Have you been told of new business ideas that have been successful and wondered, “Why didn’t I think of that”? Personally, I’ve launched seven businesses, but the ones that didn’t work are among my favorite ones. For instance, I often consider Topgolf The extremely popular golf driving range and sports bars appearing across the US. I’ve played the game since 8 years old young and drinking in bars when I was 18. But never did it occur to me to combine these two activities into a company. How could I have missed that?
My purpose with this article is to assist you discover the next big idea through creative and business frameworks that allow you to identify intriguing concepts and develop innovative business concepts. We hope that this will lead to others laughing when they see your business’s growth.
The four stages in identifying an opportunity for business. The four steps include:
- Find an unmet market need.
- Create a distinct solution that is able to meet customers’ requirements.
- Play devil’s advocate.
- Get market feedback.
- Find an Unmet Market Need
The primary focus of all business ventures is the customer. To get customers to invest their money in an item, it must be able to provide more value customers than the existing options. Therefore, the first step to find an opportunity for business is to find something customers would like but isn’t readily availableor affordable for them.
Your business idea doesn’t need to be an incredibly new idea. Actually, these “big ideas” typically take the most capital to bring to market that they’re not practical for the majority of entrepreneurs. For instance, Meg Whitman and Jeff Katzenberg have raised $1.75 billion in capital in pre-revenue in their online video service Quibi. It’s irregular to find a couple who can do such a feat.
The most effective ideas are typically incremental improvements on existing products when distribution channels and markets are in place and the risks associated with product development are minimal, and the consumers are aware of the benefits of the product. The one of my more profitable startups was an organization that specialized in real estate syndication that was the 50th firm to join an established market to offer tax-free real estate investments to private investors. We quickly established ourselves as a major player in the market simple focusing on offering customers the kind of service that they couldn’t get from other providers.
Then, where can you locate market demands that are not being met? There are two options:
- Your work environment
- Your personal life
The great thing about looking around your workplace is that if your current employer has customers, it is likely to have complaints about customer demands that aren’t being addressed. Most of the time, when customers aren’t content with the solution they’re seeking, it isn’t readily available elsewhere or they’d choose to go to a different vendor. If you can come up with solutions that address the problem of the customer If you can, you might be in the middle of a lucrative business chance.
I know a person who worked for a large company that built the satellite-based ground stations. The company he worked for was an production of equipment business, which sold complex multi-million dollar communications systems. My friend was constantly hearing potential customers tell them they could not afford their own equipment, but they wanted to lease capacity from a different ground station. The company was overwhelmed with trying to construct sufficient ground stations in order to meet the needs of its largest customers. My friend resigned and founded a data services firm that operated a single ground station, and also sold access to data to a few of smaller customers.
When I’m not at working, I consider business opportunities each whenever I’m in need of or want something that isn’t easy to get at what I consider as an acceptable price. I also take note of to my family and friends are frustrated at not finding an answer to problems they’re having to deal with or their dissatisfaction over things they bought.
- Develop an Innovative Solution that Meets the needs of customers
Finding a market need that isn’t being met is always exciting but there’s not a chance to make money unless you come up with a solution to complete the need. Differentiated answers can come from your creativity, your expertise, or your knowledge of where to find the needed creativity/expertise. I’m an example of how you don’t require an innate “gift” to come up innovative solutions. It’s all you have to do is think outside the box or share the market gap that is not being addressed with other people who may have specific expertise that can aid.
To show the concept of solving unmet requirements, I’ve prepared a set of business plan examples from ventures that I put up on my own. Each one of them illustrates the process I used to come up with a solution.
- Play Devil’s Advocate
I’ve launched seven companies, but I’ve identified several more needs that remain unsatisfied. What made me decide to launch those businesses that I did?
It’s not difficult to eliminate markets that don’t meet the needs of consumers and it is difficult to come up with an original solution. It requires time, effort and self-awareness in order to cut out the majority of concepts. Here’s what I normally follow.
As the name implies I strive to make holes in business opportunities I have come up with. The framework I employ to perform due diligence on possibilities for business is built on four fundamental components of any business that are: People, Product, Market and money. The table below provides a list of the most important questions you must conduct due diligence in each of the categories.
I typically begin by looking for products from competitors which are similar to the distinctive solution I’ve developed. A similar product doesn’t mean that it’s the end of the road to death because the market could be large enough to support multiple companies. If you do find the same product by one company that’s struggled for a long time, it’s an indication that your product may not be as effective as you think–unless your product addresses the issue that’s making the competitor struggle.
Another thing I observe when examining competitors is that somebody else has a product that is superior than the one I came up with, so there’s no unmet market demand. If this occurs I usually give a sigh of relief and leave.
Another thing that I examine is the economics of the business opportunity. What will it cost me to turn my idea into a product I can market? What would it cost me to manufacture in large quantities? What is an acceptable cost for sales? What is the maximum number I can sell?
When my reverse of envelope model doesn’t reveal a true windfall, I typically leave. I call it an actual windfall since, in all likelihood the situation will look more bleak, and not necessarily better in the event you make a precise financial model.
If I believe I’ve got a great business idea after having worked through all the issues in the above table, as well as any other issues that come during my due diligence, I’ll share the idea with a few friends, colleagues or family members and solicit their honest opinions. Alongside getting their feedback on the business concept development I also ask for their assistance for the new project. If your friends, colleagues and family members don’t support (e.g. offering expertise or financing) of the project this could become a show-stopper.
- Get Market Feedback
You’ve arrived the end of the process you think you’ve got an idea. Now it’s time to find out if knowledgeable customers have the same opinion about the idea.
It is essential to get feedback from as many potential customers and distributor channel partners as you can in order to determine if they are in need and will pay the price you have in mind for the idea. It’s not often that people make explicit commitments at this point however, people are likely to be hesitant to say no. In reality, the most you can expect is to have some potential customers tell you they’ll test your product once it’s finished and that the distributor channel partners show they’re willing to take it on if it turns for early adopters.
It’s also worthwhile to employ former insiders from the industry who are now consultants to provide you with opinions on the concept. They’ll be able to provide valuable connections and insight as well as important roles to fill in your team once you’re ready to begin hiring.
Sometimes, it is sensible for third parties to get market feedback however, I’ve found that it’s beneficial to conduct certain interviews on my own so that I can get feedback directly. This is particularly true when third parties provide positive feedback. I’ve found out by experience that a lot of people do not want to criticize the ideas of others. Remember, the purpose here isn’t to convince yourself as if you’re a winner in a business opportunity when you do not. The aim is to avoid investing time and money in business concept development that’s not likely to succeed.
In the event that your commercial idea demands that you develop an entirely new distribution method, e.g., selling directly through a newly-launched website, you must consider how long and what amount of cash it will cost to establish the brand name and awareness needed to create real sales.
The final scenario to think about is one that establishes a completely new category of products, i.e., a product that’s unique from other products available. Consider the personal computer before it became available.
These kinds of opportunities present problems when trying to gather market feedback since prospective customers are often unable to imagine the product that you’re selling. Consider the challenge of explaining to someone back in the 70s when your product is similar to the typewriter and an LCD TV. This is only one of the reasons that “breakthrough” business ideas are most risky and require the longest time to develop.
Development a Business Idea Is About Finding the Signals to Continue
If the feedback from your customers is positive, it’s the right time to call it quits. Do you have the intention to implement this business plan into practice? If yes and your family members are in support, you can begin writing your resignation letter. Read my next article to learn the steps to creating a new business.