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I am lecturing a James Madison University New Venture class this evening on selecting an idea for the basis of a business plan. The student teams are tasked with coming up a business idea and building a plan over the semester. And as anyone who has done it knows, it isn't an easy thing to do.
This is what I'm going to tell them. These are the 6 Easy Steps to a Great Idea (Or one that turns out great).
I should clarify that there are both great ideas and ideas that turn out to be great, this is the pursuit of the latter. Great ideas are well and fine but for a business plan, there is no alternative to pursuing an idea that turns out to be great. Great ideas can stand alone in art and science but not in business.
In business, the only thing that matters are ideas that facilitate great results. Ideas that when well executed -- meet a market need and generate growth and profit -- and ultimately, turn out well in the end for all.
To start a business one doesn't need a great idea, they need an idea that with time, effort and inspiration can generate great results.
The steps then are not actually, specifically about finding a great idea. They are the steps to finding an idea that could, should or just might turn out to be great.
1. Find something people currently or will want
This is distinctly different than something people currently or will need. People need healthy food but any hour long drive down any Interstate highway in the United States should convince you they "want" crappy fast food. Maybe they "should" want something but that doesn't mean they ever will want it. They want $3 oily, bitter coffee from Starbucks because it is conveniently offered whenever and wherever they want it. What people want or will want is generally viewed with some need mystery. And it will be so long as one tries to "think it up" on their own. If your goal is think up a great idea, you can lock yourself in a room and commence to do so. If you want an idea that will turn out well you need to talk with people and you need to look for it. To find, one must seek.
2. Look for Wishes
What do people wish they had that they currently lack? One might wish there was a gym closer to my house, or an all night chili dog restaurant or mobile dog groomer in my town. They wish for things they will probably want if they become available. How do you find them? Go to any business establishment and ask the staff what people complain about. They'll tell you. They are sick and tired of hearing about the very opportunity that you're desperate to find and can't discover on your own They'll say "People wish we were open later, or had a mobile offering, or were located closer to their home". They might say "We get a lot of requests for higher end product, or custom product or less snarky salespeople". Ok, the last item might be implicit in your conversation.
3. Study the environment to find Wishes
So you know what people wish for, how do they fulfill the wish today. Do they choose some worthy substitute or drive an extra distance or pay more for an over-sized alternative? This isn't about understanding the customer as much as it is determining the competitive environment. People who wish for or want something are usually meeting the wish or want with something today. Yes, there are completely new solutions to wishes everyday, but most of the wishes and wants have been around for thousands of years. New ones are relatively rare.
People have unmet wants and cope with their unmet wants in a conscious way. Typically, in ways that are less than ideal. If you have any doubts about this, go a to a night club on a Saturday night.
It is that functioning alternative that one usually will compete with. That people want a better something won't guarantee business or success. It is a starting point but only a starting point. It is not high bar to clear to assume that one's offering, which is perfectly suited to a task, is only competing with other things also perfectly suited to the task. It has to motivate change from whatever comprises the existing coping behavior.
The issue is give them what they want in all ways that is far, far better than current substitute. The challenge is deliver something that makes them happier than what they're doing today.
4. Define Happiness
If makes people happy to have their wishes realized or wants met. If you really want an idea that turns our great, make people happy by doing business with you. Make them happy to embrace the change you offer them for their unmet needs or wants.
How will you deliver them what they wish for and/or want? What will bring them the greatest satisfaction? Define every aspect of their happiness with your offering and its delivery. Determine how you will deliver the kind of happiness with products and services that people feel compelled to tell others about. Examine how much it will cost you to consistently deliver happiness. If one can do it reliably well and at a reasonable cost, this might be an idea that could turn out well.
5. Understand who wants the Happiness you offer
In the simplest terms, are they rich or poor, are they smart or dumb? I say this with all due respect and affection to dumb people everywhere. Perhaps, my distinction would be better as well educated versus poorly educated. Either way, dumb people buy a lot faster than smart people. The rich ones are able to buy more than the poor ones. Yes, this isn't rocket science. If you going to sell to dumb people, target the rich ones. (Don't think they're out there!?!, HAH!!, I say, they're out there.) They buy fast and are in a position to buy a lot.
The fastest path to ideas that don't turn out great is attempting to make smart, poor people happy.
They have the intellect to discuss a purchase at some length, if not the budget to complete one.
At the end of your analysis, the question is "Given your target audience characteristics and desires, can you profitably sell the Happiness you offer them?".
6. Determine how many people want your offer of Happiness
Now and only now, look at how many people are in your target market and decide if you can build a business around and within that target market. The wish, the want and the need precede the target market selection. Don't just choose a large, ill defined market and attempt to divine an unmet need. Find unmet needs and solution to meet them. The first way of starting with the target market will lock one into the search for great ideas. The second way, unmet needs matched with real solutions and genuine happiness, will uncover larger target markets than one readily imagines and ideas that turn out in the fullness of time to be great.
That said and done, they should go write their business plans as they are now ready.