that he might be able to meet with a potential new business.  No one says, “Gee, I was driving around today and noticed a lot of unpainted houses.  I think I’ll start a house-painting business.”

Maybe there are people who make big life decisions purely on a perceived supply-and-demand equation.  But those are very few people indeed.  I can say this because not only have I started a business, but I’ve dealt with many, many hundreds of business owners.  Not a single one of them ever said that they made the life-changing decision of starting a business based on coldly investigating “supply and demand.”  It’s not how the real world works.

Want to know the truth?  The majority of people who start businesses do it in one of these ways:

  1. They inherit it. You’d be surprised how often this happens.  Of course, the people who have done this very rarely admit that they were born into it or had it handed to them.
  2. They have worked in some field, and after learning their trade, they then decide to go out on their own. This is perhaps the most common way people get into their own business.  The advantage of doing things this way is that you get a chance to learn the field, learn what works, and how to go about doing things.  In business, the learning curve costs money, and the more efficiently you can do things, the better.
  3. They stumble into it. A person might simply enjoy doing something.  He keeps doing it.  He attracts the attention of a wider and wider audience.  Suddenly he realizes that there are a lot of people who want the same thing.  He realizes that he can generate income by offering his product or service to a larger audience.

I don’t want this to sound like I’m minimizing “demand.”  There are, of course, some people who actually do make decisions based on demand.  I remember one nurse I dealt with who had an ingenious moment of inspiration and used it to launch a new business.  She told me she had worked in the health care field for many years, dealing with all sorts of issues.  She said that she noticed that no one had ever thought of creating a truly mobile blood-testing lab that could would meet the needs of doctors and paramedics.  So based on her experience in the field, she designed such a mobile lab.  And it was a great success.

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But even here, she would never have made such a decision unless she had been working in a field she loved in the first place.  To identify demand, you have to know your field.  Stated another way:  you won’t be able to identify demand unless you know what to look for.

This brings me to my second point, which is:

You Need To Work At Something You Love

If you aren’t working in a field you like, you’re going to be hating life.  You’ll miss opportunities to identify demand.  You’ll be miserable all the time.  You spirit will sag, and your frame of mind will be negative.

This is why it’s important to point out that you can’t make big life decisions (like starting a business) on purely mechanical grounds.  A business takes a maximum effort over many years.  If you’re doing something you hate, you’ll never be successful.  So you need to be picking something that you like doing.  Making a decision based purely on “Oh, I see a demand for XYZ” is setting yourself up for failure.

People rarely make big life decisions based on looking at numbers and abstractions.  And when they do, it is because they already know a lot about the field or the subject matter.  They already have a “feel for the street.”  And they usually got this “feel” by working in the field for someone else for a while.

No one just goes off and leaps into some profession with no experience based on some charts and tables about “demand” that he found on the internet.

You have to like the subject matter.  And this is why it’s not bullshit when people say:  follow your passion.  Starting a business is in many ways a leap of faith.  You will be working your ass off.  So you’d better be doing something you have at least some interest in.

Another corollary to this is that you’ll never be able to spot “demand” if you are in a field you hate.  You’ll miss all those little nuances, those little “tells” that make bring a good idea to fruition.

Don’t take this too far, of course.  I’m not saying that you should just blindly follow some dead-end passion and hope for the best.  No.  I’m not saying that.  But what I am saying is that you need to have some strong interest in some area in order to be successful.

You Can Create Your Own Demand

And here’s another point that people often miss in discussions about “demand” for a business.  They obsess and obsess over demand, without realizing that they can actually create their own demand.  There are some practical limits on this concept, of course, but the point is to remember that your energy and action can drive events.  You are not a passive observer:  you are an active creator of reality.

Even if you know an area well, you can never be entirely certain that your idea will succeed.  Chances are, someone has already thought of it.

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But that should not concern you.  You can create your own demand.  If you are doing something well, and are entering a crowded field, you can still be successful.  And this is the thing that few people really understand about “demand.”  Demand is not an absolute, static concept.  It is very, very fluid.

If you are doing something well, or doing something in a way that has not been done before, you can create your own demand.  People often don’t really know what they want until you show it to them.  I think Steve Jobs said this, or something close to it.  And I think this is true in many situations.

So those are few of my thoughts about “demand” when it comes to business.  It’s a lot more complicated than people think.  Don’t be demoralized or feel discouraged if you find it difficult to know if there will be a demand for your proposed business.  No one can really tell you.

My point here was to point out some nuances to the idea of demand in business.  Starting a business is a mix of rational, cold calculation with visionary, inspirational energy.  You need both.

As I said, there is an element of faith involved in starting and running a business.  Do your due diligence, of course.  Make your preparations.  Arrange your plans.  But at some point, you’ve just got to do it and see what happens.

Read More: Did Ellen Pao File A Baseless Lawsuit To Hide Her Own Job Performance?

31 thoughts on “Why Measuring “Demand” Isn’t Paramount When Planning To Start Your Own Business”

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  1. Thanks for the article Quintus, I always enjoy reading your work. Supply and demand should obviously never be overlooked when making any business decision. The few exceptions to having a product with no demand, changed the world forever. It’s practically inconceivable now to think of a first world home without one or more computers but there was a time when the idea seemed delusional. Imagine working with the latest tech in the 70’s and 80’s and seeing what was possible. Where would the ability for what essentially boils down to industrial computational power, find a place in a home? Sure, they used the idea of keeping up with the Jones’ and their shiny toys but that wouldn’t create an industry. They had to sneak in the power in the guise of silly applications for decades before consumers started to see the potential and give feedback about what they wanted. Then everything took off and it’s amazing to witness that in our lifetime. Now personal desktop sales are down but the tech has only migrated to smartphones and TVs. And it’s crazy where we are headed. In 5 years we won’t be experiencing much of the internet in 2D anymore as most pages will have the option of being viewed in VR/AR.

  2. The way I see it, starting and running a business is closer to a form of art than an analytical exercise.
    People who only see the analytical side of things are usually missing the point. Starting a business is a chaotic process. You need discipline and brains, that’s for sure, but you also need some craziness, some poetry in the way of doing things. Other wise you end up like 99% of dull and soulless businesses.

    1. I think it is very important to see it as an art, but maybe not to the exclusion of the analytic. Also, it depends on the business. For instance, the company I work for was started by a man who took a shit fuck ton of loans and bought a lot of property in very undesirable parts on new york city and then built high rise luxury residential buildings there. This was seemingly mindfuckingly stupid. Why put a lux residential in the ghetto. Well that was the late 60’s and early 70’s. He passed away a few years ago, he was a great guy. I now work for his kids who oversee a business that has a monthly NET of over 300 million. Monthly. And that is just the real estate portfolio and not even other investments they have made which have returned profit well.
      This man was, as you say, an artist. To foresee that these very undesirable parts of new york would be commanding 3k or more a month of studio apartments was truly a thing of beauty. But as much as it took the artistic element, he was always a brilliant accountant and had balls of brass. All three were important.

    2. Well said! Yes it’s the chaos that frightens most sane people – the day to day uncertainty that efforts to structure and plan attempt to control or prevent. I think because there are so few real original artists that’s why so few businesses succeed. You just know in your bones something is right and never let go. And if it “fails” or you have hard setbacks you learn why. Having a solid business is running gaming on the world, but not in an artificial way: by creating real value which attracts honest attention. I am satisfied when I look in the mirror at days end knowing I am building Quality, wrapped in Love, grounded in Truth.

  3. I don’t know how successful Curtius is at business, but this is good life advice, not good business advice. Don’t start a business thinking about how you’re going to get rich: you won’t, and not quickly.
    Definitely think about demand, but remember what Henry Ford said: If I’d asked people what they want, they’d have told me faster horses.
    That being said, the advice Curtius gives is good life advice, not good business advice. Without knowing exactly how successful at business Curtius is, take his business-side advice with a grain of salt.
    Never trust business advice from someone who isn’t rich. And rarely trust business advice from someone who is rich.

        1. As each of us can only purchase the productions of others with his own productions – as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase

          Jean-Baptiste Say.
          Better for you?

        2. I knew somebody would invoke Say’s law as an allusion. No, Say’s law is not fully accurate 100% of the time. Yes it does seem specious, but there are various problems. If Say’s law were true, none of us would consider saving as a significant deduction from readily disposable income (unless you live in places where inflation is blatantly an erosion on saving rates). Furthermore, by that logic, there would not be recessions, and the late 20s, 70s and 2008 are proof that there can indeed be recessions. Classical economics as well as neoclassical economics is constantly being challenged, and Say’s law has been debated as a sophistry ever since Keynes.

  4. I really liked this. Very practical, very analytical, and most importantly, I think, very encouraging and uplifting for anybody who is sitting on the fence regarding the actualization of their own business plans…excellent article, IMHO.

    1. Indeed. Another thing to remember… business is all about relationships. People don’t do business with people they hate. People they like go to the top of their list.

      1. Bingo! 7 years in %75 of my business is referrals, word of mouth mostly, from past clients and other businessses that know of me. They key is being faster not cheaper than competitors. Execution and an attention to detail. Before my competitors even return a call to quote I’ve often quoted and booked the work..

  5. Many investors, or even old industry veterans are very narrow minded when it comes to new technology and new products.
    They always say shit like: I need all the data! more data! The business plan!
    They think numbers will give them the answer to a successful business.
    Humans don’t work that way, your customers don’t work that way. You have to have a ‘feel’ for what people might buy, regardless of what the ‘data’ says.
    It’s easier to just look at numbers and data than have the intuition of a good idea.

    1. I heartily agree. I could have some aspects of my business better organized with all the official business plan malarkey, but I did enough of it to know where I stand out and I mill the heck out of my uniqueness. I laugh when I hear MBA tell me in stern tones how important be business plan is when they couldn’t sell ice to Eskimos. If you don’t have at least as much heart as brains you will not have a vibrant business. People want to be seen and respected first, I believe. If you show you care they are more likely to trust you which you’ve earned with hard work and dedication. I make myself very available which builds confidence, and I obsess over details they’d never imagine. Once they realize what I can do they can’t live without me – and I do it with humor, sometime in short supply in the business world. You can’t teach this, but you can cultivate it. You have to like people and like relationships to really succeed in the spirit of business. I’m poised to become potentially 10X bigger than I’ve been but it took 10 years to get here. Wouldn’t trade the ride for anything!

  6. Mike Rowe says that passion follows success. As in many people become passionate about what they’re good at and not necessarily the other way around. They love what they are good at doing.
    But survivor bias of 1% geniuses often cloud masses into thinking the extraordinary is possible to all.
    Look i like Usain Bolt, but there is no fucking chance i’d ever be able to match his sprint ability. some things are fixed, some are malleable.
    Its just how it is.
    Arnie loved soccer and a bunch of other sports. But he found he was only in the top 10% for bodybuilding. And he took that forward and got into the top 1%.
    There are some types that should follow their passion, but most shouldn’t. You need to have a few key principles of what you do and don’t accept and a vision for your life but the whole passion thing is bullshit. That won’t keep you warm on the dark nights. Using skills, developing a pallet of talents and then finding the crossection points of those talents is where success usually lies.
    Look at redpanels.com. I like the guy.
    Is he the best at drawing comics? no
    Is he the best communicator of the austrian school of thought on economics? Not really
    But the intersection point of the two make for some amazing red pilled comics that are simply not like anything else today:
    http://redpanels.com/comics/how-the-minimum-wage-works-comic.png
    He has become a visual master of displaying SJW cognitive dissonance in a scientific, funny clever way that serves as a stand alone and also a useful companion piece to Ben Garrison’s slightly more in-your-face artwork

      1. yeah its brilliant. i often think these arguments but the creator does it in a succint snappy three panel, three lines method

    1. Passion is overrated. I totally agree. This is coming from a guy who was a full time musician, then a full time photographer, then video producer. (5 years in each field, in southern california.). Now I work in advertising. My passions became jobs just like any other job, and each time I got bored… Or annoyed with clients or competition is more like it.
      Its the combination of design, writing, and sales expertise that make me good at this new career. I can leverage this for more than that other stuff. Plus, thise passions are more fun when Im not trying to please some client.

      1. Friend, it’s good you realized you didn’t have enough passion, or clarity about what your passion was. Anyone reading – if you burn, there are many who will help you and your own fire will ignite others to aid you as well. Passion is like lightning – when not just a pretty light show, it scorches and transforms those it touches. Quitters always find a reason for giving up – that’s fine, but don’t try to tell someone else that “passion is overrated.” A blind man trying to explain color!
        ===
        The moment one definitely commits oneself, then providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decisions, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance which no man could have dreamed would have come his way. Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now.
        Goethe

        1. Passion is overrated. You can’t call me blind or tell me I gave up. I was very passionate and worked hard. I left behind my family and moved 4,000 miles to pursue my lifelong dreams. I was successful in both my natural areas of talent. But passion isn’t everything. How do you know you will enjoy that industry when you break into it?
          I meet way too many kids in the US who think they’re gonna be rock stars, rappers, film-makers or photographers. The reality is, all of those careers look cool on the surface, but those people are puppets. Puppets to record companies, production companies, etc. Plus, after playing 4 musical instruments for almost 20 years, all the “full time” musicians I know HATE music. It’s not fun for them anymore. That’s just one example.
          Even Tim Ferris (I know he annoys me too) said turning your passion into a career isn’t a good idea in one of his facebook live videos. Eventually you hate your passion because it’s a job.
          Check out a book called “Flow.” People can learn to enjoy anything, even toilet scrubbing, if they stop comparing themselves to others and create some personal goals in the area of work.
          Besides, If we tell everyone to follow their passions, we’ll have no one to wipe our asses when we get old.

        2. I enjoy music much more now that I no longer do it for a living. 15 years of success led to burnout. I avoided music for 4 years before wanting to do it again part time only. That was 10 years ago. I know exactly what you mean.

  7. Quintus, great article! keep it going.
    Have been saying for months we need more “practical” articles, like this about starting a small business, rather than those focusing on just the ails of society and how they’re negatively impacting men.

  8. There is a business now that makes very good money writing messages on potatoes with a sharpie and mailing them to people. The demand for potato-grams was zero before this company existed. Now they’re so successful even competing produce-messaging services have sprung up.
    The moral all startups should remember is that Millennials are stupid. All you have to do is figure out how to get them to throw money at you and you’re golden.

  9. Great article Quintus, your experience is clear.
    For anyone who can’t “state th passion”, I highly recommend the book “Is Your Genius at Work?” by Dick Richards. Why? Because until you have identified your individual focal point of passion, you will be frustrated and rudderless as I was. Also Simon Sinek (Start with Why, TED talk ‘How great leaders inspire action’) and Gary Vaynerchuck (Jab Jab Hook) have inspired me.
    I don’t believe inventing the next Walmart is what the world needs – enough people are attempting to be all things to all people. Cute gimmick businesses only go so far. I feel that combining hard-won expertise, applied talent, clarity of vision, and care for the world are crucial elements to encourage personal and business success. Through cultivating these virtues you will attract help in the most unlikely places. You will bring light and beauty to a world drowning in technology but screaming for meaning.
    It will be YOUR light, discovered not manufactured. People can smell bullshit a mile away so don’t try to do some get rich scheme. This is why passion is #1. You have to believe absolutely in the truth of what you are doing and know the diamond, while it may lie hidden, cannot be forever ignored. Passion is infectious! Enthusiasm comes entheosiasmos – being filled with Spirit!
    You are the diamond working your way up to the light and rest assured there will be many obstacles in the way. If it were too easy there’d be no gem to begin with! Pressure and time – passion and dedication – create timeless value and resilient beauty. Good luck and feel free to ask for pointers.

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