Let’s start with some good news. If you have taken the time to identify your strengths and brainstorm business ideas, you’re already ahead of 90% of people who dream about starting a business. While others fantasize about financial security, you have taken action. By now, you should have a rough idea of the kinds of business opportunities that you are interested in. Now it’s time to refine your ideas so that they can form the basis of your profitable business.

By the time you complete the steps in this article, you will be able to write a single sentence that explains what product or service you plan on providing, who your audience is and what emotional benefit they will receive.

I wish someone had taught me this process when I was starting Sixty and Me. It would have saved me thousands of dollars, months of product development and many sleepless nights. Here are the three steps to refining your business idea.

Don’t Make Something New. Make Something Better!

One of the biggest misconceptions about starting a new business is that you need to come up with something completely new in order to succeed. Nothing could be further from the truth! It may be fun to fantasize about building the next Starbucks, but, for the great majority of businesses, success comes from making small changes to an existing idea. This is true whether you plan on working as a freelancer, building a physical product or opening a restaurant.

In fact, you should see a lack of competition as a warning sign. If no one in the history of the world has built a business similar to the one you are considering, there is probably a reason. Don’t invent. Innovate.

Your first step is to research how other people are making money from activities related to your passions and skills. For example, if you want to be a freelancer, search sites like Elance.com for professionals who are offering similar services. Read their LinkedIn profiles, visit their websites and learn about their clients.

Pay attention to how they position themselves. What words do they use to differentiate themselves? Write down how much they charge. Do they have an hourly fee or work on a retainer?

The same process applies if you plan on opening a retail store, coffee shop or restaurant. Do you know how Burger King decided where to put its first restaurants? They built across the street from McDonalds. This allowed them to take advantage of the millions of dollars that McDonalds spends on location research every year. Don’t reinvent the wheel when you can hitch a ride on someone else’s cart.

As you research, keep your eyes open for opportunities to innovate in the following categories.

• Offering – Is something missing from your competitors’ products or services?
• Audience – Can you find a niche that needs a slightly different solution?
• Marketing – Are your competitor’s websites cluttered and confusing?
• Value – Can you offer something that sweetens the deal for your customers?
• Service – How can you support your customers better than your competitors?

You may have noticed that I didn’t list “price” in my list of innovation categories. While it’s possible to compete solely on price, this is usually a losing approach. In the long-term, you’re better off focusing on value creation.

Find a Market Niche

Another mistake that new entrepreneurs make is not being specific enough about their audience. Mistaking audience size for market opportunity, they define their audience as “women,” “college students” or “artists.” Even if you think you’re targeting accurately, you can probably do better.

When I started Sixty and Me, I thought that defining my audience as “women over 60” would be specific enough. Unfortunately, I learned the hard way just how difficult it can be to help your audience if its members have different needs.

I eventually turned to Infusionsoft to segment my audience into interest groups. As a result, I am now able to target my offers to different customer groups within the broader demographic, based on their interests (health, dating, beauty, etc.) But, I would have saved myself a lot of time and energy if I had from the beginning.

Even freelancers can benefit from choosing a niche. For example, there are thousands of SEO consultants out there, but, far fewer who specialize in helping U.K. real estate agents to get found online. There are thousands of yoga instructors in the world, but, not many who specialize in helping women over 50 in their city to get started with chair yoga.

When it comes to choosing your target audience, don’t think big. Think small. There will be plenty of time to expand your business into other areas when it becomes successful. In the meantime, focusing on a niche will allow you to charge a premium and keep your margins high.

Identify Emotional Benefits, Not Cold Features

Brand marketers know that what their product does is far less important than how it makes their customers feel. Harley Davidson doesn’t sell motorcycles. They sell the promise of the open road. They market freedom, companionship and badassness. Apple doesn’t sell phones. They sell self-expression, status and style. Simon Sineck talks about this when he suggests leaders focus on the “why” instead of the “what”.

It’s never too early to start thinking about the emotional benefits that your product or service will deliver. Brainstorm how you want your customer to feel when they use your product or service and build this into every aspect of your business. For example, if one of the benefits of your website migration service is “peace of mind,” how can you reflect this in the tone of your marketing, the frequency of your emails and the structure of your guarantee?

Over time, your customers can help you to refine your brand promise, but only if you listen to them. So, pay attention. Do you hear the same words or phrases repeatedly? Use them in your marketing. Amplify them in your product strategy. Most importantly, use them to keep yourself motivated on the long road to success.

Putting it All Together

Most people have an intuitive feeling that they need to be able to describe their business in simple terms. After all, in the words of the Cheshire Cat from Alice in Wonderland, “If you don’t know where you’re going, any road’ll take you there.” The problem is that most mission statements are nothing more than glorified dreams with little basis in reality.

In other words, since we think of mission statements as externally facing, we tend to focus more on highlighting a big idea than defining exactly what value they will provide to whom and for what purpose. Let’s look at an example that Entrepreneur.com included in an article on how to write a mission statement.

“ABC Enterprises is a company devoted to developing human potential. Our mission is to help people create innovative solutions and make informed choices to improve their lives. We motivate and encourage others to achieve their own personal and professional fulfillment. Our motto is: Together, we believe that the best in each of us enriches all of us.”

It feels good to write a mission statement like this. Just reading it makes me want to don my superpreneur cape and fly off to save starving puppies in far off places. But, can anyone tell me what ABC Enterprises actually does?

I recommend that you take a simpler approach to describing your idea, at least at the beginning. Try to write a sentence that explains what product or service you plan on providing, who your audience is and what emotional benefit they will receive. In other words, try the following formula:

[Company] [description of your product or service] for [audience] who want to [emotional benefit].

Here are a few fictitious business descriptions to illustrate the point:

Busily Bagels delivers fresh bagels to busy executives in downtown Seattle who want to focus on building their business, not finding breakfast.

Sit Me Down Yoga provides gentle chair yoga courses for women over 50 in Chicago who want to get flexible in a stress free and safe environment.

I provide Aweber to Infusionsoft migration services for small businesses in the United States who want to save time while deepening their customer relationships.

Once you have a one sentence description of your business, take the time to collect feedback. Go beyond your immediate circle of friends. Join a group on LinkedIn, ask a few potential customers.

“Doing what you love” is never going to be enough to build a profitable business. But, if you focus on innovation, define your target audience, and deliver emotional benefits to your customers, you can build a business around your skills and passions. Don’t wait to get started. Write your business summary today and share it with a friend or in the comments section of this article. Let’s help each other make our ideas even stronger.

How would you describe your business (or potential business) using the formula above? Do you have any other suggestions for our other community members who are looking for ways to validate their business idea? Please join the discussion.

Read Next: Starting a Business After 50 (Part 4): Setting Up Your Website