Chapter 4 - Small Business Ideas: Creativity, Opportunity, and Feasibility

Business models

A way to identify and organize key information on a business and how it achieves its goals. Can be analytic tools (like a business model canvas) or a way to do business (like the "razor and blade" business model).

Eliminate

Search for opportunities that arise when you get rid of something or stop doing something Idea Trigger: What could I get rid of or reduce that would eliminate something my customer has to do?

Screen Ideas - RBI Screen

"Really Big Idea" A fast technique for making initial assessments (called screens) of prospective business ideas based on five questions. Approach comes from Alex Bruton, and can be found at RBI Screen.

Avoid Pitfalls

1. Identifying the wrong problem 2. Judging ideas too quickly 3. Stopping with the first good idea 4. Failing to act 5. Obeying rules that don't exist

Screen Ideas 2

1. People: Who are you? 2. Offering: What are you offering? 3. Customer: Whom are you offering it to? 4. Value proposition: Why do they care? 5. Distinctive competencies: Do you have any key or core science/technology or feature?

Customer segment

A group or subgroup of potential purchasers that can be approached in a coherent manner.

Pilot Test

A preliminary run of a business, sales effort, program, or Web site with the goal of assessing how well the overall approach works and what problems it might have.

Entrepreneurial alertness

A special set of observational and thinking skills that help entrepreneurs identify good opportunities The ability to notice things that have been overlooked, without actually launching a formal search for opportunities, and the motivation to look for opportunities

Adapt

Adaptation from existing products or services Idea Trigger: What could you adapt from other industries or fields to your business?

Freemium

An approach to pricing, and a business model, that connects free and premium products or services. Typically a free version is offered and users have the option to pay to move up to premium features. Dropbox, Angry Birds

Imitative strategy

An overall strategic approach in which the entrepreneur does more or less what others are already doing

Gain

Can be any sort of outcome (a product, service, outcome, or situation) customers or potential customers would like to encounter or be able to depend on.

Pain

Can be any sort of problem, annoyance, source of aggravation, shortcoming, or sub-optimal situation customers or potential customers face.

The Classic Feasibility Study

Feasibility studies consist of careful investigation of five primary areas: 1. the overall business idea 2. the product/service 3. the industry and market 4. financial projections (profitability) 5. the plan for future action.

License

Legal agreement renting you rights to use a particular piece of intellectual property. Licensee, licensor

Rearrange (or Reverse)

Magnetic Poetry example Idea Trigger: What can you rearrange or reorder in the way your product or service appears?

Causal model of entrepreneurship

One in which you wan to create a particular product or service that does not yet exist and to achieve that end, you have to cause the product or service to exist. This can mean you will have to learn new skills, or find others to help you achieve your end.

Combine

Possible combinations that result in something completely different. Books, coffee, and music: Barnes & Noble, Tattered Cover Book Stores. Idea Trigger: What separate products, services, or whole business can you put together to create another distinct business?

Ways to Keep On Being Creative

Read magazines Invite someone you've never included before to a meeting Have a "Scan the environment" day Try a mini-internship Put yourself in customer's shoes Redesign your work environment

Target Market

Refers to the group of customers in the area you plan to serve who would be likely to be interested in your product, or those of competitors. Can refer to individuals or market groups called segments. Also called Serviceable Obtainable Market, or S.O.M.

Value proposition

Small business owners' unique selling points that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition. Also known as benefits

Magnify (or Modify)

Taking an existing product and changing its appearance or adding more features. Can also cue you to minimize something. Idea Trigger: What could I make more noticeable or dramatic, or different in some way from my competitors?

Make Sure an Idea Is Feasible - Feasibility

The extent to which an idea is viable and realistic and the extent to which you are aware of internal and external forces that could affect your business

Conversion rate

The measure of how many visitors to your website (or people who click on your online advertisement) are actually willing to make a commitment to the product or service promoted on the site

Put to other uses

Think of ways you could generate a high number of opportunities for your product or service Idea Trigger: Suppose you learned that all the traditional uses for your product had disappeared; what other uses might there be?

Substitute

What might substitute for something else to form an idea? Idea Trigger: What opportunities can you think of that come as a result of substituting or replacing something that already exist?

S>C>A>M>P>E>R...SCAMPER

a creativity tool that provides cues to trigger new ideas for your business

Creativity

a process introducing an idea or opportunity that is novel and useful, frequently derived from making connection among distinct ideas or opportunities

Royalty

payment based on the number or value of licensed items sold

Incremental strategy

taking an idea and offering a way to do something better than it is done presently

Radical innovation strategy

Rejecting existing ideas, and presenting a way to do things differently.

Ideas, Opportunities, and Businesses - Opportunity recognition

Searching and capturing new ideas that lead to business opportunities Involves creative thinking that leads to discovery of new and useful ideas

A/B testing

A way to check customer reaction to websites describing your product or service. Two versions (version "A" and version "B") of the site are posted and are served up randomly to prospective customers. The version of the website that gets the most commitments from customers is the one kept and the less attractive site is revised and the two versions tested until one revision gets consistently superior customer reactions.