The other day I came across some business advice from a an enterprise organisation for a city that encourages new business start-ups. But the problem with this guide was that it assumed that you had already come up with the right business idea. There was no advice or tools on how to come up with or identify a right business.
Coming up with the right business idea proceeds a business plan. How can you start a business plan if you don’t have a business idea for a product or service that you’ve tested by doing basic market research or at least validating your idea in the marketplace? I found it a bit strange that the business adviser suggested that you should survey customers either through interviews or questionnaires (mail or email) before you’ve even had a chance to develop your business idea into a prototype or test service. The advice given was that you should start your market research by interviewing about 100 people if it’s a consumer business such as a restaurant or hairdressing salon but if it was a business product such as building materials you should talk to at least 20 builders.
The one thing I’d be careful of is interviewing people in your own neighbourhood only to find out that they take your idea and come up with a similar business themselves. But the other important point is that you first need to think through what it is that you’re going to offer potential customers before you go out and interview them. An even deeper and more insightful reason not to go about things this way is that it seems like putting the cart before the horse. It makes more sense to find out what problems potential customers have and if the solution that you can come up with to the problem meets with your skills set and circle of competence, it might be worth pursuing an idea based on real-world experience.
So how do you find the right business idea for yourself?
The typical advice is to do personal brainstorming such as going for a walk, watching TV, browsing the Internet, wondering around in supermarkets and shopping centres, mind mapping or even combining two objects or nouns together to come up with a new idea (for example, snow + surfboard = snowboarding).
But unless you are doing such personal brainstorming bounded by your own real-world experience and perhaps knowledge of a particular market, you could end up with “artificial” ideas that sound exciting theory but flop in practice. It is also a problem with completely new ideas or original ideas in that you need to invest a lot of money to “educate” your potential market about the benefits of your new product or service. That’s why an old rule of thumb holds true for investing in any new enterprise: watch out for investing in any business, products or service that is more than 15% new than what is already available on the market.
Another way to go about coming up with the right business idea involves an inner process. This involves finding out what you are good at, your skills and experience and your “circle of competence”. As Warren Buffet says, you need to recognise your perimeter of your circle of competence because if you stray out of it you increase your risks. One way to go about identifying what you are good at is to list five or 10 things that you have excelled in, which we could call your core competencies. Keep this list and then list things that you are not good at and afterwards think about what products and services could make your life easier and that might apply to other people.
I came across an interesting way to find out what sort of business you are good at and would be interested in from a small business site the other day. Their method involves writing activities you like to perform on a page and then taking out a blank sheet of paper and writing each activity on top and listing as many businesses as you can think of that are related to that activity. You then make a comparative evaluation using a checklist that includes questions such as “Can I do what I love to do?”, “Will l fill an expanding need?” and “Can I learn it and test it first?” This advice at least helps you to identify your core competencies and matches them against industry domains that you are familiar with. A simple example: it’s going to be much easier for you if you have had a good few years of experience keeping aquariums at home and coming up with an idea for an aquarium shop than it would be for you to decide on becoming a garden land landscaper when you have no experience or expertise in this domain.
The right business idea will be easier to validate in the marketplace if it is bounded by the reality of your skills set and experience where it is easier to connect the dots rather than generating smart ideas that customers may find interesting but don’t want to buy. The need or problem is in your marketplace; you must identify that need or problem and come up with a better, faster and cheaper way to solve it.
If you want to find out more about how to generate ideas and turn them into viable products and services, then shoot me an email and get onto my mailing list for my upcoming book “Breakthrough Ideas”. I am printing a limited quantity only so if you want a copy get onto the mailing list now. You might not have this opportunity again.