The last four posts in this business startup series dealt with ways to get started brainstorming, for the purpose of coming up with a great idea for a new business. Some of the authorities quoted in those posts seem to play down the value of the initial decision, since, in their respective situations, major adjustments had to be made later to survive or grow. Some of the articles suggested you could probably just lie on your couch and have an idea run into you, rather than having to get up off the couch and work for the idea.
In her article, Getting into a Breakthrough Frame of Mind, Lisa Gundry, Professor of Management and Director of The Center for Creativity & Innovation at DePaul University, suggests “[D]uring this time of economic recovery it can be an opportune period to rediscover and even reinvent your business. The following ideas can help create the conditions for breakthrough thinking:”
- Unlock yourself from your expectations and be open to possibilities.
- Review the opportunity or problem as you understand it.
- Engage in experimentation.
- Focus your attention on what you want to see happen, rather than what you do not want to occur.
Here’s one more set of steps on how to brainstorm your initial business idea, and to move the ball a little further down the field. I always believe in looking a little further down the road when I’m trying to read a map, and Kathy Korman Frey’s article, How to Turn an Idea into a Business, takes us just beyond the business concept stage. In fact, she even gets into mind mapping with an article you definitely should read if you’re interested in ways to come up with an idea.
Frey suggests a seven-part strategy for coming up with ideas. She suggests starting by taking a piece of paper, drawing a circle in the middle, and then writing the name of an interest or passion in the middle of the circle. She then suggests, in the area just outside that circle, writing every word that comes into your head when you think about your area of interest. From there, you try to find those words that are connected in some fashion, .linking them with lines, then drawing circles around clusters of words, and, finally, picking your favorite cluster. Having found a nexus, you develop an “elevator speech,” briefly describing what the cluster-based business is about. At the end of the exercise, you develop and deliver your “pitch” to sell your product or service for this business.
A few years ago, there was a marked increase in the number of firms, and “inventors,” who spent a substantial amount of time studying patents which had been issued but never commercialized. Many patents boasted great and novel ideas, but could not be commercialized after the patent was issued, because there was either very little interest in the ultimate product (i.e. fruit) of the patent holder’s labor, or because it could not be produced efficiently.
Some of these patented creations needed lighter and stronger materials to be viable. Some needed an energy source, and some needed another part or component to reach marketable potential. Then along came lighter and stronger alloys, more efficient batteries, etc. Guess what? Great ideas were not really reborn, but they were resurrected and updated and lots of folks are making lots of money because they could “connect the dots.”
Some of these new business concepts may revolve around disruptive innovation. This “term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market,’ eventually displacing established competitors.” Harvard Business School professor, Lynda M. Applegate, describes this in her article, Jumpstarting Innovation: Using Disruption to Your Advantage, as follows.
“These disruptive innovations are not just novel inventions. Successful innovators take ideas and turn them into opportunities by adding a business model that creates sustainable economic value for all stakeholders. They then go one step further and exploit the opportunity by creating a sustainable business.”
This is exciting stuff. Part of this process, however, is Balancing interest and excitement, as mentioned by Jeffrey Kalmikoff, former chief creative officer at skinnyCorp/Threadless:
There’s nothing wrong with being excited. However, excitement is energy, and what you do with that energy is often times more important than the fact that it exists. Just because a car can go fast doesn’t mean it always should, right?
Kalmikoff makes the point that “excitement is what brings on the onslaught of brainstorming – new idea after new idea after new idea” but “I can now see how unbridled excitement can actually derail focus.”
Likewise, Richard Mammone points out in his article, Humility and the Successful Startup, that:
“You must take a full accounting of your strengths and weaknesses before you get started. This takes a great deal of honesty and humility, but it is the only path to success.”
“Every skill set required to form a startup should be subjected to a make-or-buy decision process. In other words, if you don’t have it, outsource it. Let me just stop here for a moment and mention that outsourcing is the strategic entrepreneur’s solution to most problems. There are too many moving parts in a business to have deep expertise in every area; it’s not practical for you to hold on to tasks like marketing if you are an engineer—or product testing if you are a marketing guru.”
I’m in the camp with those who value extensive work to come up with the best possible business concept right off the bat. We all know things change, but that is something to be factored into any plan for a business startup. We will get into synchronizing business goals and personal goals in a later post. For now, however, we must consider whether our new business will be a short-term venture, or is to be of much longer duration.
A huge segment of businesses, both in the United States and internationally, is family controlled. Some were started for that purpose, but many were not. We will look at the unique overlay of issues related to family businesses down the road, but if your goal is to start a business, which will survive your own life and be a foundation for improving the financial health of the family tree, then a substantially different set of options comes into play. Clearly, this might not be just starting a little Internet-based operation in your spare time, in order to get a little extra cash. Of course, if you start a really good Internet-based business, it can have the same impact on your family.
We have already looked at elements some feel are essential for a productive brainstorming session. Certainly, if there are things, which would seem to improve your odds of success in a venture, they should be considered carefully. Likewise, if there are elements which would tend to distract your efforts, delay them, or lead you in less than the most promising direction, efforts should be taken to minimize these. Low hanging fruit is one thing, ignoring the odds is another.
We have also looked at a few baseline considerations, such as whether it is better to try to go it alone, find friends to work with, exclude friends and find others whose only focus is on the prospective venture, or some combination thereof. All of these factors may or may not impact any given startup situation. As you work through the process, it just seems to make sense to try to cast the broadest net of concern, in true brainstorming fashion, to fish for as many of these potential “show stopper” factors as possible. Then, again using the brainstorming techniques we’ve looked at, we can start to rank them, discounting ideas with factors which seem least likely to impact us, and setting the others aside for further study and action.
There are many great articles, books, and seminars on developing innovative ideas. We’ve covered a few, and I suggest you look at as many as possible to come up with the perfect method for you. After all, what you’ve come up with in this exercise may not be the only one you will need or want to brainstorm in future. At some point, however, you’ve got to get beyond the concept stage and on to the next part of the process. In his article, How Good Is Your Big Idea, Tim Knox sums this up.
Every business idea, no matter how good it sounds while bouncing around inside your head, should be put to the test before you invest time and money into its execution. Success lies not in what you think of your idea, but what the buying public will think. Many entrepreneurs find out too late that the public’s opinion of their idea differs greatly from their own. Wasted time and money aside, the last thing you want to do is hear “I told you so!” from your husband, so take a deep breath, slow down, and let’s look at the ways you can test the feasibility of your idea.
We can presume there is probably competition of some sort for almost everything we might come up with, in terms of a concept for a new business. Are we not defying the odds again, if we pick the low hanging fruit, knowing there is likely to be much more sustainable business models within our reach with more effort? My vote is yes, and since I don’t see a show of hands in opposition, we’re going to take a brief look at some “macro” issues before we get to our final, short list of business concepts.
Perhaps one of the simplest “show stopper” tests is described by Alan Hall, founder and Chairman of Grow Utah Ventures, in his blog post, Two Questions Every Entrepreneur Should Answer. The two simple questions are:
- Who are your customers?
- How are you going to make revenue?
One of the popular “brilliant ideas” these days is to build a business based upon creating something free, building a gigantic social network around this concept, and then slowly finding ways to “monetize” the user base, either with ads on the Web site or blog, or by other means. We’ll look at this phenomenon in a later post, but suffice it to say, this can often land in the “low hanging fruit” bin. An article by John Tozzi, Building a Facebook for Wine, points out some of the hazards, even for lawyers. Michael Stajer’s original idea was to start an Ebay site for buying and selling wine, but the path took an unforeseen twist.
The Bay Area attorney sold his personal wine collection for $25,000 to finance the site, called WineCommune. At the time, he hoped to get venture or angel funding early on. “My original plan was, ‘Hey, I’ll get this product up and then I’ll shop it around and see if I can get some money, hire some people, and then take it to the next level,'” Stajer says.
That didn’t happen. The dot-com collapse came a year after he started WineCommune, and investors were wary of the regulated market of alcohol sales. Stajer kept his day job and gradually developed the site. He amassed more than $40,000 in credit-card debt to finance the business. But despite the time he spent wondering how he would ever pay the bills, Stajer says he’s glad he never got funded.
As it turned out, Stajer was able to change directions and stay with the wine concept, but his initial “brilliant idea” needed a major overhaul. This points out the need to have a backup plan, as you explore and finalize your own brilliant idea for a new business.
The prospect that your venture may never make money makes it important to have a backup plan, says Stajer. His father, a hotelier and restaurateur, advised him that “if you want to be an entrepreneur, that’s fine, but have something to fall back on.” Stajer knew that if his business failed, he could always work at a law firm for a few years to pay off his debt.
Stajer was able to rework his love for wine and desire to make it big by taking wine online. Ultimately, he scrapped the Ebay of wine concept and went with a little less inventory startup expense.
The company expanded by launching online retailer J.J. Buckley and WineZap, a price comparison site with a social network. He expects WineCommune to have $17 million in revenues this year from a mix of advertising, paid referrals, and retail wine sales across the three sites. “Now, of course, [the credit-card debt is] paid off, and I got my wine collection back,” he says.
If your big idea is trying to create viable wine businesses through social networks, flip through this slide show.
At this point in our journey, having spent the last four posts on coming up with the initial business concept or idea, it is probably time to take a short break. We started with a desire to create a new business from scratch. We have looked at a number of ways to brainstorm our first concept, trying to use the funnel approach. We first threw all our possible ideas up on the wall. Then we gradually started to look at ways we could reduce “all” to “fewer,” and more logical choices during the initial selection process.
This idea creation process is as much art as science. There are definitely many “scientific” approaches to it, many of which we’ve looked at, and many of which we have not. Every entrepreneur must pick his or her own combination of these methods for each venture. The method and the elements will change, in many cases, depending up the goals of the entrepreneur and other environmental factors.
At this point we still don’t know what we don’t know. That is a very dangerous place to be. Our excitement and growing passion for our initial selection make cause us to take off, rashly, in the wrong direction. A good general would never march troops over the hill without sending out scouts and having the best possible reconnaissance on what lies ahead. No one wants to be ambushed. We already have an investment of time in the process. As we continue our journey, that investment of time and other resources will increase substantially.
Every step we take in one direction may very well be two steps away from another direction. If we spend $100 or 100 hours pursuing choice “A,” then we have $100 less or 100 hours less to pursue choice “B.” We have a “gut” feeling at this point about which direction we should start out on, but being mindful of the “vector” factor mentioned in a previous post, we certainly want to conserve our resources, including our time, and reach our ultimate goal as quickly as reasonably possible. Some say it is all about the journey, but we don’t want to waste time on the trail either.
Having come up with some initial selections for our new business concept, in the next posts we’ll review what we have come up with and start down the funnel to refine and conduct further screening of our new business ideas to see if there are any show stoppers, which eliminate the reasonable prospect of going forward. We may hit the wall on one or more, but our initial research may also lead us to simple work-arounds, such as outsourcing. They might even help us discover some combination of factors leading to a disruptive innovation.
The path we are seeking is one which leads us to success. There are many, trails which will lead to failure and many, which will lead to disaster. We have to be as sure as we can that when we make further investment of our time and other resources, we are well prepared for the next steps in the journey, and have the greatest chance of success for the future.
This is the fifth post in the business startup series. For others in the series, check the series index.
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