How to pick an idea for a startup? Part 1
This topic is so extensive that I’m going to divide it into two parts. The first part is rather addressed to people who haven’t run a startup before.
WHAT WILL YOU FIND OUT FROM THIS ENTRY?
- About the essence of running a startup – how to define it in a few words.
- What is the purpose of running a startup.
- What questions you should answer before you start thinking about an idea for a startup.
- Why the idea itself can be less important than all the other questions shown in this entry.
- You’ll read a couple of inspiring topics which will probably change your nearest future.
- You’ll read about my experiences with startup ideas within following weeks in the next part of this entry. 🙂
The question about a startup idea seems to be quite important, after all, one sets up a company in order to realize certain ideas. These can be services, trade, or production. However, there is always a goal.
Some people never set up a company because they never feel they can „ hit the bull’s eye”. They have ideas, there can be even tons of them, but something always prevents them from making a decision – „Yes, I’m becoming an entrepreneur”. Americans have this popular saying -„put your money where your mouth is”, which means to „ put your money into the ideas you keep on talking about”, or in other words – „talking isn’t enough, you have to lay out money”. Although the perspective of running a company and realizing your own ideas seems attractive, lots of people find it enormously hard to make a decision saying that from now on they not only talk about what they want to do, but they invest money, take risks, and start acting.
I really liked the definition of an entrepreneur that I found in a book „The Startup Owner’s Manual”.
The entrepreneurs are characterized by the desire to find a repetitive and scalable business model. They are agile and flexible enough to cope with daily changes and function without a plan. (..) They should be able to enjoy every failure which allows them to draw valuable conclusions and start a new iteration.
The word „find” is crucial here. But exactly – how to find this „repetitive and scalable business model”?
If you take a look at the history of many startups, you will find out that their ideas have eventually undergone some modification. Groupon started as a social platform called „Point”. Its purpose was to connect people to solve problems together. However, it turned out that the idea wasn’t very attractive, and the company started running out of money. But when on their blog they started informing about the attractive offers of different companies, which allowed you to get a discount when buying e.g. two pizzas instead of one, it suddenly turned out that people wanted to use it.
This story shows the essence of running a startup and looking for an idea. We always start with a certain vision which sometimes appears to be quite vague and unclear (it doesn’t always have to be so , but life usually shows that the idea should alter in order to have a chance of success). As a matter of fact, we don’t know if we are talking about a vision or a hallucination. The search doesn’t end on the day you set up a company. Quite the opposite – in case of startups it’s only the beginning of sometimes winding road.
But where to get this assurance that it’s worth following the idea which came to your mind when you were taking a shower?
However, what is more important is the question if you want to be an entrepreneur. If the answer is yes. The second question arises – OK, what to do then? If entrepreneurship is what you want to do, then ask yourself the following questions.
- Why do I want to run a business?
If your answer is „for money”, then this motivation can be not enough. Especially in case of a startup, where money may not flow for a very long time or even the of the company can end in its closure. If you want to survive in hard times or rise after the closure of the company , you’ll need something more than just financial motivation.
Then what should be the correct answer to this question, so that there is a chance of future success ? The topic is so interesting that I’ll give it a separate entry. But consider if it is something that you would do even for free. Or if you have a feeling of some kind of mission – what mission? Do you feel passion for taking care of business?
I believe this is the most important question of all. No matter whether you want to produce toys, create a dating site, or send rockets into space – if you don’t know why you do it and what motivates you to do this, then you can lose the motivation at some stage of running a company.
The answer to this question will eventually help you make the decision „yes, I’m setting up a company” and not to put it off for the rest of your life.
If you already have a company, you can go on to next questions.
- What resources do I have today?
- how much money do I have (it can be one, ten or one hundred thousand zlotys – it doesn’t matter, mention it),
- what skills do I have (cooking, networking easily, graphic sense),
- is there a person, whom I know, who can help me (with advice or conversation) or who could run the startup with me,
- how much time do I have for realizing my ideas,
- what experience and knowledge do I have?
If you have no money, then it doesn’t really mean that you can’t set up a business. Maybe you’ve got time and skills (e.g. programming) which will allow you to create something that will draw the attention of an investor? And maybe you have money and connections, but no experience – maybe you could think about setting up a company with somebody who has more experience than you?
- What risk am I able to take?
I think that statistically the biggest „addiction” of entrepreneurs is being worried. This is not necessarily a synonym of stress, but it can be connected with it. Setting up a business, you will wonder whether your idea will make sense at all , whether you will do well on the market, and if anybody will want to use what you create, etc. Employing another people, you’ll worry whether your clients will keep on paying, to keep all the employees and let the company expand, or wether the competition will be better than you.
Worries can concern every entrepreneur – regardless of the size of the company. But they don’t have to. The topic is so interesting that I’ll also give it a separate entry – incl. how I cope with them.
At this point , however, you still have a certain level of risk that you are able to accept – I’m speaking here primarily of financial risk. Imagine the worst scenario – what loss are you able to accept to realize your idea? If a certain amount of money comes to your mind, then transfer it on the company’s account and accept the fact that it’s possible that this money will never come back to you – how do you feel about it?
In the definition of an entrepreneur cited at the beginning of this entry there is a part that I especially like – „They should be able to enjoy every failure ”. The word „failure” has a negative connotation – I prefer the word „feedback”. Prepare yourself for a lot of feedback. Every such moment really makes you develop in some way. You enrich your experience, develop your intuition and attain knowledge.
- What can I give up if I want to take care of my idea?
Instead of realizing your ideas, you could spend this time on something else – e.g. working for somebody. This is a loss indeed – are you able to accept it at this stage of your life? If you are a programmer, the decision can be tough because if you start working in somebody else’s company, you will probably be able to expect regular and good earnings. Your business can bring much bigger profits but you can also not earn anything. Until you are able to make such a decision, running a business will be only connected with constant thinking about lost earning opportunities as an employee – and that won’t go along with your company’s development.
When I was setting up Expansio, the moment for making a decision to give up on something came. The company hadn’t generated any income yet, and on the horizon there appeared a very attractive job offer from an American startup with a good wage and on an innovative project. My acquaintance recommended me, all I had to do was say „yes”.
This wasn’t an easy decision, but I forwent that offer. What helped me was the answer to the first question – „Why do I want to do this?”. I felt that my heart had been telling me for ages to , „go in that direction”.
- What would I like to go into? What business, technology, would that be a virtual product or maybe something physical?
Why does such question appear on the fifth place? Because I think that when you start a business, the answers to the previous four questions are far more important. Without them you can lose your motivation for running a startup when you come across first problems. Get to know yourself first – first of all, whether and why you want to do it. Also, get to know your resources, analyze your experience, and estimate the risk that you are able to take, it will enable you to choose what kind of business you’ll be able to take care of. This will more or less show you what you can take up at the beginning.
Okay, but where is the answer to the question about which business idea to choose? If I knew the answer like „create XYZ in such way and you’ll earn ABC”, I would just set up an online shop where every idea would have a certain price – because it would bring guaranteed profit. Of course there are ideas which would surely make you rich – e.g. teleportation. But does your current knowledge allow you to deal with this topic? And if not, then maybe you have enough money to employ intelligent people who would work for you on this subject and you are able to risk such cash? Everyone has a different situation. Business has something from art and is the combination of answers to all the previous questions. And maybe, while surfing the Internet, you have seen a startup which inspired you to do something new? Or maybe a friend of yours is great at something, in which you see a business potential, but he has no money ,but you have?
It all starts with a prospect, untested, but bringing a twinkle in your eye. Then you have to think about the first step to move forward. Maybe a meeting with somebody who has more experience in this field? And maybe finding more money?
And this is what the will to „find a repetitive and scaled business model” is all about. At this moment, the real search for an idea starts. Don’t expect that the idea that appeared in the shower will be exactly the one that you’ll be realizing for the next couple of years. You aren’t able to predict everything that can happen during that time. But ask yourself a question – do you want to take the first step?
Aim high but don’t expect to create Facebook immediately. And accept the fact that it may not work out. Being an entrepreneur is far more than just a business idea. It’s a set of qualities which allow you to manage an enterprise regardless of the industry.
And to motivate your mind to bring you interesting ideas while taking a shower, here is a set of several selected technologies that can change the world in the nearest future.
In a separate entry I will discuss the topic of this road – how it looks like and how to complete it to increase a chance of success.