How to generate new business ideas - The STATEMENT model

Every business starts with an idea. As seeds of any human action, ideas cannot be dissociated from the process of creating any activity without skipping one of the most important steps. And business is no different.

Although execution is allegedly at the heart of the concerns of successful entrepreneurs, generating an idea worth executing is still a unique headache for many people. Especially for small businesses (such as startups).

The problem with selecting the idea for your business is that it can easily be generated based on guesses and passing trends, which is not very uncommon in the Angolan market, especially in uncertain economic times where survival is the general law. This article intends to clarify how the selection must be done, step-by-step, so that the probabilities of taking a position influenced by the wrong variables are reduced.

How does someone generate an idea?

Generating a business idea is rarely seen as a skill, however, a surprising majority of successful entrepreneurs have gone through dozens - sometimes hundreds of deals - in order to achieve what they call success today.

There are 3 ways to generate an idea:

• The Spontaneous Idea - Every now and then, we all have an epiphany moment when it feels like a lightbulb has lit up at the top of our heads and we believe we've identified the business idea of the century. These moments happen more often than we would like to admit, since recognizing this fact also implies that we have already given up on dozens of “ideas of the century”.

A spontaneous idea can arise anywhere and anytime. They arise while talking with friends, in the shower, in the car or in bed when we are about to sleep.

• The insider's idea - In these cases, the entrepreneur usually had to spend a few years working for a certain company or industry and ended up realizing that there was an underexplored area or that his former employer refused to solve it, even at the request of his clients. The overwhelming majority of entrepreneurs around the world fall under this category. It's much easier to get a good business idea when it comes from the experience of dealing with those who actually face the problem and are willing to pay to see it resolved.
• The deliberate idea - In this case you don't start with an idea, but with the desire to create a business. Maybe you are ready for a new challenge, with a strong desire to learn how to build and manage your own business or simply generate extra income. But you need to find the idea for your business and you have no idea where to start, so you have no choice but to deliberately generate a worthwhile idea.

In the Angolan context, where we face some of the highest unemployment rates, not everyone has the opportunity to identify new business ideas based on their previous employment. Which is why in this article we bring you step-by-step instructions for the third way to create a business idea.

The STATEMENT model of generating new business ideas

At STATEMENT, our team is trained to generate new business ideas in 4 distinct phases: Research; Brainstorming; Strategic Forecasting and Validation.

Research (market and industry)

The first phase of the idealization process is market and industry research. But what does this mean? And why distinguish the market from the industry?

Ideas are everywhere, and as good as they may sound at first, there is a huge chance that they were generated based on unrealistic assumptions, after all, no one believes he is incapable of fooling himself. In this first step, the key is to list all the good business ideas that might come to mind. A more pragmatic suggestion would be to purchase a notebook, diary or notepad specifically for this purpose. Create a three-column table and your preferred number of rows; in the columns write “Idea”, “Market” and “Industry”.

Column of ideas

Here you need to write the main idea of the business. The key to this part is to be as specific as possible, so avoid generalizations like “create a new form of transport”, or “revolutionize the oil industry”. To help you in this step, you should write within the space limits, this will help you simplify the idea. Good examples of ideas would be similar to "low-cost home rentals"; or "build and sell cars"; or "build and sell fuel filters for automobiles."

Market column

Here you will have to analyze your market under 3 variables: demand, supply and raw material suppliers. You need to realize how desperate the market is to receive your solution, what solutions already exist, and how easy it will be to get the materials you need to build your solution. Ideally, your solution would have high market demand, little supply (it doesn't need to be zero) and your potential suppliers are local (unless you have good contacts and relationships, avoid businesses that depend on currency conversions and international suppliers). Use a scale from 0 to 3 to rate each variable, the higher the score, the better the idea. A good idea will get at least 5 points when all three variables are added.

Industry column

More often than one might imagine, entrepreneurs have extreme difficulties in identifying the potential of the industry in which they want to be inserted. How big is it? How much does it generate annually? How relevant is it to a particular business ecosystem and country?

The theory is very simple… If you want to build a business that brings you millions, you need to be in a industry that generates millions, likewise, if you want a business with billion dollar potential, you need to be in a billion dollar industry.

In this step, note in the available field (after the appropriate research) the estimated value that the industry to which your business idea fits generates annually. Then answer the following question: if you knew that all your effort, after 10-15 years of setting up the company, would only allow you to reach 1% of this amount annually, would it be worth it? If the answer is no, cross it off the list.

At the end of the research phase, the ideal would be to have only the 2 best ideas left.

Brainstorming

“What is brainstorming?” you may be asking. It is an activity that appears all too often in the business world, especially startups and/or small businesses, although it is a powerful tool when well used by large corporations. The purpose of the brainstorming phase is to stimulate questions that counter your idea, discover the best ways to overcome the problem you are trying to solve, and strengthen the structural basis of your business concept. You can do this individually (not advised), or you can try to explain your idea to as many people as possible, preferably those who will be your business partners and customers, and ask them to find arguments capable of invalidating your idea or additions that may be useful to you.

Eliminate brainstorming from your ideation process and you'll be opening the door to unnecessary mistakes that can be completely eliminated in the beginning. As an entrepreneur, it is important that you develop the ability to listen to the market and defend your business idea. After brainstorming, the ideal is to be able to properly answer and justify the following questions:

1 - What is the real problem?

2 - Can you solve the problem (you and your team available. No outsourcing)?.

3 - What is your solution?

4 - What is your market?

5 - Could you scale your business?

After this phase, only one business idea should remain, as the work here starts to increase and the focus therefore needs to be greater.

Strategic Forecast

Strategic Forecasting is a very familiar concept in the management consulting industry. In simpler terms, strategic foresight is essentially the ability to make informed and educated guesses. However, it's more than just trying to predict the next market trend.

Strategic forecasting looks to the past for recurring trends that apply to the future. The goal is to take all the information available in the present and actively implement strategies to shape and create the future you desire. As an entrepreneur, knowing how to “read” the market from available data is a skill that gives you exponential advantages over any company or individual.

Like any skill, strategic forecasting improves with practice, and you don't have to severely discredit yourself for bad prediction. On the contrary, exercising with failures will make you a strategic predictor with great chances of success.

In this step, the ideal is to ensure that your business idea is designed in the right way. Try to understand the trends of the period in which you intend to launch your business. It's no use selling raw gold if all people are asking for is gold-plated jewelry. That is, there are several ways to build the perception of the value you want to add, your job is to find out which is the most viable for the moment.

Idea validation

Idea validation is the last and most important step in the idealization process.

Validating your idea means confirming all your long, tireless hours of effort so far. In this last step you need to “sell” the idea to who, in fact, is plagued by the problem you are trying to solve… Your customer.

Gather what you need and start testing your solution for potential buyers. You don't need to have the solution in your hands. This experience should be used as a way to ensure that not only is there a target audience, but also that they are willing to buy. Analyze how often people are willing to trust you with their money in exchange for your solution, and if this number is sufficient to justify the effort, you will have the perfect signal to proceed with the production of your solution.

Remember, you still have a long way to go before your business idea becomes a business success, but you won't be any closer to that goal if you don't do anything.

What next?

While good ideas are everywhere, it takes a trained mind to spot them. The Angolan market has seen an exponential increase in new waves of entrepreneurship, especially in the area of digital solutions, although the number of initiatives that go bankrupt is equally daunting. It is inevitable to realize that in many cases (although one cannot ignore the very market conditions that do not make the job of those who decide to undertake it easier, high prices and dependence on dollar-indexed products), the ideation part of the business has contributed significantly for the premature bankruptcy of the business.

At STATEMENT Academy we are committed to helping. With the foundation, construction and scale of startups program, #Killing Line, we intend to help thousands of entrepreneurs in the four corners of the country to build their businesses in a sustainable way, from the idealization stage to the corporate level. Check our training programs and dates on our social media pages and/or website and don't hesitate to contact us if you have any questions.

This article is also available in portugues here . Feel free to like and comment, it will be much appreciated.