“The only way I will ever become a millionaire is to win the lottery!”
-Said, everyone, I ever talked to about wanting to be a millionaire.
Unfortunately, that is the thought process of so many people when it comes to being financially independent. Did you know that having a J-O-B is riskier than starting a business? So many people are still stuck in the paradigm of relying on others for their paychecks, but I promise you, there is a better way!
For my book The Eventual Millionaire, I interviewed over 100 self-made millionaires, let me emphasize that again…self-made. That means they did not win the lottery, or inherit a bunch of money, they made their money through their businesses, real estate or investing.
But how do you start a business if you don’t even have an idea yet? Great question. In the steps outlined below, I will show you how to pick an idea and get started.
IDEAS ARE A DIME A DOZEN-THE DIFFERENCE BETWEEN AN IDEA AND A MILLIONAIRE ARE ACTIONS AND IMPLEMENTATION.
In my book The Eventual Millionaire, I outlined how to come up with a solid business idea and went in depth as to how to determine if your idea will be a good fit for both your lifestyle and your financial circumstances. When coming up with a business idea, there is a particular strategy that can help you to avoid costly mistakes. These include ways to brainstorm ideas, lifestyle evaluation, circumstance testing, the SWOT analysis.
If you are going to start a business, you might as well start it right and put the effort in upfront so you can reap the rewards later!
Although being an entrepreneur can be very scary and involve high levels of risk, it can also have even higher levels of reward. People choose to go into business for themselves for many reasons; time and location freedom, not answering to a boss, being able to choose your co-workers, financial independence, etc. However, leaving the security of a weekly paycheck can be TERRIFYING! So much so that some only dream of it and never actually make the jump. However, if you have the right tools, and a good idea or two, there really is no stopping you. So before you start anything, you need to be clear on your WHY.
So let’s get down to it. How do you come up with an idea, let alone one that can make you a sustainable income while doing work you enjoy?
Grab a notebook and a pen…write down your why statement. Why do you want to be an entrepreneur?
FOLLOW IN MILLIONAIRES’ FOOTSTEPS
Although your business should be work you enjoy, PLEASE do not fall into the “follow your passion” myth. The best ideas come from finding a need and providing a solution that people are willing to pay for. Although millionaires are made from forming businesses based on their passions, that is not a common factor of success. Through my research, I have found that millionaires have started their business based on one of three things.
1. They already had a skill, were working for another company, but decided to venture out on their own.
What skills or expertise do you already possess that could provide value to others?
2. They saw a need in their own lives.
Is there a product/service that you could create to solve a need or a problem in your own life?
3. They asked people what they needed.
What does your audience want or not want?
Write down any skills that you have that you could monetize, needs you see in your own life or needs you see in other’s lives.
BE AN IDEA GENERATION MANIAC
Don’t be shy; I know you have a few ideas locked away in that brain of yours! Now is the time to let them loose.
The process of idea generation should be fun, not daunting. Flex your idea muscle by writing down all the ideas that pop into your head, good, bad, or ludicrous. One of the ways to generate ideas is to keep a small notepad and pen with you all day. Jot down the things you touch, see, hear, smell, and taste. Do you see any problems that you could offer a solution to?
For example, while listening to business podcasts, John Lee Dumas of Entrepreneur on Fire realized that there were no podcasts that aired seven days a week to give listeners continued content throughout the entire week. So, his solution to this was to create a podcast that airs seven days a week where he interviews successful entrepreneurs. EOFire is now rated as one of the top business podcasts.
Pick a day and write down all the things you touch, smell, hear, see, and taste. Is there a need or solution you could provide in any of these categories?
PASSION: MYTH OR MONEY MAKER?
Potential customers simply are not willing to pay for a product or service; they want to pay for the after effect of what that product or service will provide to them-the outcome they will receive. How will this product or service make them feel? What benefits will your customer receive?
This is why your idea must provide them with more than just a nifty product or service, it must provide a solution or ease a discomfort in their life. This is why the “follow your passion” myth has produced failing businesses, just because you are passionate about something does not mean that others share your passion enough to pay you money for it.
This does not mean though that you should not be passionate about your business and your idea. Author Cal Newport So Good They Can’t Ignore You: Why Skills Trump Passion in the Quest for the Work You Love talks about this topic in relation to finding a career, but it applies to entrepreneurship as well.
- People who end up loving their work rarely have pre-existing definitive passions.
- Don’t seek the perfect job or career, seek to have more positive traits in the position you already have.
- Don’t set out to discover passion, set out to develop it.
No matter the idea you choose to build a business on, not every day will be sunshine and rainbows. Every business and idea will have pros and cons, good days and bad, satisfied and unsatisfied customers, things go wrong and things go right. This picture sums it up perfectly…
One can not merely “dabble” with an idea and hope that it takes off – this rarely if ever ends in success. You must be dedicated to your idea and develop the passion to see it through and grow it to its full potential. In order to be successful, entrepreneurs must bust through the roadblocks and remain committed to reaching that point of growth. You have to work hard and make it through the rough waters to reach the smooth sailing.
Look back over the two previous action items, highlight anything you see in there that is of enough interest to you that you could develop a passion around it.
PICK ONE FOR NOW
This leads me to my next point-FOCUS.
Follow One Course Until Success.
So you have a billion different ideas to start and or grow a business, great! If this is making you feel like you have ADD-that is a good thing, that means you have the right mindset to be an entrepreneur. We have SOS-Shiny Object Syndrome and are looking for the next best thing to grow our business or start a new one.
After you are done reading this post and implementing the action items, read the Market Research and Idea Validation post to help you figure out which of your amazing ideas you should use to build your business. You will need to pick one of your ideas and throw yourself into it until you have reached your definition of success with that idea, then you can move onto the next one.
But what if I don’t have enough time to do everything I want to do with all of my awesome ideas?
Don’t worry; I have a plan for that.
But first, let me explain something. When you first start and you write out your plan for your grand scheme (or plan for world domination as I like to call it-insert Dr. Evil pose), not everything will go as planned-I know, what a surprise 🙂
As your idea grows and develops into a blooming little business, so then your business will grow and develop. What you thought you wanted when you first started will most likely not be what you want 6, 12, 24 months down the road. Do not fear; this is normal. Don’t feel bad for abandoning your original plan; it’s called evolution.
Brainstorm! We haven’t started to systematize things yet, so just start jotting things down. A mind map of sorts.
WHERE DO I START?
Let’s take a step back a step back a minute. We have been talking about passion, focus, and success of your idea, but you don’t even have a solid idea yet! Remember earlier when I talked about being an idea generation maniac, making sure you are writing down your plan for world domination? There is a system to that.
James Altucher has a great article about generating business ideas The Ultimate Guide for Becoming an Idea Machine. He has this rule of 10-write down 10 ideas every day. It may be easy to get the first 4-5, but reaching out to get 10 is what really stretches your idea muscle.
However, don’t over think this, don’t put too much pressure on yourself and create more stress-that is not the goal here. The main goal of this exercise is to practice just as you would with any other skill you were trying to develop.
So lets start…
- Write down 10 things that you already know how to do well
- Write down 10 ideas where you saw a need that you could provide a solution (you don’t need to know what that solution is just yet)
- Write down 10 industries that you find interesting, want to learn more about or think would be a good fit for you
There is a downside to this though; you will not know which ideas are good and which ones are bad. Frustrating, I know. But what you can figure out is which of your ideas will fit into your life and financial circumstances, which will give you a better snapshot of if they are worth investing time, effort, and money into. Just make sure you move past the idea generation-pick something and move onto research and validation of your idea.
I hope you have a dedicated idea notebook by now! Write down 10 ideas a day for 7 days. This will give you 70 ideas to start working with.
CREATING YOUR LIFE PLAN
So, how do you go about accomplishing your ideas? You need to create your life plan.
So turn to a fresh page in your idea notebook, because I know you have been taking notes with all these juicy bits of information…
- Grab your paper and pen
- Draw a line down the middle of the paper
- Write your age at the far left
- Continue writing your age down the left in 5-year increments
- Place an idea in each section
See my example below:
|Age||Idea for that age|
|30||Start a blog|
|35||Be a business coach|
|40||Be a world class speaker, author, coach|
You have to be able to think long term and realize that patience and persistence are what pay off. You can get real specific and break this down into 1-year increments if you want.
So when you come up with an idea-GREAT! Now what? You also have to know how to market and sell your idea, otherwise, if you can’t get it to your customers, it will never take off. Just as I mentioned focus before, you must immerse yourself in your idea and the world of business.
IS YOUR IDEA RIGHT FOR YOU?
Earlier I mentioned about the strategy of coming up with ideas for your business. We have pretty much covered the brainstorming aspect-but in case you missed it-WRITE YOUR IDEAS DOWN! Just make sure you are flexing that idea muscle, so it does not atrophy.
Now let us move onto the lifestyle test, financial circumstances, and SWOT analysis. I promise they are not as complicated as they sound.
When building a business you have to make sure that you can build it around your life rather than build your life around your business, that is why you are starting this journey in the first place.
What is your end game?
What do you want your life to look like 1 year from now?
5 and 10 years from now?
You have to make sure your business goals align with your personal goals, so you do not resent becoming an entrepreneur. There are essentially two different ways you can approach your business-for money or lifestyle.
Define the personal goals you want to reach in your life. This will help guide you along in your entrepreneurial journey.
For example: After my kids grow up, I want to travel to a new country every month.
A MILLIONAIRE’S APPROACH
Millionaire MJ Demarco has the philosophy of working insanely hard for a few years and then selling your company for a big payout and living off of the interest. This may be a great option for the young, single crowd out there, but not necessarily viable for individuals with family responsibilities or that need to maintain a mortgage.
The other option is to create a business that works around your life; this tends to be the case in the side hustle world. Not everyone can quit a good paying corporate job to chase their dream of being their own boss. If you have a family to support, the lifestyle business may be more aligned with both your personal and professional goals.
List the things in your life that are a priority, everything that is non-negotiable.
For example: I have to be able to take my kids to school and pick them up every day.
But let’s get strategic about this. Go back to your paper and pen and start to imagine what your ideal day looks like.
Be specific and detailed about this. Visualize what your ideal day would look like and start writing.
What does your morning routine look like?
What did you decide to wear this day?
What or where did you have breakfast?
Where are you working?
What does your workspace look like?
What other people are you interacting with?
Do you have employees?
What is your general attitude and demeanor?
What do you see in your bank account?
I think you get the idea.
How does this ideal day make you feel?
Are you happy, fulfilled, successful, confident?
Now let’s combine the brainstorming and the lifestyle notes. Take a look at the table below. Fill out at least 10 of your favorite business ideas in the first column. Use the ideas from the 70 ideas you did for one week of idea generation for this action item. Then put a quick synopsis of what your life would look like if you carried out that idea. Lastly, rate them in order from 1 to 10 on how closely the lifestyle synopsis matched your ideal day.
|Business Idea||Lifestyle Synopsis||Rating|
When you are finished, cross out any that are lower than a 7 ranking. Also, go through and cross out the ones that do not fit into your lifestyle. You should then have a clearer idea as to which idea to start testing.
FINANCIAL CIRCUMSTANCES OR “THE MONEY TEST”
Now on to the uncomfortable but critical part-money. You may have a great idea that fits your desired lifestyle, but you also have to make sure you can fund it. Look at start-up expenses.
The great thing is with the world being digitally connected, you can start a business with very little start-up costs. You can build a super professional looking blog and monetize that, or a podcast starting at less than $100. But again, it has to fit your lifestyle. If you’re not a tech-savvy person and want to open a bakery, your start-up costs will be significantly higher.
Go back to the previous action item and pick your top 3 ideas.
Think about all the various expenses your startup will need.
Do you need a physical building?
Are you selling physical products?
Do you need to carry inventory?
Do you need to purchase any software of monthly subscriptions?
Do you need any special licenses or certifications?
What will you spend on marketing and advertising?
What kind of office or other equipment will you need?
Will you need employees right away?
Just because your start-up costs might be too high for you to fund personally, does not mean that you should stop there. If your idea is cohesive with your lifestyle, explore the possibility of crowdfunding or forming a trusted partnership. Don’t let this be the thing that holds you back from moving to the next step.
Ok, so let’s say you have an idea that works hand in hand with your lifestyle, and you can either fund it yourself or have a plan for funding. Time for the SWOT analysis. A SWOT analysis (strengths, weaknesses, opportunities, threats) will give you a better picture to start with, outlining what is solid about your business plan and what can be improved.
- Strengths: the characteristics of the business that give it an advantage over others.
- Weakness: characteristics that place it at a disadvantage relative to others.
- Opportunities: external chances to improve performance in the environment.
- Threats: external changes in the environment that could cause trouble for the business.
Start by researching the top 5 competitors. Figure out if they have a weakness that you could improve on. What are they doing that keeps their customers happy and coming back? Use the template below-one for each idea that you have.Make sure to look at competitors and include notes on their strengths, weaknesses, opportunities, and threats.
Here is an example of a completed SWOT analysis:
|New concept to the industry
|Lack of experience in the industry
Little startup capital
|Industry is rapidly growing
Big distribution network
|Low barriers to entry
Competitors have huge market share
*Make sure you do this for each one of your competitors.
After you have filled up a bunch of pieces of paper with your ideas, lifestyle testing, financial analysis, and SWOT testing-get feedback. Ideally, you want to get feedback from your potential customers. There is a whole other system for doing this that we will go into in the next post. But for now, we will keep it simple.
Take your top two or three ideas, starting with your top pick and try to validate it. You are going to want to create a flow chart or an outline-make it pretty! Then you will need to identify your potential customer, pitch your idea to them, and finally get their feedback.
SO NOW WHAT?
Unfortunately, you will never know if you have a perfect idea. Everything you do in your business will be subjective of how other perceive its value. You need to find the balance between researching and vetting your idea enough and taking action. Trust your gut as much as you can.
If you have several business ideas that you have done all the background work for, go with what feels right. Continue to take the feedback that people give you. Do something with it! They may see something that you do not that could make or break your business. You know how the saying goes; it is hard to see the forest through the trees. Don’t make the mistake of standing in the forest for too long.
If you are interested in a paid, structured program to keep you accountable and help get you started on your path to success and freedom from “going to work,” check out the Side Biz MBA with Scott Barlow. This program includes one-on-one coaching, a structured Mastermind group, and a supportive community of like-minded people. Not to mention a bunch of amazing resources to help get your business off the ground.
ACTION ITEM CHECKLIST:
- Write down your WHY statement.
- Write down your skills and the needs you see.
- Write down everything you see, hear, touch, taste, and smell in a day.
- Highlight any of the skill, needs, or things you write down that you could be passionate about.
- Brainstorm or mind map.
- Write down your 10 ideas a day for 7 days.
- Create your life plan.
- Define your personal goals.
- Create your list of non-negotiables.
- Outline your ideal day.
- Review potential expenses for your top 3 ideas.
- Do your SWOT analysis.