15 Ways To Find The Next Winning Business Idea
In the last post I talked about what makes a great, profitable idea: for you. Now let’s talk about how to actually find that idea. I’ll also follow this up with how to get inspiration for your ideas. Even if you don’t have a creative bone in your body, that’s fine-read on.
1. Take an existing business model and introduce it in a new location or industry. Instead of coming up with a brand new idea, why not take something that already works and implement it somewhere else? One American entrepreneur I talked to recently introduced the “agency” method of finding and managing professional baseball players to Japan. Before him, a large barrier separated talented players and professional ball clubs. Without inventing anything new, he took a successful business model and implemented it in Japan.
2. Take an existing idea to a related market. Likewise, you can take something that works in one market and introduce it to another.
3. Make an improvement to an existing product. You’re a consumer and have the opportunity to try all sorts of new products. See if you can make them better for yourself or others. Often a good resource for this is looking at customer reviews on such sites as Amazon.com. A useful tip: often times, simply making a better product is not the answer-try to see if you can make a cheaper product with less features to satisfy demand from a customer base that isn’t willing to spend as much and doesn’t need a top quality product (big companies often overlook this area). Read The Innovator’s Dilemma for more detail on this topic.
4. Create a brand new solution to a pain point in an industry. People love to complain. Go to forum boards in your business area of interest, read blog comments, and peruse Amazon.com product reviews. Listen to what people hate and develop a solution to their problems.
5. Pay attention to new trends. Don’t try to create something really cool that no one cares about. Go to where the buzz is and you’ll likely land more customers and investors. “Green technology,” “social networking,” “cloud computing…”- these are the areas that are growing the fastest and the companies within these industries need new solutions to their problems as they grow- just pay attention.
6. Figure out what the government is throwing money at. Governments (at least in the U.S. and Europe) are notorious for throwing away money at concepts they deem important but have no clue about (“climate change mitigation, anyone?”). All it takes is reading the newspaper to find out what kind of hot issues are prevailing so that you can find your niche.
7. Take something existing and put your own spin on it. What does Southwest Airlines do that U.S. Airways can’t? Nothing. If it weren’t for slight differences in service, airlines would be as similar and commoditized as coal. But Southwest chose to brand themselves as an airline that cared about customers, could make their lives less stressful by targeting less congested airports, and allowed them to choose their own seats. If they didn’t do this, they would be competing on price alone, and as a small entrant, they would get smashed by the big airlines.
8. Find out how to do something cheaper. If you can convince a CEO that her company’s spending $X thousand per month on a certain service but you can do the same thing for 50% of that with the same level of quality or better, you’ve got a business.
9. Talk to professors and read academic research on hot topics. Academics are infamous for coming up with brilliant ideas without recognizing or having the time to implement them into practical solutions. Visit some labs and interview some experts on an area of interest to you. Universities are often more than happy to supply you with the people you need to make the business happen (lawyers, VCs, experts).
10. Hobbies and passions. Need I say more? If you enjoy something enough, you probably know exactly what fellow hobbyists want.
11. Buy a business in an area of your expertise/passions. If you want to be in business but can’t come up with an idea, why not acquire an existing business in your area of expertise? You would presumably invest in something that is already proven and generating a cash flow. This offers a few benefits: it teaches you quickly how to operate one (although I would recommend having an industry mentor along the way) and it’s easier to finance because lending banks feel secure that it’s already proven.
12. Find untapped distribution networks. Distribution networks are ways for a company to get its products to its customers. A restaurant, for example, is a way for a wine company to distribute its bottles to paying customers. If you find distribution networks that may be good avenues for a product, however the product isn’t there, you may have found an opportunity to distribute a similar product, especially if demand is high.
13. Identify lazy incumbents. Incumbents are large companies that have sustaining, rather than accelerated growth in a market. Although they seem to set up insurmountable barriers to entry, their large size makes them inflexible and often lazy. They may forgo many new technologies, ignore customers, sacrifice quality, or be slow to capture social and fashion trends. If you can catch on faster and satisfy your customers’ hunger, you win.
14. Identify an existing idea/business that could use better branding, content, or service. It’s a sad thing that many great ideas die because people don’t like them or simply don’t get the opportunity to see them. If your talent is in branding products and making them more attractive, undervalued opportunities abound.
15. Add value to a process. A furniture manufacturer could use the help of a sawmill to take the chopped wood from lumberjacks and turn it into chairs and tables. Sure it could grow and cut its own trees and save money, but they may be better off paying a slight premium for the wood from the sawmill so that it can focus on what it does best-making furniture. Think about ways that you can add value in an industry’s value chain.
Inspiration for your idea
So these are some initial types of ideas, but you may want to brainstorm and drill down to what’s right for you. For that you’re going to need to be in the right state-one that gets you inspired and feeling creative. When are you at your most creative state? I want you to think about what type of setting you need to be in to have positive thought. Is it having water run down your back in a shower? Or are you like me and need the rumbling white-noise in a transatlantic flight to free your mind? Here are some more things/environments that may motivate you and allow the free flow of ideas: reading business books or autobiographies of successful entrepreneurs, brainstorming with other MBAs or entrepreneurs, attending conferences/seminars, taking baths, skiing, driving, free writing, drawing…and the list goes on. Good luck and get inspired!