How to Generate Business Ideas:
We should first understand that businesses basically solve some problem or create some convenience for which a sufficiently large number of customers are willing to profitably pay for. Three factors are important here:
- Solve a problem or create some convenience. This can be by way of a physical product or service (we will use ‘product’ here to cover both),
- Have a sufficiently large number of customers who able and willing to pay for the product,
- The price to be paid for by the customers is sufficient to cover the business costs and return a profit.
All businesses must pass these tests to succeed as going concerns. So the question is how do we come up with business ideas that will meet these ‘success conditions’?
First, let it be clear that there are no hard and fast rules as to how to generate business ideas. How one comes about a business idea and assesses it differs from one entrepreneur to another. The key thing is to realise and be alert to the fact that business ideas can come in different ways and from different sources.
This article is about how to generate business ideas. We will therefore focus on the first factor mentioned above, that is coming up with an idea that will solve a problem, or create some convenience, or do both. We will take up the last two factors (market and pricing) in our next article, which will be on testing a business idea.
Let us look at a few broad possibilities of coming up with business ideas:
Be alert: I will start by giving an example of how I started my IT business. One sunny afternoon in the mid 1990s, I went to an IT shop in Lagos to buy a memory to upgrade my laptop, the heavy Compaqs of those days. The shop attendant wasn’t so sure if they still had stock as we walked together to the shelf. Luckily there was a piece that was remaining. The attendant explained that I was ‘lucky’, as it was constantly being bought out by customers, and his boss doesn’t bother restocking on time. I immediately asked him if we could sell if I import them. He assured me we could. Within the next 48 hours he taught me everything there was to know about memories and the prices we could sell them in Nigeria.
I immediately borrowed $22,000.00 from a benefactor, bought a British Airways ticket to Singapore via London (the middle-east carriers had not started operating the Lagos route then). Arriving early morning, I barely spent 14 hours in Singapore buying different memories and taking the next BA flight out with my stock onboard with me. Upon return to Lagos, I gave my agent who sold them within a week. After deducting all my expenses and sales commission, I made over 160% return! A business was born. It was quite a lucrative business and we rapidly grew into other components and employed additional full time staff to help with the sales and records keeping. On the other hand, my travel agency business was born as a result of my frequent travels. I got to know so much about reservation, ticketing etc. I also learnt that the Muslim lesser Hajj operations was quite substantial and profitable. I therefore got a partner and we set up the travel agency, processing and getting our IATA approvals etc. We made good money and also burnt our fingers on a particular lesser Hajj operation, as our Saudi Arabian agent failed woefully on discharging his part of the bargain. We have started learning lessons!
The key is that you must be keen and alert always. Business ideas can be thrown at your face any time of the day or night. Your challenge is to take note of it and study it diligently, and make an informed and timely decision one way or the other.
Network: Meeting other people is a great way to come up with ideas that you may never have thought of on your own. It is therefore important to seize opportunities that expose you to others in serious settings such as Trade Fairs, Conferences, Seminars etc. In these settings, people openly discuss and share ideas, successes, challenges, constraints etc. Ideas are discussed freely as people hope to meet potential partners that they could do business with. Again, be alert.
Brainstorm: We go through hundreds of interactions with other people daily. From these interactions, we could have either enjoyed some convenience or suffered some frustration. We could also hear from others what their experiences on other issues are. It is therefore very possible to come up with propositions about certain things that can either solve problems or create convenience for people. We simply need to ask questions on questions until we reach an answer.
The best starting point to brainstorm is with yourself alone. Even for the highly extroverted individuals amongst us, you need your quite and private moments to think vastly and deeply. You can ask questions about things you believe can be introduced or improved. Stretch your imagination and be satisfied that you believe there is a potential opportunity. Thereafter, you can discuss with others you trust. They must be sufficiently knowledgeable and experienced to discuss the idea(s) comprehensively with you. Remember, the objective is to come up with a proposition that can provide a product(s) that will meet some market need(s); or reduce costs of some existing product, or increase its value.
Go to the markets: Another way of getting business ideas is to actually go to the markets. If you are interested in computer, phone and hardware business, it will be good to visit the Computer Village in Ikeja, Lagos. Walk around, observe what is happening, ask questions. Search yourself, are you excited by the ‘rowdiness’? Make a few friends that you can meet later to discuss what happens in the market. You will learn a lot and be able to come up with possible ideas. Your new friends can also suggest several opportunities that you have not thought about. The important thing is to be ready and willing to test each idea.
Observe and learn from others: It is also possible for you to observe existing businesses. You need to get as much information as possible to really conclude one way or the other if the business proposition can be replicated with significant improvements by you. I once attended a seminar where someone informed us that he came about his business idea at the end of his MBA program. One of their lecturers had asked them what they will do after the program and everyone stated what he or she wanted to do. The lecturer encouraged everyone and wished them success. The lecturer concluded by saying that it is possible for each of them to succeed, by simply looking at what their parents/grandparents did and improve upon that in the light of the knowledge they have acquired. The person telling us this story said his mum was a local food seller, so he decided to set up restaurants! Now he has a very successful chain of restaurants in Nigeria.
Search your areas of interest: The issue of searching your areas of interest to come up with some business ideas is a bit of a controversial one. But there is absolutely no need for any controversy. The important thing is that the ideas, even if entirely from your hobby, should simply pass the tests mentioned above. A typical example is football players. They tend to be very passionate about their game. They simply love what they do. Ronaldinho was reported to have stated that he loves football so much that he could pay to be allowed to play! So, for him to be paid to play is an unbelievable proposition. Several retired football players successfully go into businesses associated with their trade. It can indeed work.
There is a reason why areas of interest are considered a great way of considering going into business. This is because succeeding in business needs tremendous supply of mental, emotional and physical energy. Interests are known to create passion and passion generates energy. But there is absolutely no sense of going into a business in an area you are interested if it does not stand the above tests. Unless of course you are running a charity and have no consideration of returns typically expected of business concerns. So in searching for business ideas from your hobby and areas on interest, you must be dispassionate, and rigorously ensure that the ideas stands the tests, devoid of your emotional attachments.
As I mentioned at the beginning, there really are no hard and fast rules in ‘recognising’ business ideas and opportunities. You just need to be alert to the happenings around you and others.
I always like to provide additional readings for those who may want to learn more on each issue under discussion. See the links below for that.