Lessons Learned – Moving to Your “Short List” of Business Startup Ideas

We identified two criteria for our new business idea in the last post. Those are that:

1. we must have passion for whatever business idea we come up with; and
2. running this business must give us personal satisfaction

We also got started with the process of generating ideas or opportunities we are interested in exploring and adding to our short list of potential businesses to start. Since your starting vector (on the journey to find the best concept or opportunity for your new venture), will often be a factor in how quickly you reach your goal, if at all, we’re going to spend a little more time on that issue in this post.

In an attempt to be “fair and balanced,” I must admit that Paul Graham’s article, Ideas for startups, seems to place less value on the initial business idea.

The fact is, most startups end up nothing like the initial idea. It would be closer to the truth to say the main value of your initial idea is that, in the process of discovering it’s broken, you’ll come up with your real idea.

The initial idea is just a starting point– not a blueprint, but a question. It might help if they were expressed that way. Instead of saying that your idea is to make a collaborative, web-based spreadsheet, say: could one make a collaborative, web-based spreadsheet? A few grammatical tweaks, and a woefully incomplete idea becomes a promising question to explore.

Actually, startup ideas are not million dollar ideas, and here’s an experiment you can try to prove it: just try to sell one. Nothing evolves faster than markets. The fact that there’s no market for startup ideas suggests there’s no demand. Which means, in the narrow sense of the word, that startup ideas are worthless.

Despite Graham’s apparently pessimistic view of the value of initial business ideas and concepts, his article presents several strategies to generate good business concepts, and is worth reading as we move along on our journey to a startup.

I posted an article today on the Applied Entrepreneurship group site on LinkedIn, Saras Sarasvathy Explains the Entrepreneurial Method, by, of course, Saras Sarasvathy. She says:

So it’s not really a question of this is better than that, it is just that the way entrepreneurs do it, they work with what they have and they look around and say, “What can I do with this?” And then, “What else can I do with it?” So it goes back to the idea of doing the doable and then pushing it.  So they just look around at the resources that are available to them and by resources I don’t even mean money.  A lot of the entrepreneurs I study started with things like who I am, what I know and whom I know.  So they are looking at what kind of a person am I, what kinds of things turn me on, what kind of things that I just will not do because it goes against my values. So, they have a sense of self. They know what they know and very often they are very good at knowing what they don’t know.

I posted another article today on the Applied Entrepreneurship group site, from the Idea Sandbox blog, which also seems on point for our present stage in the process: How To Create The Perfect (Brain) Storm. This particular post sets out three elements necessary or at least helpful for brainstorming. Here’s a snippet from the post:

Have you ever been in a brainstorming or strategy meeting where all the elements seemed just right and ideas just kept flowing and flowing? You and your team were able to hit ideas “out of the park?”

Chances are you had…

1. a. the right people assembled,
2. b. the right process and tools, and were,
3. c. in the right place… where people felt safe to think big ideas and were free from distraction.

I call these conditions the Perfect (Brain) Storm… When all the elements come together just so, and ideas just seem to flow.

Despite what the last article says, some feel the quest for ideas shouldn’t be all that hard.  Finding the Real Opportunities starts out as follows:

Business ideas are all around you.

They are lurking in your garage, in your basement, in your kitchen, and in your children’s room. You’ll find them in magazine ads, at your neighbor’s house, and at work. They are right there in the vegetables you brought in from the yard . . . in the stack of papers next to your laser printer . . . in the back of your truck . . . and at the back of your mind.

You don’t need to be a genius or an MBA to spot those ideas and turn them into profits, either. Identifying business opportunities is often as easy as identifying problems many people share and finding a way to solve them

The article goes on to suggest that one reason it is so easy to find ideas for your new business is because you can simply:

• Do what you live to do
• Turn old standbys into new products
• Look for marketing avalanches
• Look for mundane moneymakers
• Spin off a more lucrative business (not relevant to us since we’re presumably starting from scratch)

There are certainly many more ways to consider when trying to come up with the initial core idea or concept for a new business. I will be posting an article tomorrow on the LinkedIn site, which at least raises one worth mentioning here. The article by Paula Pollock, is Ego Keeping You From Your Dreams?

The bulk of the verbiage in the article is not necessarily germane to our process at this point. It does raise the significant specter of ego,  which is germane. When working through the process of finding an appropriate business idea for further study, ego can certainly get in the way. This may be particularly true if working in a group, since we all want to impress our peers with our value in such situations. It could, however, be an even more dangerous factor when working alone, since there are no others to question our energy, experience, or available resources.

I often suggest a little exercise to clients embarking on a new venture. I recommend that, after they create their initial draft of a business plan or business case, they lock themselves in a room alone with a mirror. I suggest they then say out loud to themselves, while looking in the mirror at themselves, each of the essential things to which they plan to commit themselves in the prospective endeavor, and that they next repeat, in the same fashion, each of their qualifications enabling them to have a reasonable chance of accomplishing these goals.

Granted, I expect very few of these clients actually go through this exercise. Some have done it, have thanked me, and have then moved back into the real world. The exercise works just as well when each member of a startup group does this, individually, of course. If you get through it with a straight face, you are either a really good liar, or better able to do the same thing when you look for your first employees, investors, etc.

In the next post, we’ll try to get to our short list of potential business ideas, and then move on to the start of the research and testing phase.

This is the third post in the business startup series. For others in the series, check the series index.

Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Lessons Learned – Refining (or finding) the Initial New Business Concept

In my last post, I mentioned I had been working on a change of direction for this blog. Instead of digesting the fifty or so articles I post weekly on the LinkedIn, Applied Entrepreneurship group site, and then giving my thoughts and impressions of common threads, I’m trying something new.

The current plan is to continue to use the rapidly growing Applied Entrepreneurship archive of some 1,400 articles on entrepreneurship (also available from the Boxnet application on my LinkedIn profile page), as well as new articles I post from this point forward, The difference is that instead of just blogging about the articles, based upon whatever gets posted on a daily basis, I’m going to try to “connect the dots” in a different way.

The premise of the blog’s new direction will be to use those articles, as well as your comments, in a step-by-step journey to starting a new business venture. Beginning with this post, I plan to walk through the process of starting what could be either a hypothetical business, or perhaps an actual business. I plan to have some fun with this, and I hope you will too.

There are at least a few things, which could make this a little more interesting.

• First, quite some time ago, one of the posts referenced an article I’d run across describing a “virtual incubator” project. Without going into too much detail, entrepreneurs posted their interests online in an ongoing user generated blog format, in hopes of matching talents, opportunities, and other things necessary for a start-up. The goal was to actually create one or more real business ventures out of the “sparks” generated through the virtual community.

I followed much of the string from the beginning, which ended up consisting of hundreds of posts. I won’t spoil the secret of the extent to which this generated real business ventures, but I would like to think this series has at least the same potential.

• Second, a group of professionals with whom I have served on a board of directors, has been exploring the possibility of continuing to work together in some new endeavor. We all spend some of our time on charitable boards but have an interest in the potential of working together to make some money together. We like each other and respect the talents we have seen each other display for many months, while we served on the board of the same enterprise. We plan to get together socially in the near future, and I’m sure this topic will come up.

There is the potential that we can use the output (from me) and input (from you) of this blog series to help us gel our thoughts, pick a plan to go forward, and actually get a business off the ground.

• Third, simply posting “the best of” articles and gathering feedback from readers should allow me to periodically post “best practices” lists and discussions. The Applied Entrepreneurship reading list, referenced above, contains literally scores of articles on many different aspects of entrepreneurship, as well as the process of starting and running a successful business. Some of the articles contain conflicting points of view. Some are better than others. Some are the best for one situation, but may not work for another. This is where experience, a good dose of luck, and the art of applied entrepreneurship come into play.

There is no one book, which will walk you through starting up every type of business under every set of circumstances. I’ve bought and studied enough of them to feel comfortable in making that statement. I’m still buying them and reading them, but I doubt I’ll ever find that silver bullet. On the other hand, there are lots of millionaires, and quite a few billionaires, who got where they are through imperfect means and methods. You don’t necessarily have to do it perfectly, but you do have to do it well enough to beat the competition and sustain that long enough to get it to the bank. (Read the article I posted by Anthony Robbins, Don’t Try To Be Perfect.)

I plan to use this blog series to generate a series of “best of the best” business startup and business operations articles, which I hope will provide you with both an opportunity to participate in the selection process, and benefit from the results. The success of this part of the plan is as much dependent upon you as it is on me, so let’s get started.

On The Threshold of Starting a New Business Venture

One of the threshold issues in such an endeavor deals not with issues, but people themselves. An article by Noam Wasserman, which I posted on the Applied Entrepreneurship site earlier this month, Founding with Friends, Founding with Strangers?, deals, as the title suggests, with the issue of whether one is better off founding a business with strangers or friends. The article gives pros and cons, and was certainly worth reading as a preface for this venture.

Another of the threshold issues is whether the concepts entrepreneur “wannabes” are working with are real ideas or “just” opportunities. Often, I find my new clients come in with great excitement, having found what they think is the “better mousetrap.” Just as often, someone has apparently just found the “perfect” business opportunity, but they have to act fast to make it work. In both cases, there is a great danger that they will rush past the basics on their way to the “gold rush.” Sometimes that can work, but the odds are slim.

Yesterday, I posted an article by Tim Berry (founder of Palo Alto software and great business blogger), titled Ideas vs. Opportunities. Here are a couple of points from his article:

The business planning process is about filtering the opportunities — a precious few, requiring focus, and planning — from the idea.

An opportunity has some of the following elements:

• Industry and market potential: look at market structure, industry structure, growth rate, margins, costs, etc.
• Economics: capital requirements, fixed costs, cash flow, return on investment, risk.
• Competitive advantage: degree of control, barriers to entry, availability of sufficient resources.
• Management team: people who know the industry, the market, the operations, the logistics, the road to market.

So now we’re starting on the journey with at least two things in mind. The two issues are:

1. Is it better (or reasonable) to start a business with friends than with strangers?
2. Are we better off looking for an idea for starting a new business, or just looking for the right opportunity?

There are clearly many more issues one should consider at this stage, including the old entrepreneurial quotient self-evaluation. We’ll get into that and dozens of other startup questions and answers as we travel down this road together. If you have suggestions on answers to either question, above, or would like to suggest other threshold questions, please contribute to the process.

This is the first post in the business startup series. For others in the series, check the series index.

Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.