If you’ve come to the conclusion that working for someone else isn’t for you, becoming an entrepreneur may be a shrewd move. While starting a business on your own may be difficult, the hardest part might just be coming up with an idea that can be successful.
The International Finance Corporation’s SME Toolkit advises potential entrepreneurs to create three separate lists to determine what might be a good fit. The lists should focus on what you’re good at, what skills you’ve acquired over the years and the things you like to do.
“Keep these three lists in an accessible place (for instance on your desk) for several weeks, and when small business ideas come to you, jot them down in the proper category,” the SME Toolkit advises.
Jason Nazar, co-founder and CEO of Docstoc, believes the best way to generate a business idea is to think of a problem that can be solved. But, he also noted, it’s imperative the problem not just be your own.
“What’s a problem that a lot of people have?” Nazar says in a video on the Docstoc website. “That’s a really good starting point for a great business idea.”
Brad Sugars, founder and chairman of ActionCOACH, wrote in an Entrepreneur.com article that the best business ideas tend to be ones that are most narrowly focused.
“Category leaders tend to be highly focused, and many times, that focus can appear too narrow,” Sugars wrote. “But companies with focus grow precisely because their niche is so distinctive.”
While some like to be as secretive as possible when crafting new business ideas for fear of having a great concept stolen from underneath them, entrepreneur Chris Dixon believes the opposite approach is best.
In his blog, Dixon, the co-founder and CEO of Hunch, advises those who want to start a company to create a spreadsheet where they list every idea they can think of. He advises they then take that spreadsheet and get feedback from as many people as possible, such as venture capitalists, other entrepreneurs, potential customers and people working at big companies in relevant industries.
“The odds that someone will hear an idea and go start a competitor are close to zero,” Dixon wrote. “The odds you’ll learn which ideas are good and bad and how to improve them are very high.”
Money also needs to be taken into consideration. When deciding the best business to pursue, author and franchising expert Joe Matthews believes any idea that is deliberated should also be measured by how profitable it can be.
Matthews encourages potential business owners to run three different financial scenarios — best-case, average case and worst-case — for their prospective business.
“Shoot for the best case, but make sure your decision is based on the average case scenario,” Matthews wrote on Entrepreneur.com. “Also, make sure you can survive the worst case.”
Many good ideas for a new business can be found where you’re already working. In his book “The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By” (Yale Press, 2008), author Scott Shane writes that interactions entrepreneurs had with customers in previous jobs is a great source of inspiration.
He points to a study by the National Federation of Independent Businesses that shows that a business founder’s prior job was the source of the idea for a new business 43 percent of the time. In addition, 61 percent of new businesses serve the same or similar customers as their founder’s previous employer and 66 percent of the new businesses were in the same or similar product line.
While following all of the advice won’t necessarily lead you down the path to a profitable business, it will help you get on the right track.