Generating & Choosing Ideas

Deciding on the right idea for your enterprise is the most important decision you will make. Without a good idea for a product or a service, your enterprise will not succeed.

You can have the most efficient and well-organised enterprise in the world, but if you’re not producing something people want and are willing to pay for, you won’t sell anything. This means you won’t make any money, which means your enterprise will fail.

In this lesson, we’ll learn about:

1. How to generate ideas for a new enterprise
2. How to evaluate your ideas
3. The importance of making sure your idea is realistic

“Brainstorming” is a perfect way of starting the idea generation process.

Basically, get a group of people together and just start coming up with ideas – lots of them – and make sure someone is noting them down.

The aim is not to suddenly hit upon the perfect idea, nor is the objective to criticise or reject ideas.

Brainstorming aims to stimulate discussion, open up possibilities, and encourage people to look at the problem in new ways.

Ideas aren’t dismissed or criticised because a random idea from one person may spark off a really strong idea from someone else.

At the end of the brainstorming process, you should have a lot of ideas.

So, how do you narrow these down to a shortlist of two, from which you can choose one winning realistic idea to build your enterprise plan around?

Here are three principles to think about.

First of all, consider this.

I can’t think of any entrepreneur who has built a successful business by doing something they don’t enjoy doing!

Have you ever watched Dragon’s Den?

The Dragons don’t do what they do because they have to; they do it because they want to because they can’t think of anything else they would rather do than run their own businesses.

Principle 1

Think about your interests and skills. Maybe you are into football, yoga, or movie-making, and perhaps you are good at organising things or motivating others.

Try to find a good match between the ideas for your new enterprise and your own interests and skills.

Principle 2

What resources will you need to turn your idea into an enterprise?

Resources include all sorts of things, such as people with skills, storage space, a means of distribution, components and raw materials, and finance.

Principle 3

How unique is your idea? Is anyone else doing it already?

The term “me-too” products and services is used sometimes to describe things that are essentially copies of what’s already out there.

I’m not saying that “me-too” is always a bad thing.

You just need to make sure – if you go down the me-too route – that you can do whatever it is better or differently or at a more competitive price than the people you are copying.

Even after you’ve applied the three principles, you will still have many more ideas than you can run with.

Now, these need to be evaluated more rigorously.

We can do this by looking at eight different areas:

• Skills audit
• Resources
• Potential constraints
• Financial forecasting
• Costing & pricing
• Communication & promotion
• Potential customers
• Gaps in the market

Let’s look at each of these in more detail.

Write down your interests and skills, then be completely honest with yourself and categorise them into A, B, and C.

A – are the things you like doing and can do well.

B – are the things you want to do, or think you will be good at, and are willing to learn about.

C – is stuff to avoid; stuff you aren’t interested in doing, things that are just not your thing. Keep in mind that no one can be good at everything.

Then, assess how closely your interests and skills match the skills you think will be needed to set up and run an enterprise based on the ideas you have generated.

What resources do you need, and what resources do you have available?

For example, if your idea involves selling something perishable or heavy, essential resources will include storage and delivery. If your idea is for a downloadable or online product or service, you don’t need any of that.

If you need to source and pay for parts or raw materials to produce your idea, you’ll probably have to buy these before you sell anything, which will require financing.

If you are selling someone else’s products, maybe adding value to them in some way, this can be much easier to finance.

You can ‘add value’ to something in different ways, such as making items available in more convenient quantities or combining different products.

These are things that you are likely to come up against that will limit what you can do.

These are unique to every business but typically include things like the time, money, assets & resources you have available.

For this project, anything requiring employing people, taking out a commercial loan, or renting premises must be excluded, as you wouldn’t have access to any of these due to your age.

You also don’t have any budget to spend on the project.

One of the aims of the presentation you make at the end of this module may be to appeal to potential investors – which is, of course, different from taking out a loan.

So, will your idea need any investment? If so, your ‘numbers’ have to make sense.

Think about how much money a potential investor would need to put in, what they would get out of it, and how long before you see a profit.

At what price will you need to sell your product or service and how does that compare with your competitor’s prices?

Of course, you can’t calculate your prices until you know exactly what your costs will be—all your costs.

These include the cost of making your product but also the cost of storing it, distributing it, maybe packaging it, and the cost of promoting it.

It is often quoted that it took Amazon 10 years to make a profit; you can’t afford to wait that long!

How are you going to promote your product?

You might have the best and most innovative product in the world, but you won’t sell it if no one knows about it.

Your realistic business plan needs to include a well-thought-out plan for marketing your idea.

If the focus is on ‘organic’ social media posts, promotional costs can be kept right down. Building and hosting a website is relatively cheap if you have access to the right skills, but advertising can get expensive.

Who exactly do you expect will buy your product or service?

Define your potential customers as precisely as you can. So don’t just define them as ‘young people’ or people who are ‘into cycling’.

What age range are your potential customers?

Are you aiming at a mainly male or female market or both?

What sort of lifestyles do they have?

Are they affluent?

Adventurous or conservative?

What are their interests likely to be?

What issues might be important to them?

And so on.

Try to find gaps in the market.

Is there something you think customers will want that just isn’t available?

Have you seen something in one market that you think might transfer to another market, meaning you can sell it to new people?

Who are the main competitors for your idea, and what are they selling/doing?

Finally, and very importantly, the reality check.

You’ve got your idea – brilliant! It’s a clever idea, an innovative idea – even better!

But is it something you can really turn into a business?

Can you really imagine someone seeing your ad or post on social media and thinking, “Yes, I need one of those”?

Or walking through a store, picking it up and thinking, “I want to buy that because it will make my life better”?

Friends and family are always supportive, which is great. But don’t think, because they like something, that everyone else necessarily will as well.

Your idea has to appeal to enough people who don’t know you, might not understand your idea as well as you do, and are bombarded by posts, emails, texts, online ads, TV and radio all day long.

Is it realistic to think that enough of them will buy your product to ensure your idea can sustain a viable enterprise?

This is for you to decide and justify in your report and presentation.

Brainstorming is a great way to generate ideas for a new business.

You can screen these ideas to produce a shortlist using three principles:

Do the ideas really interest me?

Can I access the resources I need?

How unique is the idea?

We can evaluate the viability of your idea by considering our skills, resources, potential constraints, finances, costs & pricing, communication & promotion, potential customers and gaps in the market.

Finally, it’s always important to check and ensure whether your idea is realistic.