The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “How do you come up with a new startup idea?” is written by Avery Roth, founder and CEO of The Startup Consulting Group.
All entrepreneurial journeys are a complex intertwining of personal and professional life. To create a worthwhile business concept, you must figure out which opportunities make the most of three factors: your skills and values, the problems you are passionate about solving, and the profit potential. You may recognize this analysis as a version of product-market fit—a concept usually reserved for companies, but one that also works incredibly well for individuals.
The process begins with a deep dive into oneself. Your aim is to list your top five values, strengths, skills, and lifestyle goals. Personality tests such as Myers-Briggs and Gallup's StrengthsFinder (including the new entrepreneurial strengths test) can be helpful in fleshing out some of this detail. You may also wish to solicit feedback from your personal and professional network. Aggregate the data, and for each of your lists, consolidate similar attributes into buckets until you have only five traits on each list. The conclusions will be crystal clear.
For example, if you conclude that you value family, that some of your best skills relate to advising other people, and that your primary lifestyle goal is to have work-life balance, you may determine that you want to build a company that will allow you sufficient time off, such as a professional services business. On the other hand, if you value status, you have fantastic computer-engineering skills, and your lifestyle goals include penthouse living, you might conclude that becoming a CTO at a tech startup is a good fit for you.
The next step is to assess the topical areas about which you are passionate. This exercise can incorporate subject matter you’ve studied, a domain you have mastered in previous careers, or a subject that’s been a hobby for you to date. All subjects are fair game—so long as you’re passionate about them—and they can be totally unrelated to your skills. For instance, the CTO in our example might have a passion for topics as diverse as pets, coffee, and Asia. The important thing is that you feel energized to promote and solve problems in these domains.
Think about the previous steps as feeding two circles of a Venn diagram. Your next step is to assess where those circles overlap. In other words, how can you bring your strengths and talents to topics you are passionate about? For example, our CTO might come up with ideas as diverse as building an app where pet owners can meet each other, or a community for coffee lovers. She could also build something that combines her interests, like an app where pet owners in Asia can meet for coffee. Your mission is to open your mind to as many fun, interesting, maybe even wacky ideas that instill you with excitement. In order to immerse yourself substantively in this exercise, it’s necessary to surrender your ideas of what you should do with your life, and instead embrace a childlike wonder for what you could do.
You now have a list of cool business concepts. Jumping into building a business at this point is exactly where many entrepreneurs go wrong. It’s a critical final step to assess whether your ideas are likely to be profitable. The key in this analysis is to understand the customers for whom you are solving a problem. Reach out to them to verify their pain points and their willingness to pay. Speak to experienced business people to test your assumptions and ask them to poke holes in your thesis. This critical thinking will likely generate new derivatives of your original idea that are much more likely to succeed. You may also become more observant of lateral business problems you encounter in your daily life, which is precisely how many brilliant startup ideas are generated. The more often you share your ideas and open them up to feedback, the stronger they will become and the more certain you will feel that you have a business idea worth building.
Avery Roth is a startup strategist and the founder and CEO of The Startup Consulting Group. She works with startup founders to achieve product-market fit, scale, and prepare for fundraising.