Home / Business ideas / business ideas 101, how to find your awesome business idea? (2019)

business ideas 101, how to find your awesome business idea? (2019)

when it comes to finding a new business idea there are so many resources that you might use there are lists online of businesses that you can create or even books about the topic however I suggest that this is not the ideal approach to take instead we want to focus on you who you are and what makes you great some of the greatest entrepreneurs in the world come from businesses that they already had some familiarity with the model that I like to use is gifts Plus loves Plus skills equals talents it's at the intersection of these three things where your talents lie and what makes you great you want to explore what your gifts are these are the things that you were born to do what things make you great sometimes other people will help you understand it better next you want to look at the things that you love these are the things that you enjoy what do you just like to do for fun often these things give you energy which will give you longevity in entrepreneurship next you're going to take a look at your skills this is knowledge that you've acquired over time whether it's through learning or apprenticeship these are the things that you've just learned how to do and finally you want to look where all three of these come together your gifts your loves and your skills whenever you see something mentioned multiple times in all three categories that's an excellent sign that you have a talent in that area you want to focus your business idea generation around that talent that is the best starting point if talents are about who you are then needs are about what other people want it's about the pain that they have the best entrepreneurs cultivate an awareness of the world around them and the needs that other people have the most basic example of a business that's based on needs might be if you use dry cleaning on a regular basis let's say that you used it weekly then you move to a new area and find that there are no dry cleaners nearby this is an example of a need that could exist in the marketplace it could be a good business idea the idea is to discover the pains that other people have there are a series of questions that you want to explore first about yourself what's missing in your day or what's too hard what's too difficult for you also you can explore that question as it relates to other people the third question deals with just things that other people are asking you to do or give perhaps people discover that you have a gift for graphic design and so they regularly ask you about it that could be a need the fourth deals with business annoyances things that happen on a regular basis that just drive you nuts Netflix tells the story that founder Reed Hastings got the idea for Netflix when he got a huge late fee from Blockbuster and then the fifth question is just basic it's the idea of what are the things that you do that the market buys on a regular basis we just want to look at what kind of existing businesses revolve around your talents now we're going to come up with a brainstorm list of business ideas the most important rule in this process is do not edit anything all of your ideas any idea right now is good just put it down your goal is to get at least ten ideas now we just want to have an initial list that we can edit from in the future so take a look at the work that you did previously look at your needs worksheet what business ideas could relate to the needs that you saw or what businesses already exist related to those needs remember you don't have to come up with an original idea an existing business can be fine for you next take a look at that talents worksheet that you created and ask yourself what are businesses that are related to the talents that I already have add any ideas that you have on to that list remember don't edit all ideas are good also did you have any idea swimming around in your head prior to starting this course most people don't go into the idea of starting a business without already having a couple of concepts in mind put those down on the list remember we're looking for at least ten ideas and if you come up with more than twenty that's fine just print out more worksheets we want every idea that you could possibly have so we created a good list of starting business ideas now what we want to get your list down to the top five best ideas and here's how we're going to do it first let's start with the head column we want to check the box for any idea that just simply makes sense that it's logical that you can see the numbers lining up now before we were just throwing crazy ideas and we weren't editing anything because we were brainstorming now it's time to get logical check off the box for anything that makes sense in your head and the next column we're focusing on your heart how does it feel as an entrepreneur you need to be excited about what you're doing so we want to check the box for any ideas that are exciting or interesting or that you're passionate about complete this process for the full list if you don't know fully the answer or whether it makes sense in your head or your heart just put a question mark now what we're looking for are any ideas that don't both check off the head column and the heart column for any idea like that strike it off the list we need both your head and your heart engaged in entrepreneurship then finally we're going to rank however many ideas you have left this should get us to somewhere around the top 5 from these top 5 ideas we're going to evaluate and figure out which of these have the best likelihood of success the difference comes down to what I call the opportunity factors these are the principles that combined together that lead to an actually successful business first demand how much does the market actually want this product or service next expertise we actually have to have the know-how in the industry that we're trying to get into that's what we need to make it happen in that business third resources your resources as an entrepreneur are money equipment materials we have to have the things necessary to create that product or service fourth profitability we actually have to make money in the business this means we want to look at the price and cost differential and make sure that there's enough money to be made distribution is critical because it gets the product into people's hands and we need infrastructure and connections to make that happen and finally it's your proprietary advantage this is what makes you unique in terms of a patent or a trademark or a process the first opportunity that we want to assess is demand simply we want to ask how many people can buy this product or service this is sometimes referred to as market size there are four areas that we want to look at first who are they we want to be focused about this are we looking at people or are we selling to businesses for instance an example might be we're targeting women between the ages of 35 and 54 who have an MBA second we want to ask a question about geography where are they what city or what geographic region do they reside in for instance we might say Los Angeles now just a caution about this many people who are excited about their new business say our market is the entire world because they put it up on the internet however you will be much more successful if you're focused in terms of your geography third now we want to get an idea of how many of these people exist the good thing is there are tools on social media that will give us a little bit of a clue for instance you can use LinkedIn itself to figure this out by running a test ad and this becomes helpful later as we explore the other opportunity factors you no matter how wonderful your idea is if you don't know how to do it it's not an opportunity there are a series of questions that you can go through to explore whether or not you have the necessary expertise first of all what are the technical abilities or skills required for this business you want to list everything that comes to mind don't forget essential skills like sales or web design or legal second assess yourself on each of these skills on a scale of zero to ten zero being you have absolutely no clue how to do it and ten being you're a master at it be honest in your assessment and this leads us to step three which is where any of those skills below seven if so we want to highlight those and bring them out because there's a potential problem here you don't have the capability that you need in order to make this business work in that skill so it doesn't mean that the idea is dead it just means that we're going to need to hire someone or outsource it or add someone to our team who has those skills and just a caution about this many people look for a partner when they're lacking a skill and I am in favor of first trying to hire people rather than give up equity again be brutally honest with yourself assess this like you were an investor considering whether or not you would put money into this business this will help you be more objective as you gauge this opportunity imagine for a moment that you wanted to be a carpenter and you set out to build a house however you don't have any wood you don't have any tools now the idea of that is silly right yet so many would-be entrepreneurs start out in exactly that situation they have an idea for a business yet lack the necessary resources to succeed I'm going to give you some questions to assess whether or not you've got the resources to make this idea an opportunity first of all do you have enough money to start this business how much money do you think you need just give it your best guess and then multiply that gas by two why because everything is more expensive than you think it will be do you have that money and if not how would you get it would you get a loan would you ask a friend for it where is that money going to come from to start the business second the related question is for the first six months how much money would you need to run this business assuming no profit is coming in this is critical because most businesses need about six months of ramp up time and probably no profits are coming in so give it your best guess and then multiply times two why because everything is more expensive than what you think it's going to be and if you don't have that money where are you going to get it third let's consider the materials do we actually have the stuff we need to make whatever it is you're going to be sewing for instance if you're going to have an ice cream business obviously we're going to need cream and sugar and some mix-ins do you have access to this and if not where are you going to get access to it fourth do you have the equipment that you need again in the ice cream scenario we're going to need an ice cream mixer so either we're going to have to buy one or already have access to one and then finally are there any other resources that we need that we haven't thought of yet just add those in there looking at these resources on we'll give you a better idea of the reality of this idea that you're looking at we need the reality not just excitement a for-profit business must make money why money is the lifeblood of business without it no matter how wonderful your idea is it isn't an opportunity the word for money in business is profitability at its most simple level profitability is sales minus expenses but we need to dive a little bit deeper than that now first of all ask yourself whether you're selling a product or service how much do you think you can sell that for in particular per unit if it's a product or per hour if it's a service now we want to calculate or estimate your expense per unit in other words how much is it going to cost us to provide this product or to provide this one hour of service we want to overestimate here because everything costs more than what we think is going to cost now using these two numbers we can calculate the contribution margin which is sales minus expenses now we need to take a look at your overhead this is sometimes called the fixed expense these are things that you're always going to have to pay month in and month out these are things like rent and utilities or subscriptions or insurance or administrative costs again overestimate how much things are going to cost because things always cost more then we can calculate the break-even number at its most basic level this is overhead divided by the contribution margin in other words the break-even are the number of units that we must sell in order to break even hit zero every single month this is a critical number because it lets you know how much you need to sell so that you're not losing money but we're not done yet the most important question is how likely are we in this business idea to double the break-even every single month why double because it's not enough to start a business and make back the money you're putting in we want it to be highly profitable and by trying to get two times what we're putting in we're creating a business idea that has a lot of cushion behind it so how likely is that not very likely very likely maybe just put your best guess by taking a look at these numbers it will help you understand whether or not this is a business opportunity or just a great idea you've got this amazing product or service now we need to get it into the hands of your potential customers distribution answers that question how are we going to do that you might have the best ice cream on the entire planet but if it's not on the shelves and the stores where people buy it you have an uphill battle with your business there are some questions that you can consider about the opportunity factor of distribution first of all how will your most likely buyer need to get this product or service are you going to sell it face to face are you going to sell it over the internet or does it need to be in the stores be honest with yourself about what the distribution model really needs to be second do you already have established connections to these distribution channels provide a brutal self-assessment to yourself we must have access to these channels do you know who it is that we need to contact to get this product into people's hands and third if you don't already have it set up how are you going to get access to that distribution channel pause for a moment on this question is the answer come to you quickly do you have an idea if not you have a real struggle with that business idea and it very likely may not be an opportunity distribution is powerful to your business and necessary for your success it can make or break your business idea the last opportunity factor is proprietary advantage what does that term mean proprietary advantage essentially it's something that you own or is exclusive to you something that gives you something that no one else no other business can have it's not necessary to have a proprietary advantage but it can add a tremendous amount of value to a business idea let's take the example of ice cream that I've been talking a lot about and consider a few ways in which you could have a proprietary advantage the first would be a patent this would be an invention a way of building something that no one else has the right to do for instance I have a machine that I've invented that creates ice cream in a particular way or I invented a heated scoop for ice cream if I owned the patent I own that thing and can sell that to others second there is a trademark this usually deals with a brand name for instance Ben & Jerry's that's a very powerful trademark and they've used that trademark to create franchises or to create a particular type of ice cream on the store shelves you can also have a trademark but it takes a lot of work to build up its value number three is a particular process or technology usually you're going to protect this using a copyright or a patent one example of this might be if you created a software program that was exclusive to ice cream businesses and help them run their business in a very profitable way now what if you have no proprietary advantage does this mean you don't have a business not necessarily many great businesses have been started without this but you want to find another way to create value to create uniqueness to compete with other people who are doing what you're doing one example of this in the ice cream world is bela gelateria in vancouver the founder James Coleridge studied in Italy and has won many awards and is recognized worldwide is one of the best creators of gelato the result he has lines for hours around the building waiting to get this particular ice cream now you want to create something like that if you have a proprietary advantage it adds more power to your idea and gives you more value now that you have a basic understanding of the opportunity factors it's time to put them to work we want to print out a worksheet for each of your top five business ideas or how many you had and then take each of those ideas through one of these opportunity factor worksheets at the end of the worksheet you'll notice a question it asks you to assess subjectively how much of an opportunity this idea is either answering a B C or D we want to focus on the ideas that only get the a answer these are very likely to be opportunities I don't recommend that you try to do a business with any of the other answers if you only have one idea that gets an A answer well then it's easy that's probably the idea that you should test but if you have multiple ideas that turn out to be good opportunities we have an extra step let's go back through the worksheets and rate each of the factors on a scale of zero to ten for instance how strong is distribution on a scale of zero to ten if it's great then let's rate it an eight do I have the expertise that I need again on a scale of zero to ten maybe it's pretty good so I'm gonna put a seven after you do this for each of the ideas create an average score and look for which idea has the best overall score finally let's try one more step if you have multiple ideas pretend to commit to one of them imagine for a week or so give yourself plenty of time that you have committed to this idea that you're about to start it and you're going to have to do a lot of work to make it happen imagine how you feel about it this is similar to the concept of flipping a coin and then you get an answer you ever done that and then after you get the answer you decide to change your mind it's because all of a sudden it became a reality and you saw the consequence of your choices so commit to one idea imagine it's the opportunity you're going to use and then see if you feel committed to it after a week then we're ready to move on to the next step which is testing that opportunity so you've got this great business opportunity right now it's time to go out and get a logo get your business cards form an LLC get a loan set up a website slow down for a second the next thing we want to do is test that idea we want to make sure or as sure as we can possibly be that this is a good business opportunity before we put lots of hours and money into the business so what we're going to do is we're going to create a micro business plan you may love the idea and you may already be envisioning creating this corporate Empire but at this point consider that failure is an option it's a good option we want to test whether or not it's going to succeed because in the real world this is about results not just your passion we also need to make profit and if we are successful then we can leverage it into the full opportunity of creating that Empire that you envision now is there such a thing as a perfect business opportunity no there never is but we can do some things to increase our probability of success in fact a wise mentor once taught me this formula the probability of success – the probability of failure equals 1 what does that mean well if we increase the likelihood of success we'll naturally decrease the probability of failure and this business plan is how we're going to go about doing that so we've got the concept and we have some headlines so what kind of tests do we want to run here in the microplane you'll see at the bottom a place to establish two channels that we're going to measure a channel is just one way of saying how are we going to reach out to people what channel are we going to use we're looking for things that are easy and inexpensive that we can use to ask people and test these headlines here is an overview of the options that you can use and then I'll dive into them in greater depth as we continue in this chapter first is an interview or a survey you can do this online or by calling people even going door-to-door or face-to-face you're just simply asking the question number two is running an online ad this is the non pay-per-click version where you list something on a website or a classified ad site and then you're going to track how many calls you receive from that ad number three is pay-per-click this is social or search engine type listings where we're going to track how many people click on the ads with the headlines that you use you can also come up with your own ideas and be creative it's not limited to just these three but this is a starting point and these tests move us out of the realm of just guessing and start to give us some hard data and this will increase the probability of success so after you run these tests what's next well it's simply to decide whether you have a valid business opportunity or whether it was just a great idea remember what I said at the beginning failure is always an option so how do we assess whether it was a success or a failure first of all take a look at the targets you set at the beginning at the bottom of that micro plan what did you say was the criteria of success did you reach that criteria also when you asked your customers your potential customers what they thought about this what did they say what was the feedback that they gave you also take a moment and put on your skeptical investor glasses what I'm talking about is if you stood up in front of a bunch of people who had money to invest what questions would they ask what would they think about the results that you got you could also go to a third party and have them review the results with you say I want you to act like a skeptical investor and whatever feedback they give you calmly take it in if your results were positive I recommend you rerun your test but this time on a different emphasis this time you're going to focus on price what price would people pay to get this product or service be tough on yourself being an entrepreneur is risky enough what you want to do is focus on only the best possible investments for your time and money if you're unclear or uncertain in any way about the results it might be time to switch it up and try a different opportunity there could be something even more successful that's waiting just around the corner you

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