The single biggest hurdle that most entrepreneurs face is coming up with the right business idea.
Where do you start?
How do you build a consistent stream of business ideas?
How do you know those ideas will work?
This is a guide to becoming a business idea generation machine. You’ll learn how to think like an entrepreneur, solve problems critically, evaluate business ideas and take action while the iron is hot.
Let's get started with the guide on how to generate new business ideas.
Change Your Mindset
// If you read nothing else, read this.
Coming up with ideas for businesses is not difficult.
Most people view it as the hurdle that stops them from starting their own business. It’s not.
I have a theory about why this is the case: Most people think that if you have an idea, it must be a million dollar idea.
The thought process looks something a little like this:
I want to become an entrepreneur. I want to start my own business.
Starting a business requires a good idea. If only I could think of an idea for a big business like Facebook or Airbnb. That’s what real entrepreneurship looks like.
I’m just a first time founder, what do I know about starting a million/billion dollar business?
There’s no ways I’m capable of coming up with a million dollar idea.
I’m not good at business ideas, and I won’t be able to start a business without one.
Know this: ideas are easy. They’re easy, because not all of them are going to work.
An idea does not equal a business. The hard part is executing on the idea.
All ideas are good ideas because that’s all they are — ideas. Accept them from wherever they come.
Be confident in your ability to generate new business ideas, and confident in your ability to critique them. By allowing yourself to dream and think freely, your mind will explore opportunities it never knew were there.
Getting into that way of thinking is going to make the rest of this guide — where we go into how to generate new business ideas — much more fruitful.
New Business Idea Basics
// If you’ve got a good idea about what makes a good business and the different models that are good for scalability etc. then skip to the next section. If you’re a first time entrepreneur, read this section.
Every great business was built using these four ingredients (they might have had a bunch of other extra’s, or an imbalance of these ingredients. But if they were a success, they had these 4):
- A problem. [Problem]
- The right solution to that problem. [Solution]
- A way to get that solution to the people with the problem. [Distribution]
- A way to get paid for solving that problem for those people. [Monetization]
Working backwards from that… those are the four ingredients every business idea should have.
So, by reverse-engineering the ingredients of a great business, we know where to start in the business idea creation phase: Problems.
That’s where we’re going now.
#1: Problem First
Becoming a problem-solver is the first step to creating business ideas.
You have to want to solve problems.
It’s an easy to thing to say. Not easy to do in practice.
Here are a few ways to find problems you can solve:
Look in your inner circle
The biggest mistake a lot of early entrepreneurs make is they reach too far out of their area of interest/experience.
If you’re a person who loves sports, tackle a problem that involves football or athletics. Start a company like Barstool Sports. It would be a waste of time and resources to try and solve a problem that middle-aged women who like to garden have. It’s just outside of your realm of knowledge.
Solve a problem you’re familiar with, basically.
Be a painkiller, not a vitamin
The difference between them? A painkiller is something most people absolutely need. Got a headache? You take medicine to fix it.
However, vitamins are nice-to-haves. For that reason, people often forget to take them. They don’t absolutely need them.
Build a product that solves a pressing need, not a want.
Looking for examples of needs vs wants? Maslow’s hierarchy of needs explains how people’s decisions are influenced, based on a hierarchy of human needs.
This one needs no explanation: New experiences means your eyes are opened up to the wonderful world of opportunity.
No experience is bad experience. If in doubt, do it.
Look at failure as being one step closer to finding the right business idea.
An unpopular opinion, but one that needs to be chucked in here.
Jobs aren’t the sexy option. Very few people who want to start their own business want to work for someone else. It’s just not appealing.
Don’t discount the value in it. There is so much to be learned from other people’s journey of building a business.
One of my great early learning curves was joining a “rocket”. An early-stage tech company where I was employee #4 and was made the ‘get it done guy’ who doesn’t have an official role. I headed up projects and teams, took on responsibility, and mucked into just about everything I could.
It’s like starting your own company, without the risk. You get to observe all the mistakes — and learn.
#2: Building an Idea(l) Environment
This is one of the most important things I did which completely changed my perspective on the startup world, and starting my own business.
The first company I started was a complete fluke. I started with a product first and worked my back from there. It just so happened there were other people who wanted the product — thankfully.
Going through that process helped me realize how valuable a community of entrepreneurs is to your journey. And more importantly, what they do to your mindset.
There’s a reason San Francisco produces successful tech startups like no other place in the US — you go there to build. You become part of a community that is driven towards success.
That’s what you need to carve yourself out.
Social media can help you do that. Twitter is my drink of choice here. You can literally build your own auditorium of speakers.
Here are some of the best people I follow:
- HackerNews — YCom
- Sid Jartha — Founder of Gumroad
- Jack Butcher — Founder of Visualize Value
- Anne-Laure le Cunff — Founder of Ness Labs. An articulate thinker.
- Andrew Wilkinson — Co-founder of Tiny Capital
- Gagan Biyani — Founder of Udemy
- Adam Grant — Author of a few good books
- Nathan Barry — Founder of ConvertKit
- Sam Parr — Not necessarily fantastic on Twitter, but a super-fast mover. A lot to be learned from the way he operates.
It’s like listening to the best founders, entrepreneurs and thinkers in the world giving free advice, on tap.
Another great resource is newsletters. Here are 4 valuable one’s I follow :
- Scott Galloway’s No Mercy, No Malice.
- Seth Godin’s Daily Blog.
- James Clear’s 3–2–1 Thursday.
- All the Andreesen Horowitz Newsletters.
They’re not always necessarily business related, but these are some of the most original thinkers I know of. And this is what you’re doing — changing the way you think
To get your creative juices flowing, here are three other sources of idea’s/trends that I check in on every now and then:
You’ve probably heard the saying, “You are the average of the five people you spend the most time with”. To some extent, I agree with that.
By surrounding yourself with the voices and thoughts of the world’s best founders, you’re getting a feeling for the way they operate.
And you’re getting a feeling for what it takes to become a successful entrepreneur.
You’re shifting your mindset.
#3: You Don’t Need to Reinvent the Wheel
One of the easiest ways to know you’ve got a good business idea, is to piggy-back off the back of an already successful one.
That is what’s happened to Craigslist.
What’s happened here? Well, entrepreneurs have realized the success of Craigslist: people do like having a place to go and look for goods and services (a marketplace).
And they’ve made the experience better.
Zip Recruiter replaced the job section.
Airbnb replaced B&B and guest house ads.
Tinder replaced the dating/people section.
Thumbtack replaced the services section.
The list goes on.
What makes these marketplaces better than Craigslist itself? They’ve made the customer experience better. In doing that, they’ve populated both sides of the marketplace (supply and demand) and become the go-to option.
The lesson here is simple: Business ideas don’t need to be outrageous and world-changing. You can simply do something better. Just realizing that is powerful.
#4: Learn New Skills
One of the harder steps to take, right now, right here, but valuable nonetheless.
This is a bit of a backwards story, but it illustrates the point well:
The first business I started was essentially an online clothing store.
The only reason I was able to do that was because one holiday I had no money to buy new clothes. I was teenager and I wanted to look cool. I needed the “in” clothes. I’d chosen not to take a summer job and spent what money I did have on a new cricket bat. So my mom taught me how to sew.
The thing is, I was really nit-picky about how the clothes had to look. They had to look like the real deal. So I got good at sewing. I made clothes that fitted me perfectly.
By learning sewing that holiday, I was able to overcome one of the biggest hurdles clothing-entrepreneurs (that a thing?) face — creating a great product. I was able to design a pair of shorts (they were for mountain biking) from scratch to fit like a glove. They were the best product in the market (hands-down) for the niche I was targeting. They are what made that company successful.
And the only reason I knew I could do that, was because I’d learned to sew.
That skill opened up the window of opportunity to getting into a clothing business.
By selling the clothes online, I learnt e-commerce. E-commerce got me into the digital marketing world and so it goes on.
Learn new skills. You’ll never regret it.
#5: Live In the Future
Did I say the last step was hard? Oops.
If you can get this right, you’re miles ahead of everyone else. Mark Zuckerberg did. He’s sitting quite pretty at the moment, no?
Long before the days of Facebook, Zuckerberg was already playing it out. He started a blog where he basically chronicled his life. It was like his Facebook feed.
By living in the future, the Zuck was solving a problem that none of us knew we even had yet. He was building a product that satiated a need we didn’t know lay dormant within us.
To do this, you need to be extremely comfortable with failure. It is highly likely that you will fail at the majority of your predictions. Along with that, you need to either:
- Have vast experience in a certain industry which gives you great insight into the way the world and that industry is moving specifically; or
- Have insight and/or a way of thinking that most people don’t possess. You’re able to dissect society and understand the ebb & flow of emotions, trends and movements.
Predicting the future is hard business. If it were easy, there’d be a lot more uber-wealthy people entrepreneurs.
Here are three that have done it, each with varying degree’s of accuracy and boldness:
- Mark Zuckerberg,
- Jeff Bezos
- Elon Musk
They are all extreme thinkers. They’re not looking to compete on today’s problems, this is their focus:
What does the world look like in 5, 10, 20 years time and how do I position myself to make that world a better place?
I’m going to go out on a limb here and make some big predictions, just for the sake of it:
- Water scarcity is going to be a large part of the future.
- Sustainable living is not going to be a catch-phrase that some hippie people who recycle use, it’s going to be the way everyone lives. Very few huge supply chains. The majority of food you buy will be made/produced within 100 miles of your house.
- Education is going to get turned on it’s head, and its not far away. The education model is broken. People are starting to realize.
[cc Masterclass, Udemy]
- People are going to pay a premium for genuine experiences. Technology has enabled a more interconnected world than ever. But it’s also facilitated the disconnection of it. As it becomes ever easier to connect with people and things, the novelty of it wears off. Genuine experiences evoke emotions in us that few other things do. There is no thing quite like sitting on Table Mountain drinking a jet-boil cup of filter coffee watching the sun rise to get you excited about life. People are going to pay for these experiences, rather than things.
- Climate change is going to be the next thing that changes the world the operates, like the Coronavirus has.
Don’t put yourself in a box. Think big.
#6: Look Around You
// These are some quick pointers on places to look for opportunity.
Look for industries/sectors that are rapidly growing. Examples from recent times:
- Gig economy,
- Ghost kitchens.
Competition, but its weak
No competition means you’re probably ahead of your time. Validate thoroughly.
Weak competition means there’s a market, but its being served poorly.
Opportunity to do it better!
Don’t get into a race to the bottom
No one says it better than Seth Godin, here.
A race to the bottom isn’t good for anyone, so don’t get into it.
Never try and beat someone on price alone. There’s always going to be someone who can do it cheaper.
A bad experience
People love to complain. Use it to your advantage.
If you see and hear people complaining (either audibly or in places like Google Reviews, Yelp etc.), there’s an opportunity to do it better.
Found out how you can do that.
Ending this off on a get-out-and-do-it note.
Two things you can do under this heading.
Exercise your idea brain
Write down 5 new business ideas every single day. Good or bad. Write ’em down.
No restrictions. No judgement. Just write.
Go as in-depth or as shallow as you want. Dive into an idea, or simply write “Ice cream that doesn’t melt”.
It’s like warming up an engine that’s being sitting idle for a while. Idea’s are a creative outlet for your brain.
By writing every single day, you’re exercising that creative part and getting the engine ticking along again.
Exercise your body
The number one thing that helps me to think is exercise.
Specifically, aerobic exercise. As in, not super easy, but not super straining. Think of it as “the pace at which you can hold a conversation”. For me, that sits between 130 to 145 bpm. Any easier, I’m hardly trying, any harder and I’m focusing on surviving.
When I’m in that zone, my mind is clear of the worries/humdrum of my day to day. It’s a time to think freely.
Mix it with a good podcast, and my brain becomes a business idea machine. It’s not uncommon for me to have 20 to 30 idea splashes (see next section) after a 2 hour run.
There’s a bunch of science behind it, which I won’t get into now, but it works for me and that’s enough.
End Note: Systemize Your Process
As you start generating ideas, the more they’re going to arrive. It’s going to be like you’ve opened the flood gates.
The trick is knowing how to handle them — having a system.
- Any idea that pops into my head (normally while running) goes into a Google Keep note called “Idea Splash”. It’s basically where I empty the contents of my head to keep bandwidth free. I never ever say to myself, “I’ll remember this and write it down later”.
- When I finish what I’m doing (normally a run, but sometimes work), I’ll have a read through. Anything that seems completely ridiculous (i.e I can spot an immediate oversight) I discard. I am not super critical of this.
- At the end of every week on a Friday afternoon, I empty my “Idea Splash” note.
- I keep track of everything in Notion — my preferred note-taking app. Other good options include Evernote and Roam Research. (Productivity hack: Choose one and stick with it!)
- When I feel like having some fun, I choose an idea and pick it apart. I find holes in it, research the industry and make notes. If it’s worth something, I keep it. If its super holey, it gets deleted (Ideas are just ideas, can always make more!)
- The good ones I generally share on The Signal, a weekly newsletter where we start a business idea every week.
And that’s it.
That’s the process.
Like it, got anything to add, disagree? Drop me a note!
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