Successful Entrepreneur

How Do I Come Up With a Winning Business Idea?

Developing a business idea is a matter of creating a vision, leveraging your strengths and determining what the market needs.

These three steps should get you started.
Create a vision

Close your eyes for a few minutes and conjure up a detailed image of what you want your life to look like in 5 years.

Be as specific as possible.

• Where do you live?
• How do you spend your days?
• What kind of work do you do?
• Do you work alone or with other people?
• Who are you surrounded by?
• What do you do when you aren't working?

Don't limit yourself to these questions; create a vivid vision of yourself, touching on things that are important to you.

These are all personal issues that will impact the type of business you pursue - being a city or country person; wanting to travel or sit at your computer; liking to meet people or work on the phone.

This activity will help you create a foundation for choosing a business, making business decisions, and setting clear goals.

It is best to do this exercise with someone else and share your vision.

If you can't, write it down to make your vision more concrete.

Determine what you're good at and what you like to do.

It's often useful to look inside yourself to figure out what you like and dislike, and where your talents lie.

It's one thing to come up with a winning business idea.

It's another to come up with one that fits your skill set and interests you.

Your business has to keep you excited so you can thrive over the long haul.
One of the best ways to do this is to make three separate lists:

List 1:

What you're good at everyone is good at something and many skills can be the foundation for a business.

You might be naturally organized or have a knack for fixing things.

You may be so used to your skills that they don't immediately come to mind, so assemble this list by observing yourself for a few weeks with an eye out for your aptitudes and by asking people who know you well for their impressions of what you excel at.

List 2:

Skills you've acquired over the years.
Whether or not you've worked in a conventional environment, you no doubt have accumulated many.

Write down all the work responsibilities you've had; think about the varied tasks you know how to complete.

Make sure this list is complete -- there should be at least 10 distinct items.

List 3:

Things you like to do

List the things you enjoy doing.

This may not be as easy as it sounds.

This list should be at least 10 items long.

Stretch beyond your hobbies and interests that spring to mind immediately.

If you're stymied, ask people who have known you for a long time -- particularly people who knew you as a kid -- what they have seen you doing when you're happiest.

Keep these three lists in an accessible place (for instance on your desk) for several weeks, and every time an idea comes to you, jot it down in the proper category.

Ask people who know you well for their input or to help you jog your memory.

Figure out what the market needs

So far, you've been looking inward to come up with your business idea.

Now it’s time to look outward to discover an unfilled requirement that you can meet with your product or service.

There are plenty of "Top 10" or "Hot New" business lists out there.

These may stimulate some ideas, but the best business ideas will come from you and will be based on who you are and what the market is looking for.

So while you're doing your soul searching and list making, put up your antenna and look out for business opportunities.

The attached worksheet is designed to help you come up with ideas.

Don't be afraid to be outlandish and don't be discouraged if your first few ideas are flawed.

Put them aside and keep working.

Guts:

Guts mean you must have an entrepreneurial instinct, which is an overwhelming desire to have your own business.

You must have the guts and dedication to be completely devoted to your goal.

Incidentally, devotion to your goal is much more likely if you have a love for your intended business.

Life is too short to start a business that doesn't give you satisfaction and joy. And, through good times and bad times, you will stick with something you love.

Brains:

While appropriate educational credentials are important, entrepreneurial "brains" means more than scholastic achievements.

To become a successful entrepreneur, you must have a working knowledge about the business you plan to start before you start it.

Common sense combined with appropriate experience is the necessary brainpower.

Prudence, follow through and attention to detail are very important.

Capital:

You will need seed money of your own plus sufficient cash to maintain a positive cash flow for at least the first year.

To be successful you must learn how to forecast future cash requirements through cash flow control.

Many businesses can be started on a very small scale with a small investment.

Then, as the business grows and you gain experience, cash flow from your business can be used for growth.

You can control your risk by placing a limit on how much you invest in your business.

Most service businesses have pricing power.

Should you bet on a business you don't know when you can bet on a business you do know?

If you intend to manufacture a product, consider the pros and cons of contracting out production to a low-cost supplier.

In other words, operate a "hollow corporation.

"A "hollow corporation" is a company that subcontracts manufacturing and packaging

Things to Watch Out For:

Impatience

Do not let overconfidence short-circuit you from analyzing your selection of businesses carefully.

You must not fear of hearing the negative aspects; it is much better to be aware of them and face them early on.

Be realistic.

Do not become lured by high rewards.

They will come if you choose the right business and if you understand every aspect of the business before you open its doors.

Step-by-Step Approach

Decide if you really want to be in business:

You will be putting some (not all, hopefully) of your net worth at risk.

You will run the risk of becoming eccentric, meaning creating a life that is out of balance, with working hours taking away from other family or pleasurable activities.

There may be levels of stress you have not experienced as an employee.

Decide what business and where:

Once you have decided you have the characteristics of a successful entrepreneur and that you definitely want to be in business, then you must decide which business is best for you and where to locate that business. 

Business Strategy

Selecting the wrong business is the most frequent mistake that start-up entrepreneurs make.

Here is a checklist to help you select a successful one:

Take your time and wait for the business that is just right for you.

You will not be penalized for missing opportunities.

The selection process takes a lot of planning and your experience and complete knowledge is vital for your success.

Don't tackle businesses that may be too challenging. It is better to identify a one-foot hurdle than try to jump a seven-footer.

Try to identify a business that has long-term economic potential.

Follow Wayne Gretzky's advice, "Go to where the puck is going, not to where it is."

A big mistake can be an error of omission. This means you may fail to see an opportunity that is right in front of you.

Look for a business that will grow in today's and tomorrow's markets.

Many small retail stores are no longer in business because huge stores such as Wal-Mart and Home Depot provide more choices to the customer and often at a cheaper price.

Follow the advice of Warren Buffett, Chairman of Berkshire-Hathaway Inc. and the most successful business picker in American history:

Mr. Buffett looks for businesses that focus on a "consumer monopoly" with pricing power and long-term predictable growth prospects.

Examples include: See's Candy's, Coca-Cola and Gillette Razors. Can you copycat this philosophy in a small way?

Businesses to avoid are "commodity" businesses where you must compete entirely on price and in which you must have the lowest cost to survive.

As Mr. Buffett has said, "In a commodity type business you're only as smart as your dumbest competitor."

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