Creating Opportunities: Business Ideation for Small Businesses

14.11.23 16:00 By Marques Barcellos

Aligning business ideation with a business strategy

Business Ideation is the process of generating ideas from conception to implementation into a new business venture or improving existing ones. It lays the foundation for a successful business concept.

 

Defining your business purpose is crucial for developing a business plan: identify an opportunity, define the solution your business proposes, and how it delivers value. Thus, business ideation helps entrepreneurs and small business owners determine the right need and how to fulfill it.

 

"Give me six hours to chop down a tree, and I will spend the first four sharpening the axe." – Abraham Lincoln.

 

There are many tools and techniques to foster creativity, such as brainstorming and idea challenges. Moreover, involving diverse people with different backgrounds is very good, adding additional points of view to the business ideation process.

 

In SMB reality, however, due to resource limitations, the owners and partners usually take care of the whole process. Even so, going through a business ideation process benefits small businesses in general.

 

A structured ideation process helps entrepreneurs make informed decisions based on market analysis and data. It helps identify and address unmet needs, aligning products and services with market demand and customer preferences. Besides, businesses can reduce the risks of launching untested concepts by evaluating and testing ideas before full-scale implementation.

 

Below is a combination of tools and techniques to help you develop a creative ideation for your business. One can use it in a sequence or separately. Of course, there is no universal model for business ideation. After all, creativity has no limits, and there are many ways to generate ideas. Ideas without implementation are only good intentions, however.

 

The goal here is to be objective, aligning business ideation with a business strategy. To complete the whole process of generating a business idea and implementing it.

 

What, How, Why: The Golden Circle

 

The Golden Circle is a concept developed by Simon Sinek, and it helps to understand why we do what we do. According to Sinek, 100% of companies know WHAT they are doing, and some know HOW they do it. However, very few know WHY they are doing it, yet the WHY is why people buy a product or service.

 

The WHY is the business purpose; it's why your organization exists. Why do you get out of bed in the morning? Sinek found out that the most inspiring and, therefore, successful organizations and leaders think from inside out (from WHY to WHAT) instead of outside in (from WHAT to WHY).

 

"People don't buy what you do, people buy why you do it." - Simon Sinek.

 

Usually, when I join a project, I start with the What, How, and Why concept at the first meeting: What is your business about? How do you deliver value? Why do you do what you do?

 

As said before, every business owner knows what their business is about, whether it is a music school, a beauty salon, a law firm, or a travel agency. Then, they work to determine how they deliver value; some call it their differentiating value proposition, a unique selling proposition, or simply the secret sauce. Finally, define their purpose and beliefs.

 

Assuming that you have identified the problem you want to solve and found the perfect solution your business offers, it's still important to challenge your assumptions. Likewise, it's crucial if you are starting from scratch, researching market needs, and designing your product.

 

Be aware that wrong assumptions can lead to various pitfalls and hinder your progress despite the amount of effort you put in. Therefore, it is essential to double-check your premises and make sure you are on the right track. To do so, you can have brainstorming sessions, research online forums and social media platforms, join seminars, or run surveys.

 

If you are a solopreneur, you can tap into your network and reach out to family and friends who may be potential customers to validate your assumptions. Besides, be honest with yourself, play the devil's advocate, and make decisions based on your collected data.

 

Mission, Vision, and Values

 

Mission, vision, and values statements are key parts of the strategic planning process. They communicate the organization's purpose, provide insight into what the company hopes to become, and reflect its core principles and ethics.

 

A mission statement describes a business purpose and its reason for existence. As you have already defined your business' WHY, you clearly know your business' purpose and beliefs, how they will support the vision, and efficiently communicate to customers, collaborators, and other stakeholders.

 

What problem is your business seeking to solve? What are the strategic goals the organization wishes to achieve? What will it look like in five years? A vision statement is an inspirational representation of what you, as an entrepreneur, hope your business will become. Dream big, but be realistic and work hard.

 

A values statement is a non-negotiable core principle and ethics that guide your business venture and its culture. It's the leading values and moral compass for how your organization and its employees do business. In summary, it's the core values framework followed and shared by leadership.

 

Target Audience

 

Defining a target audience is crucial to marketing strategies. Your business should understand your potential customers and tailor personalized offerings to meet their needs. This means that the target audience should represent a specific group of consumers most likely to purchase your product or service.

 

Defining and segmenting your target audience is crucial in creating effective communication strategies. Factors such as interests, income, age, gender, and geographic location can help define your audience, whether it's broader (such as a beauty salon) or a niche (such as a corporate tax law firm). By understanding your audience, you can communicate with them in a way that resonates and engages with their needs and interests. For example, an antitrust lawyer may not be relevant to someone seeking advice on family affairs.

 

That's where a buyer persona comes in handy. A buyer persona is a fictional representation of your ideal customer created through market research, surveys, interviews, and customer database insights. It helps to identify your customers' and prospects' goals, motivations, needs, and pain points.

 

Using a buyer persona enables you to craft business messaging and nurturing content that resonates with your target audience, leading to increased engagement and generating leads. In general, this is the information needed to create buyer personas:

 

  • Demographic
  • Background/Profession
  • Personality traits and interests
  • Motivation and goals
  • Pain points


The number of buyer personas depends on your business. For instance, if you own a travel agency specializing in cultural and religious itineraries, having two buyer personas for each market niche would be a good idea. And, of course, you can always create more buyer personas if you feel it is necessary.

Creating Opportunities: Business Ideation for Small Businesses

Competitive Analysis

 

Researching the competitors is another essential tool in marketing and business strategy. It helps you gain insight into their products, services, and how they work. Also, it enables identifying opportunities and staying up to date on market trends, ensuring your business is consistently enhancing competitiveness.

 

Besides, understanding how the competitors price their products or services helps your business set a competitive price strategy. It also aids in defining the business's position in the market, influencing branding, messaging, and the overall perception of the business among customers.

 

Finally, knowing who your competitors work with, such as suppliers and partners, can provide insights into potential collaborations or opportunities to negotiate better deals.

 

To perform a thoroughly competitive analysis, you must answer the following questions and any others that might make sense in your industry: Who your competitors (direct and indirect) are? What products/services do they offer? What prices do they market their products/services? Who are their suppliers and partners? How are they promoting their businesses? What channels are they selling through? Figure out your competitors' social media strategy and their content strategy.

 

A SWOT analysis helps you identify internal and external aspects influencing your business. SWOT stands for strengths, weaknesses, opportunities, and threats. It should constitute part of your business planning, highlighting its strengths and minimizing its weaknesses. Also, it gives you a framework for understanding the opportunities and threats within the competitive environment.

 

Stakeholders Map

 

Every project has various stakeholders influencing it and voluntary or involuntary making decisions. Sometimes, a business gets blocked by an unexpected requirement, whether a license, a certification, or an unseen element. That's why it's so important to manage the stakeholders.

 

A stakeholders map is a helpful tool that visually represents the various stakeholders of your venture. Key stakeholders can make or break the success of your business. The main benefit of mapping stakeholders is clarifying all specifications and having a game plan to satisfy all requirements according to their level of influence. This helps focus on building strong relationships with important partners within your organization.

 

Firstly, identify all the potential stakeholders — people, businesses, authorities, groups, or organizations affected by your company. Each one has influence, vested interest, or concerns in its success.

 

Then, categorize them into one of four different levels of power and interest:

 

  • High power - High interest (Manage Closely)
  • High power - Low interest (Keep Satisfied)
  • Low power - High interest (Keep Informed)
  • Low power - Low interest (Monitor)


 After defining your priorities, create a stakeholder engagement strategy using these best practices to ensure project transparency and accountability.

 

  • Develop a unique engagement strategy for each group.
  • Build trust with the high-power, highly interested group.
  • Be precise on the amount of communication with each group.
  • Manage time properly, as some stakeholders need time to make a decision.


 This is a simplified representation. I encourage you to use a graphical format to create a more detailed and visually appealing stakeholder map.

 

Value Proposition

 

Now that you've gone through the whole business ideation process, defining your business purpose, identifying your target audience, analyzing your competitors, and describing the stakeholders influencing your SMB, it's time to craft your business's value proposition. A value proposition is a clear and concise statement that highlights the benefits of a product or service in solving a problem or fulfilling a need for a specific target audience.

 

Think of the value proposition as the element of your business strategy that looks into the demand side. It must, therefore, answer three main questions: Who do you plan on assisting? What issue do you intend to resolve? What value will you offer?

 

In other words, why should a prospect do business with you, not your competitor?

 

The benefits of a small business having a value proposition statement are diverse, such as:

 

  • A well-crafted value proposition differentiates your SMB from competitors.
  • It provides customers with a clear and concise message, equipping sales efforts to communicate the product or service's benefit.
  • It guides strategic decisions by aligning the business with the needs and preferences of its target audience.


In summary, a value proposition is a crucial element for SMBs, serving as a powerful tool for customer communication and differentiation in a competitive marketplace.

 

Conclusion

 

The business ideation process is dynamic and iterative. It often involves revisiting and adjusting various stages as you gather more information and insights. Besides, sales are the best assumption validator. Therefore, remain open to new ideas and be willing to pivot if the initial concept doesn't prove feasible.

 

As said above, there is no universal model for business ideation. There is not only one proper template for business planning and not one how-to guide for business creation and development. Entrepreneurs should use the tools and methodologies that suit them best.

 

Successful entrepreneurs continually refine and evolve their ideas as they progress through business development. Be patient and persistent. Iterate and refine your ideas continuously.

Marques Barcellos