Steps 1-4: (Part 1 of 2) Written by Terry Ouimet
I wake up every morning and can’t wait to get to work. Monday is my Friday. I love work so much that time just flies by and I find myself so entrenched in projects that I end up staying late practically every day. Vacation? Who needs it? If that’s you, I’d like to know where you work because you are definitely in the minority according to recent research on job satisfaction in the USA. Better yet, you could be one of those lucky people who left their miserable job and became an entrepreneur and now have your own dream business. The problem is, how do you come up with a good business idea so that you can bust out of prison and leave your job? I think you will find these 9 crucial steps to how I came up with my business idea and my thought processes throughout each step to be extremely helpful for your own idea generation. Steps 1-4 are in this article, and steps 5-9 are in a separate article (part two).
SUMMARY OF THE 9 STEPS
Analyze the Data
SIMPLE TAKEAWAY: The smart way to come up with your business idea is to challenge your assumptions with a methodical step-by-step game plan, and stay as objective or unbiased in your thinking as possible.
SIMPLE ACTION STEP: Grab your entrepreneur notebook or laptop and answer steps 1-4 to help you come up with your business idea.
RELEVANT BOOK: Will it Fly ?How to Test Your Next Business Idea So You Don’t Waste Your Time and Money, by Pat Flynn. Full disclosure, I am affiliated with Amazon and receive a small referral reimbursement if you buy the book through this website. Your price is not any higher, but you help easuccess stay up and running.
Essentially we are conducting a well-thought-out sequence of steps which will in turn give us a game plan or framework that allows us to prove if we are right about our assumptions and new business ideas.
1. Self-Assessment Inventory
What skills, experiences and passions do you bring to the table ? My idea generation began with asking this kind of question: If money didn’t matter, what would my dream job be? What would I want to do for the rest of my life if I could draw it up perfectly? My decision- making process began with an evaluation of my biggest asset, me. Specifically assessing my skills, unique experiences, passions, personality and giftings. I think many people do it backwards by trying to come up with the product or service first. You can google “Five most profitable new business,” or “75 new businesses to start from home,” and that information is helpful. I have a couple similar articles on this blog and they play a necessary part in idea generation. Similarly you can say “I’m really good at public speaking therefore I should start a motivational coaching business.” However, I prefer this “deeper” step- by-step formula that I went through to ensure long term success.
Setting Yourself Up For Long Term business Success
Essentially this first part of the business idea phase boiled down to what was I really good at? And what did I enjoy the most? You have heard that saying, “Do what you love and the money will follow.” Or, “Choose a job you love, and you will never have to work a day in your life.” My thought process was that the only way I could sustain the focus, determination and fortitude needed for the long haul would be to choose something that I loved and was highly skilled at. Then my sales experience and business background would provide the one-two punch. Here is the point of doing this exercise: You will start to see a story or picture unfold of who you are and what you have to offer. More importantly, you have something special to offer and people will be willing to pay for it if you put some other pieces of the puzzle together correctly. Don’t believe me? Please read further and I’m confident you will agree. I think this step-by-step formula is a particularly wise strategy for coming up with business ideas when you are in a job that you can’t stand and are miserable in. Otherwise, what if you come up with an idea for the wrong reasons and jump from one boiling pot into another? I’ve heard Mark Cuban of Shark Tank – my second least favorite shark- say, “it’s wrong to choose your business based on your passion alone, but rather focus on what you are good at by looking at where you put your time in, follow your efforts.”
I think you will find a number of differing opinions on this idea from successful entrepreneurs. While I would advise listening to Mr. Cuban over me, in my own journey when I was in the idea-development stage, I thought of it like this: if you are good at it, chances are you might be passionate about it, especially if people will put money into your pocket for it; and if you are passionate about it, eventually you will have no choice but to be good at it. Takeaway point here is: if you excel at something and are passionate about it, you may have identified a potential business idea and you are likely setting yourself up for success. This is especially true if you are selling to a mass market and have come up with a unique solution to a problem or a unique way of delivering value that the market leaders are not. If you are neither passionate about or good at your idea, it might be a red flag and a bad idea to proceed.
How To Start Your List
I made a list that looked like this and just started writing everything that came to mind:
Skills For example, I was trained by a successful oil painter in Russian Impressionism and took classes at The Arts Students League of Denver, a prestigious art school. I can plein air paint well enough to sell paintings. I was taught sales skills and training by a fortune 100 Pharmaceutical company. What unique skills have you gathered along the way that you could teach, coach, consult or make a product to sell to others?
In An article by Tegan Jones for Lifehack https://terryouimet.com/Tegan-Jones , she describes some well-noted skills of Billionaire Richard Branson, the well-known outspoken owner of the Virgin Group which controls more than 400 companies. He is a fun guy, an excellent leader, able to interact highly with customers and employees, he is a giver, and a dreamer to mention a few. What are you good at? And what have others told you that you are good at? Is there anything that others rely upon you for, or come to you for advice and help with?
Education For example, I have a Master’s Degree in a specific field of study and conducted a thesis, did a lot of research, published the thesis and defended that thesis in front of a board of college professors. However you can still have an education without a fancy degree by your name, so don’t limit your education assessment to that. Think of this in terms of what product or service people will potentially pay you for. There are plenty of skills and real life “education” that people get from working with others, hanging out with other people who teach specialized skills; these experiences may in fact be more valuable than a paper degree. What special training or know how would other people like to learn from you in the form of a marketable service or product?
Personality Envision yourself going to work every day and performing all the tasks associated with your dream idea. Even better, visit a similar business and spend the day hanging out with them so you can “try on ” your potential new industry and see how it fits. Perhaps you want to open a niche bakery of some kind but you are not an early riser and hate to be on your feet all day. Maybe you want to get into the beach-gear business selling an amazing water-sport product but the thought of ordering thousands of units of product from China and then getting into the shipping and retail business sound like a major headache. The point is, think about your personality and what kind of business will bring out the best of your unique traits and enable you to thrive in that environment. If the main essence of this job goes against your personality grain, then you are not helping yourself or your potential customers. You would not be putting yourself in a position to be successful in the long term.
Unique Experiences For example, I played pro hockey in Switzerland. Not everyone has done this and it could bring unique value to a business such as knowing how to travel in Europe, knowing another language, understanding how to train, compete at a high level and work as part of a team, understanding how to take direction and correction (while sitting on a cold wooden bench), and knowing where to get good chocolate. What have you done that is unique and could help to solve a problem in the market with a product , or provide a service in a niche that has unmet needs?
Passions What do you spend your free time doing? Is there one thing that you look forward to doing when you get some “me time”? What are you always talking about and thinking about aside from work or normal everyday life? Are there magazines, books, or online information that always catch your attention? Is there an activity that you can do endlessly without realizing how much time has passed? If you could get paid to do what you love the most, what would it be? For me, at the beginning of my journey it was Plein Air Painting (oil painting outside) and selling paintings in galleries, on my website, at shows, and private commissions. I couldn’t get away from it no matter how hard I tried to tell myself it was just a hobby and you need to stifle it and keep doing what you’re doing in your “day job”.
In a CNBC interview on 10/2017 by Catherine Clifford, Amazon founder and CEO Jeff Bezos discussed telling his wife he wanted to quit his secure job and try something crazy that probably wouldn’t work. Mr. Bezos said, “I’d always wanted to be an inventor, and she wanted me to follow my passion.” The Takeaway here: Jeff Bezos followed his passion and is now the richest man in the world, and created something that will forever be remembered. The article further mentions how he came up with the idea in the first place, “I came across the fact that Web usage was growing at 2,300 percent per year. I’d never seen or heard of anything that grew that fast, and the idea of building an online bookstore with millions of titles — something that simply couldn’t exist in the physical world — was very exciting to me,” says Bezos, in his 2010 Princeton address. The Takeaway: Jeff Bezos made an astute observation about a niche in the marketplace and combined that with his childhood love of inventing things and subsequently built the most successful business on planet earth, and quite possibly other planets as well.
Gifts and Abilities These are usually abilities or traits that you are born with, you don’t train for them or study for them. You may not even necessarily know what they all are, but you just have a natural talent or “bent” towards these things. I would suggest finding out what these all are if you are serious about starting your own business. Here are some examples of abilities you may have: speed, gorgeous voice, beauty, physical strength, high intelligence, mathematical mind, organizational ability, creativity, imagination, self-discipline etc. As an unlikely but clear example, if you are terrible at public speaking, starting a business as a motivational speaker may not be the way to go for you.
I remember listening to a podcast (How I Built This , NPR) about the life story of Barbara Corcoran, star of the hit TV show Shark Tank and one of my favorite sharks. It was a long podcast that covered her whole life and the one thing I took away from it was her uncanny ability to be flat out determined in high pressure or negative situations. When it looked like the deck just wasn’t stacked in her favor and she should just walk away, she persevered when faced with failure and she succeeded – mostly through creative thinking and smart marketing ideas. She just seemed like a natural at wiggling her way out of a jam and turning it into gold. Again, ask someone who knows you well and it will dial you in pretty good as to what your natural talents are. Have them look over your list and almost certainly they will see something you did not that can help you. There are self-assessments that you can take that might be worth your time. Understanding what your natural gifts are and aligning yourself in business positions to use them, are important parts of the idea-generation phase of any new startup.
2. Risk Tolerance
I left a six figure sales job to become an artist, my first entrepreneurial venture, which sounds kind of risky, maybe even crazy. However, I believe in calculated risk, planned risk, risk with personal property paid off and money in the bank if at all possible. Still, it was a gamble and an exceptionally large pay cut. Other entrepreneurs have no choice and they have to go big or go home, some are willing to go deep into debt with the confidence that business will be very profitable one day. If you’ve ever invested money, you know that they give you a questionnaire and try to assess your risk profile. What are you willing to lose in order to gain? This is done right from the start before you hand them any money (for obvious reasons). I feel like the same kind of thinking should apply in coming up with a new business idea.
Will You Play It Safe or Risk It?
I think we have to spend time pondering what we are willing to risk financially, emotionally, and time wise before we go down this road. As I mention in a separate post, the number one reason I decided to take my first leap as an entrepreneur was that I didn’t want to look back at the end of my life and feel regret for not pursuing my dreams because of fear. Additionally, although I have no idea why, my wife was very supportive which gave me a surge of confidence.
My second business idea was a little more capital-intensive up front since it required me to pay for a tooling mold to manufacture my product, and at least 1,000 units of inventory to get the price per unit where I needed it to be. This would have cost me about $50,000 up front, not to mention other business expenses such as website, marketing, accounting and selling. As you’ve heard it said: “The bigger the risk the bigger the reward.” The CNBC article mentions this about Jeff Bezos and his initial business idea: “I decided I had to give it a shot. I didn’t think I’d regret trying and failing. And I suspected I would always be haunted by a decision to not try at all. After much consideration I took the less safe path to follow my passion, and I’m proud of that choice.” Most of the time there is risk in starting a new business, the very definition of an entrepreneur is essentially a risk taker.
3. Neutrality Thinking
I remember getting pretty pumped about my camping stool product. However, I kept telling myself, throughout the idea-development stage of the unique new portable camping stool, that I hadn’t proven anything yet, and to just keep an open mind and continue gathering information. It was hard, but to my advantage in remaining as unbiased and objective in my approach as possible.
Wrong thinking Type A: “Let’s get this thing into third gear ASAP, I have the best idea in the world, this is going to be the next best thing, I’m going to blow the competition out of the water, this is going to make me rich, people are going to love this, let’s get the website up and running now.”
Wrong thinking Type B: “I’m not going to start this, this is the dumbest idea ever, why even bother, nobody is going to pay for this, it’s stupid, what was I thinking, there’s no way I can make money doing what I love the most, there is too much competition, I don’t know what I’m doing really, I’m not an entrepreneur, I’m not cut out for this I better throw in the towel.”
Neutrality Thinking: Keeping your mind open until you have completed all the steps in the idea development stage. If you are TYPE A, I think it’s wise to stay in the idea generation phase for a little longer than what makes you comfortable; if you are TYPE B you may need help getting out of the “paralysis by analysis”, discouraged, or inferior state of mind.
An effective way to do this to get outside your own head a bit and ask other people, specifically people who might be potential customers of the product or service. Conduct market research and competitor research as mentioned below to further test your hypothesis. Your idea at this point in time, is really only an idea with some possibility, based on no evidence of truth. You might think you have the best idea in the world, but if nobody opens up their wallet for it, it’s just simply not. Or, if you can’t believe that nobody else has thought of this before, there may be a reason.
Challenging Your Assumptions
Google the definition of the word Hypothesis and you will find this: “hy·poth·e·sis noun
a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.
theory, theorem, thesis, conjecture, supposition, postulation, postulate, proposition, premise, assumption; More notion, concept, idea, possibility
a proposition made as a basis for reasoning, without any assumption of its truth.”
I think at this early stage we have to keep an open mind and be willing to abort, delay, or step on the gas depending on information from other sources. We have to remember that we are challenging our assumptions with a methodical step- by-step game plan. See below.
4. Market Research
There are two types of market research that you should conduct. The purpose of market research is to gain information about prospective customers and potential competitors in the area of business you are considering. You will find answers to things like market size, consumer demand, and market saturation. This research will help you make wise decisions about what kind of business you should start as well as your: business name, winning position, marketing niche and everything else associated with your business plan. Additionally it will minimize your startup risk and set you up for success. At this point I was trying to identify a unique way of solving a mass market problem which would be the foundation for my business, my winning position.
Primary market research (PMR) is learning about the customer directly through first-hand information– seeking to understand them rationally, emotionally, socially, and economically. Primary research will help you understand robust information about your customer and how they function in the marketplace, which will ultimately help you come up with a better idea for your startup than if you did not do this type of research. PMR is primarily done through interviews in person, by telephone, or via skype. It can be done online or through email as well. I sent out surveys in the mail with an incentive (drawing for a $100 visa gift card) to send them back to me and the information was extremely helpful. I went on Facebook forums where I participated in discussions and asked questions about what problems or needs I could address with my product. I also went to stores where my product could be sold and spoke with the managers and retail sales associates who were happy to answer my survey questions. People love to give their “professional opinion”; and this information was invaluable.
Secondary Market research(SMR) is mainly accumulated through secondary sources- here are some examples: trade association websites, white papers, statistics or industry reports, competitor websites and marketing campaigns. This is where I tried to identify my specific competitors and learn everything I could about them as if they were my own company. Having done this, you can then identify specific target segments of the market or your “market niche” as it is called. More on finding your niche in the following steps.