Coming up with a business idea can be hard. Which is why I wrote this article. It is important to understand the art of the business idea, the piece that brings ambiguity.While the science side can be calculated and measured objectively. Both are important to understanding when you are first thinking of a business idea. By the end, you’ll be able to see a business idea in a more holistic approach. This is important in making your idea scalable, sustainable and profitable.
What is the art behind a business idea?
The “art” of a business idea is made up of the fit, the team, the customers’ wants/ needs, and the innovation. These four pieces can be ambiguous to any business model, which is why it is more of an art, than a science. There is no EXACT formula to find a business idea that is right for you, only really close examples of others. Same with innovation. If you are creating something innovative that will truly change the course of something, that impact cannot be completely measured. It may be measured through financial performance, but it will be almost impossible to tell is COMPLETE social impact.
Firstly is the fit. Does the business idea fit what you want to be doing for the next five to eight years? It will usually take a year or two to become profitable, and after that, you will most likely work there for at least a few years. So it is going to take a lot of hard work!
Make sure it plays with your strengths
The business’s day to day activities will most likely be done by you in the beginning, otherwise, if you have a team, make sure your team has those tasks covered by someone qualified. The strengths you identify for yourself do not need to be hyper-specific, as starting a business requires having many broad skills. For example, are you good with numbers? Are you better with computer coding or graphic design? Do you have skills in accounting or finance? These are the skills I am talking about. It is much easier to use your already developed skills, than to start from scratch. For example, if you have computer programming skills, maybe you could come up with an app idea for an industry you have worked in or are passionate about already. If you have construction skills, maybe you can do custom construction with the help of 3D printing, as another example.
By Tom Rath
If you need help finding your strengths, I highly recommend getting the Strengthsfinder 2.0 book on Amazon.
The Team (if there will be one)
I won’t go into too much detail here about picking the right team for your idea, as many of you may be creating your business idea by yourself. As such, you may plan to run your business on your own for the first few years too.
However, when picking your team, I strongly encourage you to first use the Lean Business Canvas, to identify your unfair advantage and unique value proposition. Once you write these out, think about what kind of things you would have to do to complete it. For instance, if your unique value proposition for producing apps is your games offer the longest gameplay, hiring someone that has strengths in game design or user onboarding would be extremely important if you are not good at that.
This picture makes me laugh because it looks like he is ignoring the line of customers LOL
The Customer’s Needs & Wants
Since the problem the business idea is trying to solve does not usually pertain to everyone, there is different psychological or physical impact behind the problem for each person. The problem you are trying to solve may affect each person differently, with how it affects them and how much. Although this can be measured, it would be almost impossible to get this information for every potential customer, and to utilize it correctly. What would solve someone’s problem completely, may not be the complete solution a different person was looking for to solve the same thing. That is why it is apart of the art piece. Who do you believe? Well, you will have to use your gut on a lot of decisions, and do some stuff that you like instead of what the crowd requests. If you always listened to the customer, they would want your product for dirt cheap, but made from gold. Not sustainable. Sometimes the customer is not always right.
How do you know if your “innovative idea” is actually going to bring innovation to the marketplace? You don’t! A great example and a classic story begin with the launch of the first computer. Countless people thought this idea was ludicrous, and would not invest or even buy at the time. However, pioneers like Wozniak, Jobs, and Gates continued to pursue their innovative ideas, and it has changed the world as we know it. Of course, this impact can be seen but never truly measured until after. Why does this even matter? Well if you want to be innovative, don’t expect to be able to measure your impact right away, or at all.
What is the science behind a business idea?
The scalability, sustainability, and ability to generate a profit is the science of the business idea because it is measurable. You can measure if your business will scale. For instance, if you wanted to start a small business being a plumber (a cool plumber who uses the Internet of Things technology). You will be able to measure exactly how high you can scale the business. Easy! Literally as many hours as you can work in a year times how much you charge equals year-end revenue. Of course, this will change if you hire people or create a franchise, but this can be measured too. The data behind your business idea, the pieces of information you use to identify the opportunity you want to act on, or the potential of your business idea is also measurable.
The opportunity you are acting on is also most likely measurable. Many problems are identified as statistics (make sure you have a valid statistic or data to believe), which is a measurable thing! A great example of this is a study done by Price Waterhouse Coopers, about the forest, paper and packaging industry and their expectations with digitization. They have some great statistics related to their research that makes it quantifiable. You can see the levels of preparation in the organization from the picture above, letting you visually measure the opportunity at hand.
Like I mentioned before, how you generate profits is measurable through basic assumptions of how much you will charge, and how long you can work. The same principle applies to product-based businesses. You can only make as much as you can produce and sell at a certain price point.
How you scale your business, is also measurable. If you were going to hire people to do the work for you, so you can handle more clients or projects, is just using math. Your costs minus revenue will leave you with a profit (basic version). Some assumptions, of course, are made with customer retention and sales, and these can all be modified to create best/ worst scenarios.
Combining the Art and the Science
…you get a business idea. I hope through this blog I was able to give you insight on the ambiguities of a business idea, and the measurable factors. This will help you in identify the right idea for you, ultimately. By knowing how to quantify your problem, it will let you act accordingly, but providing the right solution is an art form because different people want different things.
What do you think about a business idea being an art and a science? Is it all a science? Head over to my Facebook Page and let’s continue the conversation!