Aspiring entrepreneurs have two big questions:
- How do I come up with a good business idea?
- How do I know if my idea will make a successful business?
In addition to this, most new entrepreneurs expect their first business idea to be a great one.
I did too!
However, now I know that in my journey as an entrepreneur, it has taken creating and evaluating hundreds of ideas and then executing a few, for me to develop my skills to the point where I can create and recognise ideas that will make successful businesses.
So how do you begin that journey as someone wanting to start your first business?
In the University Entrepreneurship program I teach, we have a whole subject for each of the questions above them. So I am going to give you an overview to those questions here and then expand on them in future posts.
How to become a business idea machine
Great entrepreneurs have trained themselves to be really good at spotting opportunities, connecting information and creating alternatives.
And really, it’s a matter of practice!
The idea is to create routines to practise coming up with ideas. Keeping an Opportuity Journal is a good practice. Write down all the ideas that cross your mind in as much detail as you can.
Do this regularly.
Set yourself the challenge of creating one idea a day. Soon you will find that you are creating more and better quality ideas because you are training yourself to notice them.
And you will have a whole notebook full of ideas you can go back to for inspiration.
There are lots of creative thinking techniques you can use to generate ideas and to train your brain to spot opportunities more readily.
Some techniques that you might like to research include:
- 6 thinking hats – Edward de Bono
- mind mapping – Tony Buzan
- Idea box
- brainstorming – including using association or random words to trigger ideas
- spotting trends
- Find a problem to solve
How to find an idea that customers want
My favourite technique to spot business ideas is to listen to people talking and identify what problems they have.
People will often complain about little things that niggle them. That is our cue as entrepreneurs to identify an opportunity.
Successful entrepreneurs solve problems for people. Eg. Problem: “I wish I knew when this taxi would get here.” Opportunity: An iPhone app that tracks taxis and shows you where the closest ones to you are.
So, will this great idea be a profitable opportunity ?
Once you feel you have found a problem which is worth solving, then you need to take it through an evaluation process to see if it is feasible (and profitable) as a business.
A lot of people run into problems in business because they have an idea and launch without conducting this kind of analysis. That’s why I am an evangelist for doing an Opportunity Evaluation – because I feel it is absolutely critical to a successful business.
A lot of problems can be avoided by doing this right at the beginning – so don’t miss this step!
Opportunity Evaluation involves
- asking strategic questions
- getting real data and customer feedback to answer them
- validating your assumptions.
Some of the questions that are important to answer include:
- What problem are you trying to solve?
- What is your solution?
- Who is your target market?
- What is their compelling need to buy?
- What is the value proposition you are offering them?
- How can you reach them?
- What is happening in the external environment your business will operate in?
- What is the competitive environment like?
- Who are your competitors?
- How much power do your customers and suppliers have?
- What will your business model be?
- what will you keep in house? outsource?
- how will you make sales? pricing? costs?
- how can you stop others copying what you are doing?
- What risks do you face and how can you mitigate them?
- What will your exit strategy be?
Get real data
Answering these questions (plus a few others) will give you a good idea whether your idea will be worth pursuing as a business or not.
Your answers should be based on solid market research. Gut feel is a good place to start, but you want to back that up with solid data before you invest your time and money. (Getting an MVP out there can be part of this process.)
With the feedback you get, make your idea even better
The magic is, that in the process of finding the data and interacting with your potential market, you will discover great strategies to tweak the original idea to make it even better and more profitable.
Having this thorough knowledge of the industry behind you will also give you a lot of confidence as you move towards launch.
Although this looks like a long list, it doesn’t have to take a long time.
Once you have run a few ideas through the opportunity evaluation process, you will find you do it quite quickly and are coming up with better and better ideas.
Is the idea a good fit for you?
The final thing to look at is whether the opportunity is a good fit for you personally with your current skills, resources, time, contacts and interests. Some ideas may be great ideas but not good for you.
I had this experience several years ago.
I was working on a business opportunity to help accountants outsource their basic bookkeeping tasks. I eventually realised, that although it was a reasonable opportunity, it was not a good fit for my skills and personality.
The opportunity evaluation process also showed me that the target market was not ready for this idea in Australia and I wouldn’t be able to grow the business to the size I wanted to.
So I moved onto the next idea after spending minimal time and money.
So why is it good if the idea turns out to be a dud?
Running an idea through an opportunity evaluation process and deciding not to execute it, is a good outcome.
You have saved time and money which might have been wasted developing a product or service that people don’t want.
You get to move on to another idea that has higher potential as quickly as possible.
You will also have learnt a LOT about what makes a good business and your next ideas will be even better.
If you’ve found this helpful, you’ll love my video series on how to use my proven process to create great business ideas that give you an unfair advantage. Click on the banner below to get access.