Step 2 – Exploring Your Business Ideas

Business Planning Start-Up Guide

If you always wanted to start a business but are not sure what kind of business to start, this section will help you find one.  If you have one in mind, read through this step and pay particular attention to the Product Life Cycle.  If you combine this step with Finding Your Why, you’ll “find” it’s a winning combination.

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“I can’t find it!”

Code Name

This section is named “Exploring Your Business ideas,” remember? So, don’t marry an idea by naming it. If you name a puppy, that’s the first step to keeping her. Moreover, too many of us spend hours settling on a name when we should be understanding our customers, first.  

You’ll still have to name it something, though. I suggest giving it a “Code Name” and moving on. Name it based on your product or service. For example, if you will be a car dealer, call it your first name and then “Car Dealership.”  So, for me it would be “Nick’s Car Dealership.”

If you get a “go” decision later you can start to think about a name. You’ll need a name to register for a tax identification number and a bank account. We’re not even close to that, so just give it a code name and move on. 

Which Is It?

Physical business or a virtual one?  Or are you more concerned with an industry, product, or service.  The more traditional approach is to steer you toward an industry first then toward a primary product or service.  Either way, it’s best to first understand your interests, abilities, training, skills, and technical expertise.

I think a great tool to understand your hidden abilities or talents is The Strength Finder 2.0, written by Tom Rath, Gallup Press (2007).  For less than $20, you can buy this book, take the online test, and apply it to your situation.  You can find it at a bookstore or on Amazon.com.

If you don’t want to try the finder, I’ve given you a (weak) substitute to try:  At the bottom of this page find, Still not Sure Where to Start?  Follow this link and complete the quick exercise.

Ideas to Get You Thinking

When you do errands, go to work, etc. check out the variety of businesses people’s have started.  You might take an exploration drive to various business districts or industrial areas to get additional insight.  Be sure to check out those businesses away from malls and big box stores.  You’ll be amazed at the variety of small businesses you’ll find.  

The internet is a great place to begin your search, too.  Check out eBay, Amazon, and Google Shopping for ideas.  Start broad and then narrow to a niche.

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Narrow your ideas: Niche.

 

The Money is in the Specialty Area or Niche

Think of this:  Whether you’re an employee, physician, or business owner the higher income trades and professions come from the specialist — not the generalist.

Be weary of an industry that is so broad that you’d never be able to compete in. For example, one wouldn’t think about starting an auto manufacturing business like Ford or Honda.  But a company like Tesla motors might be something to consider.

Still not convinced?  I know of one entrepreneur who sells a million dollars (annually) of yoga mats on Amazon.  Yoga mats!  His mats are longer and thicker than the typical mat (he got innovative).  He works with a Chinese manufacture to customize his product and stands out.  I also know a local guy near Boise, Idaho, that has a mobile diesel mechanic business.  He goes to the customer and he has more business than he can handle.

Bottom Line

Start with the big picture and then think narrow — then specialize and succeed!

The Product and Business Cycle

In the next step, we go over the SWOT analysis, where you’ll evaluate one or many of your business ideas.  But before we go to the next step, we’ll consider one additional element before committing to a business idea.

History teaches us that nations, economies, fashion, and nearly everything else cycles.  So, it’s no wonder businesses cycle.  When considering what businesses to start, try to examine where your primary products or services are in the Product Life Cycle (see Exhibit-A).  

There are four phases of the cycle and each has its advantages and disadvantages – thinking businessmen and women adapt their strategy to their place in their business’s life cycle.  Some product cycle last months and some last decades or even centuries.  Life is generally good in the growth phase but more challenging in the mature and declining phases.  Knowing where your business is should affect your decision to enter the market and your strategy while you’re there.  The descriptors (audience, market, etc.) at the base of the graph in Exhibit-A should help with your strategy.

Remember the Beanie Babies Bubble in the late 1990s?  The combination of production scarcity and other factors fueled an accelerated life cycle and bubble for a $5 toy (list price).  The early adopters made a “killing” while the late adopters got “killed.”  I remember the Christmas of Beanie Babies in 1998 and then nothing in 1999. 

Cell phones had a longer life cycle than the Beanie Babies.  The device replaced the 1980s pager.  It began its growth in the product cycle about the time the Beanie Babies Bubble went bust.  Then after 10 or 12 years later, the smart phone replaced the cell phone as the America’s preferred hand-held communication device.  

We’re all keenly aware of the 2008 Great Recession.  The housing and financing/investing cycle lasted about a decade.  Do you think housing is a dead industry now?  Real estate is one of those industries with cycles within larger cycles.  People always need somewhere to live, so as long as the population grows, the real estate “product” will continue to grow in the U.S.  However, in some communities, such s Detroit, MI, real estate is in the decline.  It’s also in decline in Japan after a its boom time in the 1980s.  In Japan, its birth cycle is in decline and so is its real estate industry, through booms and bust will appear in local markets.

Your Business’s Life Cycle

When considering your business and its primary product or service, its essential that you understand where it falls in the Product Life Cycle–making sure not to be caught in a bubble or in an industry or product that’s not only declining but being replace by something else.  It’s not necessary to avoid a mature or legacy business, especially if you can fill a niche or adapt to that particular market place.  However, if the product is on an exit trajectory then you’ll want to avoid it.  Whatever you do, don’t open a DVD movie store!

Some mature products never die out but through consolidation are left to the remaining players.  During the industrial revolution (middle 1800s in to the early 1900s), steal manufacturing was king.  Today, this mature product/industry is ubiquitous but most of its production has transitioned from the U.S. to China.

Exhibit-A is a typical product life cycle.  Look at the graphic and compare the Beanie Babies, cell phones, real estate, and your proposed business or product.

Product Life Cycle

Exhibit-A

Once you’ve decided which stage of the life cycle your business or major products are in, you can estimate its future and your strategy accordingly.  With that in mind, lets examine your business in its ecosystem:  The SWOT analysis will help you assess your competition and your strengths and weaknesses in the marketplace.  


Still Not Sure Where to Start?

Go to your friends and family and ask them, “You know me, you’ve watched me for years.  What am I good at?  What are my interests?”

Let silence be your ally.  Wait for an answer.  Also, don’t let them talk about your degree, training, or your current job.  That’s not the question.

Now What?

You now more about yourself and you’re committed to narrowing your business ideas.  However, you’re having a little trouble narrowing your search to just one business.

Okay, do this:  Pick 10 (at most) ideas and order them from 1 to 10, with number 1 being your top choice.  Now without cheating (you created your list right?), go here and type this password “next” (without the quotes) and do what it says.

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