Generating & Choosing Ideas

Deciding on the right idea for your enterprise is the most important decision you will make. If you don’t have a good idea for a product or a service your enterprise isn’t going to succeed.

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

In this lesson we will 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

1. How to Generate Ideas for Your Enterprise

“Brainstorming” is a really good way of starting off the process of idea generation. 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. The aim of brainstorming is to stimulate discussion, open up the possibilities, 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 arrive at 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 Dragon’s aren’t doing what they do because they have to, they are doing it because they want to, because they can’t think of anything they would rather do than run their own businesses.

So principle number one; think about your own interests and skills. Maybe you are into football or yoga or movie-making, and perhaps you are good at organising things or motivating other people. Try to find a good match between the ideas for your new enterprise and your own interests and skills.

Then, principle number two; what resources will you need to turn your idea into an enterprise? Resources include all sorts of things like people with skills; storage space; a means of distribution; components and raw materials; finance.

And principle number three. 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.

Further Thought

Try and brainstorm some business ideas right now. Remember, there is no such thing as a bad idea in brainstorming!

2. How to Evaluate Your Ideas

Even after you’ve applied the three principles I’ve just outlined to your ideas for a new enterprise you will still have many more ideas that you can run with. Now, these need to be evaluated more rigorously.

1. Skills audit

Write down your interests and skills and then be completely honest with yourself and categorise them as 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 definitely 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 and run an enterprise based on the ideas you have generated.

2. Resources

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

For example, if your idea involves selling something perishable or heavy, important resources will include storage (maybe even refrigerated 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 – component parts or raw materials to produce your idea, you’ll probably have to buy these before you sell anything – which will need financing.

If you are selling on 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; for example, making items available in more convenient quantities. Or combining different products together; for example paints, brushes and an easel, bought in bulk from different suppliers, and sold as a set.

3. Potential constraints

These are things that you are likely to come up against that will limit what you are able to do. These are unique to every business but typically include things like the time, money, assets & resources you have available.

For this project, anything that requires employing people, taking out a commercial loan, or renting premises has to 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.

4. Financial forecasting

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 would they get out of it; and how long before you see a profit?

5. Costing and pricing

At what price will you need to sell your product or service and how does that compare with your competitor’s prices? And, of course, you can’t work out your prices until you know exactly what your costs are going to 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!

6. Communication and promotion

How are you going to promote your product? You might have the best and most innovative product in the world but you aren’t going to sell any 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 the promotional costs can be kept right down; building and hosting a website is relatively cheap if you have access to the right skills; advertising can get expensive.

7. Potential customers

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.

8. Gaps in the market

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?

Further Thought

Mindmapping is a useful technique for generating and evaluating ideas. Research this idea and apply it to your own idea generation process.

3. Is My Idea Realistic?

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 visualise 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, who might not understand your idea as well as you do and who 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 for you to justify in your report and presentation.

Further Thought

Research 5 examples of micro-businesses that have successfully started up recently. Why were they a success? Were they unique, or did they do something others were doing but did it better?

Lesson Summary

So, to summarise what we have learnt in this lesson:

  • Brainstorming is a great way to generate ideas for a new business.
  • You can screen these ideas to produce a shortlist using three principles:
    • Does 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 throught considering:
    • Does I have the interest and skills to do this?
    • Do I have the resources available, such as financing or premises?
    • Are there any constraints, like budget or my age, that might affect the idea?
    • How long will it take to starting turning a profit?
    • How much will it cost to product, store & distribute?
    • How will I communicate and promote the idea to others?
    • Who will be my potential customers that will buy the product/service?
    • What gaps in the market are there that I could fill?
  • Finally, it’s always important to check and ensure whether your idea is realistic.