How to come up with a good business idea (part one)

“The best way to have a good idea is to have lots of ideas” – Linus Pauling. Perhaps this American chemist, peace activist, author, and educator summed it up best. Pauling was one of only two people to win a Nobel Prize in two different categories, Peace and Chemistry. Successful entrepreneurs tend to do what Pauling suggested – come up with lots of ideas. 50% of their ideas may be crazy. 45% may not be feasible. If 1 out of 20 is a good one, though, then coming up with all those ideas can be well worth it.

So how do you come up with good business ideas? The best place to start is by looking at yourself and asking three questions: 1) What do you do for fun? 2) What are you good at? 3) What have you learned from places you’ve worked?

The first question is the most important. You’re probably thinking, well, I like to watch college football, play video games and eat hot wings. Where’s a business idea in that? Hopefully you’ve got other interests, but even if you don’t, start with what you like. No, you probably can’t start a business watching football on TV and eating wings, but maybe there is something related to sports or food, or both, that would allow you to participate in those activities and talk about them a lot. What is your favorite hobby or favorite past time? Do you like to travel? If so, where? Do you like to read? If so, what? Do you like to volunteer with a local charity? What is YOUR PASSION?

Why are your interests the best place to start? First, if it’s something you’ve been doing for awhile, you’ve probably developed some expertise in the field. If you have a passion for freestyle snowboarding, you probably know who most of the major players are in that market. You know what’s cool and trendy and what’s passé. You know which vendors consistently produce high quality products and which ones don’t. You know what customers like. You know where they like to hang out and what else they like to do. You know what’s missing. Second, you’ll have no trouble spending long hours working on it. After all, this is your passion. So what if you have to work 60-70 hours per week in the early days of starting your business? Your work is your fun. Several former students of mine own businesses that began by following a passion. A dancer now owns a dance studio. An outdoor enthusiast now runs an outdoor outfitting store.

What are you good at? This may match up pretty well with your interests, but not necessarily. I was always good at math so I got an undergraduate degree in it. Did I ever like it? Not really. Should I have pursued a career in something directly related to math? Definitely not. Take inventory of your skills. Are you good with numbers (and don’t mind working with them)? Are you a good public speaker? Writer? Designer? Planner? Organizer? Tinkerer? Do you enjoy meeting and talking with new people?

Now think about what kinds of businesses might benefit from those skills. In 1985, I was working with a consulting company in Atlanta and developed some expertise with what then were relatively new (and very different) Apple Macintosh computers. While most people could figure out how to use word processing and spreadsheet programs, other things like networking computers, building databases and programming were still very complicated. I looked around and saw companies both large and small in Atlanta buying lots of Macs so I started a business providing high-end Mac systems integration, programming and consulting services. Nine years later the company had grown to 25 employees and was working on projects all over the country.

What have you learned from places you’ve worked? Sometimes the work place is a great place to come up with business ideas. Maybe you have a better idea about how to do something. What frustrates you about your job? Or more, importantly, what frustrates your boss? What are common problems in your industry? Chances are there are other companies facing similar issues. Many successful entrepreneurs start businesses based on ideas they come up with while working for someone else. Here’s a story of how one entrepreneur came up with the idea for his company while working in sales for a bank. To be successful in sales, you need to know something about your customer’s needs, their industry, hot issues, etc. Like most salespeople, he was expected to call on many different types of companies, making it almost impossible to become an expert in everything. His idea was to provide industry profiles for salespeople like himself. Less than ten years later, his company was a leading national provider of industry intelligence tools, serving more than 60,000 subscribers.

Next time, we’ll talk about other ways to come up with good business ideas by looking at what’s happening around you …