Your Business Idea


Figuring out the business idea can be fun, can be frustrating, and it can be incredibly insightful.  Together we will move through a series of exercises to help us figure out what our business should be.  More importantly, we will discover what the problem that exists in the market we should tackle. 

What is Your Number?

Why are you doing this?  No really, I am not being rhetorical here.  Ask yourself, why am I trying to build my win?   You might say, “I want a better life, I want to get rich, I want to be financially secure, I hate my boss, I’m tired of the grind, I want a new car.”  I am sure we could keep the list going.  Maybe you believe you can make a difference in the world or maybe you want to bring a talent you have to your friends and community.  Only you know what motivates you and only you can decide what the really big goal is. 

This usually takes most people some time to figure out.  We often tell ourselves we know exactly what we want if we only had more time and more money to make it happen.  Now we are challenging this notion by building a mind map of the vision we have.  This exercise is intended not to depress you but to motivate you to know exactly what you want.  This is an important step and it is critical that you are mature in your thinking here.  Do not build a fantasy life that you want, build the vision of the real life you believe you can attain.  If you have never made more than $50K then don’t come up with a life vision that requires a $50M income.  I love dreaming big.  Our goal is to come up with an “I’d be happy if…” vision.  Of course, our desire is to exceed our expectations. 

What Are You Good At?

We all have things we can do but what are we really good at?  Few of us can rattle off a list of things we are super good at so we are going to have a little fun.  Let’s follow these steps.

1. Make a list of 100 things you are capable of doing
2. Circle 20 items in the list that you believe you are good 
3. Highlight 5 of circled items that you really enjoy doing
4. Put a star beside the one thing that you would be nuts, upset, and besides yourself if you were told you could not do it anymore?

What Is A Problem You Can Solve?

With the items you have starred on your list, consider a problem you can solve with each consumer of the skill.  Who has a problem that you can solve with your unique combination of skills?  Why does someone need the products you can make?  How does using your skill make someone's life better?   Look for the big meaningful problems you can solve. 

Does The Math Work

Time for some back of the envelope math.  What do you think the realistic selling price of your product or service is?  Top of your head based on everything you know about the industry.  Now how much do you think it will cost you to deliver this product or service?  Think concerning the actual variable cost - no overhead like insurance, accounting, taxes, legal, etc.   Take selling price minus your cost and you have a guess at a gross profit per unit sold.  Now take Your Number and add a guess for overhead such as advertising, office space, etc.  $10-20K is suitable for most small businesses.  This value is your total cost.  Now divide your total cost by your gross profit.  This total is how many units you will need to sell just to break even.  Divide the unit sales by the number of days you wish to work, and this is how many units you will need to sell each day to break even.   Is it possible?  

The first few times you do this, it will be probably not possible to produce the volume you need to break even.  The point is to make a few educated guesses and quickly slice down through your ideas to find one that works on the back of a napkin. 

Selling Price Per Unit - Variable Cost Per Unit = Gross Margin Per Unit

Your Number + Overhead = Fixed Cost

Fixed Cost / Gross Margin Per Unit = Unit Sales to Break Even

Unit Sales to Break Even / No. of Desired Working Days = Sales Per Day to Break Even

 

Focus

  1. Find a really big problem
  2. Be creative and think about how you can deliver exceptional value
  3. Take a few guesses and see if the math works
  4. Research the idea once you think you found a good one to prove your assumptions