7 Steps to Generate a New Business Idea

How does one generate a new business idea?  Forbes online has a three-page article on the topic that I will summarize in 500 words.  The 7 step process should take 30 to 40 hours according to the post.


There are 3 ways that new business ideas are generated:

The spontaneous idea – this idea hits you in the shower, while driving to work or talking with friends.  You can’t believe no one has thought it before (someone likely has), you do some research, and discover the niche is too small or the idea too obtuse.  This inspired idea dies off most of the time.

The insider idea – you have worked for a company for several years or used a product and found gaps in the software or process.  You do some homework, talk to people, and discover your improvement idea may work.  You already have industry or product knowledge and decide to moonlight and create a better version.  This idea is often viable and with research and work, can be a winner.

The deliberate idea – this is a multistage, well-researched, and analyzed idea with a better than average change of success.

Opting to pursue the deliberate option, you embark on a process of limiting and refining the idea.  Forbes’ article lists several specific steps that will help you from start to launch.

This chart is from Forbes online, the location is the reference below

1) Determining motivation and goal – hobby or business?  Part-time or full?  Build to sell?  Lasting income stream?

2) Frame the problem – determine categories and a potential business/customer base that is a target audience.  Also add in pricing and business models.

3) Generate ideas – using the existing list – Excel spreadsheets are helpful – brainstorm ideas that fit into the criteria   in steps one and two.

4) Narrow the list – narrow the list to 5 or 6 viable ideas that fit your motivation and goals.  Considerations are market and opportunity, experience and knowledge, and alignment with goals.  Try to narrow to 3 possible ideas.

5) Research those ideas – now that you have 3 viable possibilities, research hours are needed.  To do research, you should do the following, in general:

– Internet hunt – the Internet is encyclopedia, dictionary, idea generator, and research assistant, all in one.  Use it often.

– Talk to potential customers, suppliers, competitors, and industry peers.  What is good and bad about your idea?  What is the real cost?  Possible return on investment?

– Conduct an online survey.  Survey Monkey, Google Surveys, and Quora are great places to start.  You may pay a couple hundred dollars for a targeted survey, but that is better than thousands of dollars invested in a doomed business.

6) Create a business plan – this will have break-even points, SWOT analysis, risks, rewards, and more.  A plan does not need to be huge; a simple couple page business plan may suffice.  Each of your three finalists should have a brief business plan.  Are you experienced in manufacturing or information technology?  Is the break-even point two years out or five?

7) Pick the best idea and get started! 

Here are some additional resources to help you from experienced entrepreneurs:

Mashable’s post on Why 90% of Startups Fail

David Lee on Why I Never Started My Own Company

Paul Graham‘s essay on How to start a startup

Jimmy Wales‘ answer to how to contact him about a startup idea

James Altucher, TechCrunchShould you start a company?



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