Week Five: Find and Develop an Idea

Your business idea

Every single business you have ever heard of started as the idea of an entrepreneurial individual or small team – even the major global brands.

For example, I’m writing this chapter while sitting in a Starbucks café in London after a day of meetings. Starbucks is an internationally recognized brand and there are thousands of their coffee bars across the world. They are such a huge company – not a small business like yours or mine. It must have been started by a big corporation.

As it happens the chain of coffee shops was the idea of Howard Schultz who fell in love with Italian coffee bar culture on a visit to the country and decided to try bringing it to Seattle, then, when it worked, to the rest of the United States, then to the rest of the world.

It’s a hot day so instead of coffee I’ve bought a fruit drink made by Innocent Drinks. The company was started by a group of three twenty-something friends who weren’t satisfied in their corporate careers and wanted to start a venture together. They liked fruit smoothies, and made them at home, but were frustrated that the only commercial drinks they could buy were full of additives, and lacked the flavour of their own drinks. They went into business to make wholesome, tasty fruit drinks, and are now very successful as a result.

So we have two different sized business – a global brand and a small but fast growing British company. They have been selected as examples simply because I happen to be using their products as I write this chapter, but both were started by entrepreneurial people with an idea. Think about objects around you now, or products or services you are using. What do you know about the business behind them? Who started it and why?

The point is that every business starts with someone like you, with an idea. There are some books suggested below that tell the stories of these people. They make great reading and you’ll be inspired by what someone just like you can achieve.

If you already have an idea for your business, then it’s still worth reading this week and doing the exercises, because you can refine your idea to be even better.

We’ll brainstorm for ideas shortly but first let’s see where you might find inspiration from.

You don’t need to be a beardy-weirdy inventor

Did you notice something about the two successful businesses I highlighted above? The founders did not invent the product or service at the centre of their business. Howard Schultz didn’t invent the coffee bar – he liked them in Italy and brought them to the USA, adapted for American tastes. The Innocent founders didn’t invent the idea of making drinks from fruit, they just improved them for a target audience who wanted something without additives.

Let’s look at other businesses. Did McDonald’s invent the burger? Did Pret a Manger invent the sandwich? Did British Airways invent the aeroplane?

You don’t need to hide in your garden shed for the next six months inventing some crazy machine – there are thousands of opportunities to build a successful business by serving customers in a better way with existing ideas.

Adapting an existing idea: improving location, luxury or love

There are three ways to build a successful business by adapting and improving an existing product or service for your target audience. You’ve probably guessed from the heading what they are. So what do they mean?

Improving location

You can adapt an idea locally by bringing it from any place to any other place. In most cases this will be to or from where you are, an area you know.

Starbucks is an example of this. Howard Schultz found something in Italy that he thought would work where he lived in Seattle. He adapted it to be local to his target audience.

What products or services exist in other countries or other places in your own country, but not where you are? Could you bring them to your area?

What products or services exist in your country or city but not elsewhere? Could you take them there?

Another way of improving location is by taking the point of sale of a common product to a more convenient place for the customer. Could you go and sell to customers in their homes, like Avon, Ann Summers and the mail-order catalogue companies? Could you make it easier for customers to buy products by phone like Direct Line insurance? Could you make it easier for customers to order online like Amazon.com? Could you sell to people at work, like the countless sandwich vans that tour business parks across the country?

Improving luxury

You can adapt an idea by increasing the level of luxury to make it more exclusive, or by reducing the level of luxury to bring the product or service to a wider audience.

easyJet and Ryanair saw the opportunity to bring air travel to a much wider audience by stripping out all the luxuries to reduce the price. IKEA saw the opportunity with furniture.

Meanwhile a number of small, independent hotels and restaurants around the UK are seeing the opportunity to attract high value customers by increasing the level of luxury, and becoming desirable weekend retreats for busy working couples, or fashionable places to stay in cities during the week.

What product or service can you add luxury to in order to serve your target audience?

What product or service can you remove luxury from in order to attract your target audience?

Improving love

An increasing opportunity is to adapt an idea by adding love. There is a real trend for consumers wanting to deal with companies that have a personality, an obvious love for what they do, and an obvious love for their customers.

I believe this is a really important opportunity, and one that is particularly suited to entrepreneurs.

Take a look at the website of www.innocentdrinks.co.uk – or even better, go and try their drinks and read their bottles. Feel the love!

So what have they done in order to create a business with added love? They had a passion for that subject anyway. They built the business out of their own needs. They’ve then made sure that their passion isn’t hidden away behind expensive corporate style marketing brochures and websites. They write the copy for the website and their marketing materials in-house, they design their own adverts, they try to be in contact with their customers rather than hiding behind call centres, and they have fun!

But the most important thing they ever do is when they recruit people. They only hire people that share their passion for the subject, and their positive attitude to the business and the customer. One person cannot build a business on love if the rest of the team are jobsworths.

What are your passions in life? Could you adapt a business idea in this area and add some love?

You can also adapt an idea by removing love, but really, who would want to?

Using your skills

You can develop a business idea based on your skills. These needn’t just be related to the job you do now. What are your general skills in life? In your hobbies? At home? And at work?

Spotting opportunities

You’ve been practising spotting opportunities since last week. Have any of those inspired you? What problems are people facing? What unfulfilled needs do they have? How can you solve that?

The brainstorm

So, now it’s time to think of some business ideas. Remember that this is still worth doing if you already have your business idea, as you need to exercise your entrepreneurial skills – and you could even come up with some improvements to your initial thoughts.

You had a go at brainstorming last week (and perhaps it’s something you’ve done before anyway) but this week we’re going to do it for real to help you discover your business idea.

To refresh your memory, brainstorming is done in two stages. The first part is the ‘Green Light’ stage in which you just let your mind wander all over the place coming up with really bizarre ideas. You don’t criticize or select them in any way. You write them all down no matter how stupid they might be. If you’re brainstorming with anyone else you must make sure that you don’t criticize each other’s ideas at this stage. Anyone should feel able to contribute anything.

The second part is the ‘Red Light’ stage in which you look at all your ideas more critically. You quickly weed out the daft ones, then you might adapt or reject some others. You’re then left with a core of potentially good ideas. Some of them might even shine out as brilliant ideas. Look more carefully at each one of these. What could be the problems with each one? How difficult will each be to start as a business? What are the advantages of each one? How much of a demand do you think there will be?

The end of the week

If you do a Green Light brainstorm every night this week and a Red Light analysis at the end of the week you’ll be amazed by the range and quality of ideas you can generate. If you think hard enough you might even get a ‘Eureka!’ moment.

However, it is possible that you will discard all of your ideas, or that none of them really appeal to you very much. If this is the case then feel free to postpone going on to next week and have another week of brainstorming until you hit on the perfect idea for you. You may also want to visit the website that supports this book at www.flyingstartups.com to view some business case studies and chat with other entrepreneurs online to get some inspiration.

Emma’s idea

Emma already has her idea. One of her big frustrations is not being able to get lunches at work that she enjoys. She likes good food, and she likes to eat healthily, but the only option that is available to her is a sandwich. The local sandwich shops don’t have very inspiring ingredients, except one that is a bit more daring, but she soon gets bored of eating sandwiches every day anyway. And in winter, the only options for hot fast food aren’t very healthy. She doesn’t have much time at lunchtime, so she can’t go and sit down at a restaurant or café – she generally eats at her desk – but she would be prepared to pay extra for being able to get something tasty and healthy made with good-quality ingredients.

While on her holiday in Australia, she found a chain of healthy fast-food shops called Sumo Salad (www.sumosalad.com), and fell in love with the idea.

She’d like to set up a healthy, tasty, fast-food shop, and her long-term dream is to build it into a chain of shops.

Following up from previous weeks

Your credit records

The reports on your credit file (that you requested in Week Three) should have arrived by now from the credit reference agencies. If they haven’t, then contact them to complain, as they have to provide you with your report within seven working days of receiving your request and payment.

If the reports have arrived, use the accompanying leaflet to go through each report and check what each entry means. If everything seems OK, then breathe a sigh of relief and move on.

If there are adverse entries on your credit file then follow these steps.

1. If you accept that all the adverse entries are accurate, then consult your local Citizens Advice Bureau or another suitable agency (see the list in Week Three) for advice on what you should do to settle any problem that is creating an adverse entry. You can also talk directly to the organization that has put the entry on your file to see how you can settle the matter with them so that they remove, or mark as satisfied, the adverse entry.

2. If you believe that an adverse entry on your credit record is incorrect, you should follow the advice given in the leaflet that accompanies the report. You can also seek help from one of the advice agencies listed in the contacts section of Week Three.

Even one slightly bad entry on your credit file can cause you huge problems these days – preventing you from opening a business bank account, trade accounts with suppliers and so on. I believe that credit reference agencies, and the companies that submit entries to them need much tighter regulation, and that there should be more hurdles for them to jump before they can place an adverse entry on your file. The power of credit reference agencies is a growing problem that will seriously hinder the growth of an enterprise culture in the UK.

Entrepreneurs: Been There, Done That

John Barnes is a serial entrepreneur who left his job with KFC to buy one fish and chip shop in Yorkshire and turn it into a national brand – Harry Ramsden’s:
‘My colleague, Richard, and I had this idea that here were these American style branded chicken stores being very successful in the UK and yet there was no national brand in fish and chips. I had come to Leeds when I played football at university and seen Harry Ramsden’s and it had always left this imprint on my mind as something larger than life, because it wasn’t a fish and chip shop; it was this huge restaurant with chandeliers, carpets and wonderful nostalgic values. Richard had the idea that we should buy it, and turn it into a bigger brand.’

Sahar Hashemi had been working in New York, and loved the Italian-style coffee bars that were in the city. When she moved back to London she couldn’t find them anywhere:
‘I fell in love with the concept. I didn’t see an opportunity, I just fell in love with it as a customer. I told my brother how much I missed it, and wished there was something similar in London, and it was him that spotted the opportunity, and persuaded me.’
Sahar and her brother went on to start Coffee Republic.

Tony Dorigo is a former international footballer. When his professional football career came to an end he began looking for a business that he could run:
‘I decided to try to develop an all-encompassing service, where footballers could go for all the parts missing from their lives. Initially I saw us providing all the sexy services – let’s be honest – footballers like their watches, they like their plasma screens, they like their holidays, but when I looked into it further and recollected my own experiences of moving club and country, I realised that there was a lot more to it. So take the scenario of a player and his wife coming to a new country. First of all there’s the flights, then the hotels, then it’s finding the right areas to live in, and researching the schools. If you want the family to come over, it’s sorting out hire cars. You may want a cleaner found, and a gardener. You find a lovely house, but want an extension – we have a buildings manager who will find the best quote and manage every aspect of the build. It really is anything and everything.’
He developed this into ‘The One Club’ a valuable service for VIPs.

Bill Gates started Microsoft:
‘[When we started] . . . there really was no software industry, software was done sort of as an afterthought by hardware companies, the thing that was at the centre of people’s minds was the hardware. And the insight we had was that this would get flipped around where, although hardware would still be important, the thing that would drive the value of information technology would be software. So we said, okay, let’s build the world’s best software company.’

Trenton Moss, founder of Webcredible:
‘I was in Beijing after having been travelling for a few years, and was trying to book my return journey home on the Trans-Siberian railway, and I had the most frustrating experience on the travel company’s website. It was so poorly designed it was almost unusable. Obviously a seed had been planted by this, because I woke up with a start at 5 am the next morning and decided to set up a consultancy to help people design websites that are easier for their customers to use, and therefore earn them more money.’

OTHER USEFUL INFORMATION

One of the key things that successful entrepreneurs do all the time is to learn from their peers by reading books, listening to audio programmes and going to hear them speak. Here are a selection of useful resources. It’s well worth reading as many as you can.

Start Small Finish Big (Warner Business Books) – by Fred DeLuca with John P. Hayes
How Subway grew from one sandwich shop to become a global brand – and great advice on how you can do the same.

Pour Your Heart into it (Hyperion) – by Howard Schultz and Dori Jones Yang.
The story behind Starbucks.

Marketing Judo (Prentice Hall Business) – by John Barnes and Richard Richardson
Not only is this the story of how they built Harry Ramsden’s into a major brand with practically no marketing budget, but they carefully analyze the key things they did and show how you can do the same in your business. A really useful book for entrepreneurs. Red Audio has published an audio version on CD and cassette.

Against the odds (Texere Publishing) – by James Dyson
A great story of persistence by the inventor of the eponymous vacuum cleaner.

In the Company of Heroes (Kogan Page) – by David Hall
A fascinating insight into the minds and methods of a wide range of entrepreneurs.

Amazon.com: Get Big Fast (Random House Business Books) – by Robert Spector
Jeff Bezos is a truly impressive entrepreneur, displaying all the key skills, and this is his story.

Anyone Can Do it (Capstone Publishing) – by Bobby and Sahar Hashemi.
One of the most straightforward and candid books about starting up.

Smart Luck (Prentice Hall Business) – by Andrew Davidson
Interviews with a selection of big name entrepreneurs, and thoughts on their common traits.

The White Ladder Diaries (White Ladder Press) – by Ros Jay
The warts-and-all diary of the author’s first year as an entrepreneur. The most honest book you will ever read about starting a business (apart from this one of course!).

www.red-business.co.uk
A wide selection of interviews with leading entrepreneurs, and you can order audio CD copies to listen to in your car. (This is part of my company!)