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The location and development of viable business ideas is as much an art, or matter of luck, as the use of systematic techniques. Certainly, you can use structured approaches, as described below, but the reality is that having the right background, being in the right place at the right time, and working hard to create lucky breaks are likely to be just as important in coming up with sound business ideas.
The concepts presented below represent a series of checklists. They need not be followed systematically and, most certainly, they should not be perceived as a sure-fire recipe. Instead, view them as a series of menus from which you can pick and choose according as your thoughts develop. Probably, the only issue which everyone searching for new business ideas should review systematically is their own strengths and weaknesses and to use this as their key building block and jumping off point.
The starting point for developing new business ideas lies inside the prospective entrepreneur rather than in the marketplace, laboratory, business plan etc. You are the critical component - it is your strengths and weaknesses which should dictate the areas in which to seek ideas and the likely scale & scope of your business. At the end of the day, support for your business by financiers, suppliers, customers etc. will also be a vote of confidence in your abilities to make it successful.
You should build on your strengths and surmount or work around your weaknesses, and possibly cut your cloth to meet your main limitations. For example, there is little point in searching for capital-intensive or knowledge-based ideas if you have slim/no prospects of raising the necessary capital or if your educational background is unsuitable. OK, OK, we have all heard stories of garage-starts by school drops-out which attracted venture capital and eventually became mega-businesses, but we don't hear so much about the huge numbers of failures.
What angle are you coming from? Are you:
- An inventor who has a product/service idea?
- An innovator who has developed a new product/service?
- Out of work and want to create a job for yourself?
- An entrepreneur who wishes to create a business?
- A manager who wishes to develop a business?
Be especially aware that inventors and innovators does not necessarily make good business people.
Areas where you should make honest assessments of your strengths and weaknesses include the following:
Expertise & interests
|Write business plan|
Get planning insights
See planning surveys
Get free planner
Seek planning advice
Develop strategic plan
Checklist for business plan
Business plan guide
|Get business ideas|
Devise business strategies
Prepare financial projections
Write strategic plan
Plan to plan
Buy planning book
Expert Business Planner
External contacts, resources etc.
Don't be afraid to ask other people to help assess your strengths and weaknesses.
To help surmount weaknesses, consider the idea of forming an entrepreneurial team (or taking on a partner, part-time adviser, non-executive director etc.) but beware of trying to work with people you don't like or respect, and don't involve family unless you are really, really sure that it will work out for the long-term.
Write down your assessments and rank your main strengths and weaknesses. Make sure to avoid the trap of showing something as both a strength and weakness. Use the resulting list to help set the criteria and boundaries to your search for business ideas. For example, the scope of your ideas might embrace ideas centered around one of the following:
Be specific but don't place unnecessary limits on the scope of your ideas or thinking. Some clear ideas may have already started to emerge which could start evaluating straight away.
3. Looking for New Business Ideas
When looking around for business ideas, bear in mind that these could be based on any of the following approaches:
Bear in mind that most good business ideas are not completely original. You may be familiar with the following diagram which shows the possible combinations of existing/new products/markets.
The simplest business ideas (existing products in existing markets) will be located Box 1 and the trickiest (new products in new markets) are likely to be in Box 4. If you concentrate on pursuing ideas involving existing products in existing markets, you run the risk of being exposed to severe competition. If you focus on new products in new markets, you might find yourself too far out on a limb. Look most closely at the combinations of products and markets in boxes 2 & 3.
You must narrow your search to specific market or product areas as quickly as possible. For example, the "food business" is too broad a search area. Do you mean manufacturing, distribution or retailing, or do you mean fresh, frozen, pre-prepared etc. or do you mean beverages, sauces, confectionery etc.? It is better to pursue several specific ideas (hypotheses) rather than one diffuse concept which lacks specifics and proves impossible to research and evaluate.
Generally, you should always aim for quality rather than cheapness. Be very cautious about pursuing ideas which involve any prospect of price wars or are very price sensitive; of getting sucked into short-lived fads; or of having to compete head-to-head with large, entrenched businesses.
Observe consumer behavior:
Look at changing existing products or services with a view to:
Be on the look out for:
Try the following approaches to locating ideas and suggestions:
Above all, open your eyes wide and try to spot the obvious gaps. By all means be inventive, imaginative and original in your thinking but stay market- and consumer-orientated rather than product-obsessed. We all know stories about people inventing a better mousetrap and never getting a nibble from the market!!
4. Assessing the Business Ideas
Having built up a moderate list of ideas, these must be evaluated so that a short-list of preferred options with the greatest potential and lowest risk can be assessed in greater depth.
One way of evaluating ideas would be to use a simple scoring system using gut-feel with a limited number of criteria as shown below.
Before scoring individual ideas, run through the criteria and set what you feel should be minimum desirable scores for each. The resultant total could be used as your overall minimum threshold. If some ideas don't achieve satisfactory scores, drop them and look for better ones.
Once your short-list has been developed, you will need to start devoting substantial time to assessment, research, development and planning. For a start, you could pursue the following tasks:
Bear in mind that the incubation period for a new business can easily last several months or even years. Don't rush into the first feasible idea without letting it incubate or develop in your mind for a reasonable period. There might be a tendency to get all fired up and enthusiastic such that your heart is starting to rule your head. Instead, stand back and think!!
Do not be afraid to seek external assistance from professional advisers or from enterprise support organizations which are virtually everywhere. These include SBDCs in the US, Enterprise Agencies & Business Links in the UK, County Enterprise Boards in Ireland, EC BICs throughout the EU and so on......
5. From Business Idea to Business Plan
Having firmed up on a specific idea and conducted preliminary research, you have several options including the following:
Most probably, you will start addressing all these tasks in parallel rather than sequentially. Other issues which you may need to start thinking about include the following:
Bear in mind that, to develop a successful business, you must:
If, at all feasible, there are huge advantages to be gained by embarking on a "soft start" or pilot launch before plunging full tilt into the new business. This approach can be of enormous value in helping to firm up on the scope of the opportunity; gaining more insights into the market; debugging products and getting customer feedback; curtailing costs and personal or financial exposure; acquiring a track record etc. etc. - check Devising Business Strategies for further insights into "soft start" strategies.
6. Introducing PlanWare
PlanWare develops and sells a range of financial planning packages - Exl-Plan and Cashflow Plan - for businesses of all sizes & types. Trial versions of all products can be downloaded from our PlanWare site and many other sources on the 'Net.
We also offer an extensive range of commercial software for writing business plans, market planning, assessing business ideas and evaluating strategies.
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