Coming Up with a Winning Business Idea

This article is part of the College Startup series and is intended to help college students who want to start their own businesses. However, this information can be used by anyone who is looking to come up with the right idea or concept to start their business.

For most college students, coming up with a business idea or concept is pretty difficult. Don’t worry about it; this is normal. It’s easy to look at a successful business in hindsight and say that it was an obvious idea. The challenge, of course, is coming up with the idea in the first place.

Actually, there is a process that you can use to start generating your own business ideas fairly quickly. But before going through the process, I’d like to address a very common myth that can become a mental barrier: the belief that great business ideas are incredibly creative and can only be thought of by “special people” – or by geniuses like Steve Jobs. Breaking through this mental barrier is critical because it levels the playing field and increases your chances of success. The truth is that coming up with a great business idea doesn’t take a genius. Anyone can come up with a great business idea.

Great companies are often just improvements on existing concepts

While it’s true that some awesome companies are the result of the truly innovative ideas of incredibly talented people, the fact is that the foundation for many great companies is just an incremental improvement on an existing idea. That’s it. Someone took an existing concept and made it better. Think of any company and you will realize that, while there are exceptions, this is basically the truth.

Let me show you what I mean by looking at two companies that are indisputably considered great and innovative: Apple and Google. Surely, you say, these companies were built on groundbreaking innovation and not just on simple incremental improvements, right?

Apple: Apple is probably one of the best examples that comes to mind when you think of a great company – one that revolutionized industries. Apple has revolutionized the music industry, the mobile phone industry, and the tablet industry. But let’s look at some of their products more closely. iPods are just digital players. The concept, called an MP3 player, already existed long before the iPod was developed. Apple’s genius was the creation of a more appealing device and the pairing of that device with a marketplace (iTunes) that allowed you to purchase individual songs. Bear in mind that this plan was brilliantly executed, but it was essentially an incremental improvement, nonetheless.

You can make the same argument about the iPad and the iPhone. Steve Jobs was not brilliant because he created new products; he was brilliant because he improved existing concepts and made them great. OK, actually he made them awesome and executed their development and deployment brilliantly.

Google: While Google is the best known and most used search engine, they did not invent the concept. Actually, search engines had existed in some way, shape, or form (usually as a searchable directory) long before Google existed. However, Google’s improvement made its search engine incredibly useful: it used used link citations as a way of ranking results. Google then added to the concept by including relevant ads with the top search results. Both of these ideas are incremental improvements on concepts that already existed. These advances, coupled with great execution, led to the birth of one of the technology stars of our time.

Don’t get me wrong, I am not looking to oversimplify the process of coming up with a great idea, nor am I looking to take anything away from their achievements. All I am saying is that these seemingly “great” concepts are incremental and could have been thought up by anyone who is reasonably smart.

Here are the steps in a process you can use to come up with a winning business idea:

Step #1: Figure out what is bothering you

Businesses exist to solve problems – many of them quite mundane problems. An easy way to find business ideas is to look for problems. So as you go about your day, notice what is bothering you. Look for inefficiencies. These irritations represent potential business opportunities. Let me give you some examples of mundane problems that generated a business. Tired of waiting in line at the pharmacy for your medicine? Hate going to a video store only to find out they don’t have the movie you want? Need to find a good restaurant that is close to you, and do you need a reservation? Want to grill burgers inside your apartment? All of those are real problems – and the solutions to these problems created small and large businesses. As an experiment, make a note of every problem you encounter as you go through your day. Don’t go out looking for anything specific, just live life, notice life’s little annoyances, and write them down when you find them. By the end of a week or two you should have a healthy list of problems. Many of these problems represent business and product opportunities.

Step #2: Ask how you can improve it

Now that you have a list of things that bother you, the next step is to decide which problems have solutions that can be turned into businesses. This is where the creative part comes in. Sit down with your business partners and start brainstorming possible solutions. Flesh them out as much as you can and then determine if you think they are real businesses. Sure, you will discard many of them, but usually you will have one or two concepts that are real contenders. Bear in mind that your idea, while incremental, should generate a substantial improvement over the status-quo. Try to solve the problem as best as you can.

I have used this process to come up with a number of business ideas, one of which was, in my humble opinion, brilliant and a real money-maker. Unfortunately, someone else had patented the concept a few years before us. Which leads me to my next point.

Step #3: Have a Plan B (Couldn’t find anything? Yeah, that happened to me)

One problem that you may run into with this process is that you get a number of ideas that either don’t lead anywhere or don’t ignite your passion. Or, as it was in my case, you think of something that someone else has already patented, so I went to plan B.

In my case, plan B was buying Entrepreneur’s Magazine book of the top 500 franchises. I went through the list of businesses one by one, eliminating categories and companies that would not meet my requirements. This process took a weekend. As soon as I had a short list, I met with some franchise companies and spoke to others. Unfortunately, none of these concepts worked for me. I am picky.

However, during my research I found a financial business concept that interested me. I looked into it, liked it, and though that I could improve it. Bingo! This led me to starting up Commercial Capital LLC. We have been around for nearly a decade, so I can vouch for this method.

What about brainstorming?

I know a lot of people recommend brainstorming as a way to come up with business ideas. I’ll have to admit that brainstorming did not work for me. Coming up with business ideas out of the blue is very difficult – at least it is for most people. However, brainstorming is a great technique for generating improvements to existing concepts (Step #2).

Step #4: Keep it ethical

As a college student, you are aware that in the world of research and scholarship, copying others is considered plagiarism and gets you in trouble. In the world of business, things are different. Copying others and improving their concepts is considered competition and can create a great company. This type of competition is actively encouraged and drives our economy. This is the reason why cities have many supermarkets, gas stations, and stores – all competing against each other.

It’s important to remember that you also have to maintain business ethics. Don’t copy patented, copyrighted, or protected information. Don’t steal trade secrets. These actions are not shortcuts and are not ethical, and sooner or later they will land you in serious trouble.

Who is Marco Terry? About the College Startup Series

Marco TerryEver since I can remember, I’ve wanted to be an entrepreneur. I started my current company about 10 years ago and have had a great time running it. It’s the fulfillment of a dream.

Over the years, I have noticed two things. First, there are very few resources to help college students start their own businesses (though this is improving). Second, the little advice there is usually focuses on conventional wisdom, which often has shortcomings or is plain wrong. So I did something about it: I wrote this series.

I am always looking to improve this information, so I welcome comments. You can connect with me through Linkedin – Marco Terry -, through Google+, and through my twitter handle @marco_terry.

Now, go out there and build a great company.

Disclaimer: This guide does not provide legal or financial advice. It only provides information – which could be wrong. If you need legal or financial advice, get a good advisor.

Copyright: This guide is copyrighted. Please do not steal it. Actually, it’s updated regularly, so you are better off simply linking to it.

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