Five rules to follow that will help you recognize valuable business ideas. Includes case studies of entrepreneurs who quickly transformed ideas into start-up companies.
The best business ideas aren't hard to find. They're just hard to see
Zalman Silber's nearly $9-million entertainment business sprang from one simple observation: all these people must need something to do.
Back in 1991, Silber was working as an agent for New York Life Insurance Co., located in that tourist mecca otherwise known as the Empire State Building. Watching the crush of visitors who piled into the elevator every day, Silber reasoned that there were profits to be made in offering an indoor experience for the out-of-towners, especially for those who found their view clouded by uncooperative weather.
Seeking something with a modern, high-tech appeal, he came up with the notion of a simulated helicopter tour of the Big Apple. So appealing was his concept--or at least his pitch for it--that he managed to raise $6.2 million in a February 1994 stock offering, which took place before the ride was even built. Plowing that money into the venture, he opened New York Skyride before the following Christmas. In 1996 the ride would draw about 19% of the 3.4 million tourists who made their pilgrimage to the skyscraper that year. Aside from charging $11.50 per admission, he also has been selling customers hot dogs on the way out of the skyride. "The lesson in this story is, Capitalize on and benefit from existing infrastructure," Silber, now 30, says. "Take advantage of other people's toil. That's really what everything is about."
As it turns out, that's true of most great ideas: they aren't so much hard to find as they are hard to see. Retrace the steps of entrepreneurs who've brought great ideas to life, and they'll all lead back to a familiar spot: the markets where the founders operated, the companies where they worked, a customer's remark, an employee's insight, an intractable problem--even the weather. Opportunity, it seems, is in the eye of the beholder. Innovators are able to "make associations and see things differently," says Thomas Kuczmarski, a Chicago-based consultant who specializes in innovation. "If they look at research, new technology, or trends, they can piece those together and draw a mosaic and end up with something completely different."
Sometimes, in fact, a perfectly valid concept can be camouflaged by its very ordinary roots. But the remarkable fact that no one else is doing it--or even thinks it's a good idea--can be enough to inspire visionaries to get serious. The fact that his big-company employer shot down his idea wasn't enough to discourage software entrepreneur Mike Klein. The months he'd spent studying the market and writing a business plan made him only more enamored of his idea's potential. "It became so crystal clear in my mind what we had to do to win this game that it really came down to a decision: Do I stay with my job and wonder what if, or do I quit my job and just take the risk?" he says. "And that's what we did."
You'd probably do the same, you're thinking, if only you had that powerful an idea. Or maybe you do, but you just don't realize it. How do you find that great idea that's almost certainly in your midst? Here, some guidance from those who've done it.
Rule 1
Keep the small picture firmly in mind
Company: Citipost, in New York City
Time from idea to start-up: Three weeks
Initial investment: $19,500
Richard Trayford was only looking to kill three months before his new job in music promotion began. So in late 1989 he did what he'd often done to bankroll his fledgling music career: he got a gig at a Manhattan bicycle-messenger company.
It was there, after a couple of weeks on the job, that Trayford decided that the company was "missing its own concept," as he puts it. To entice customers to choose its services, Manhattan Borough Couriers offered overnight delivery for just a dollar anywhere in New York City. What the company viewed as nothing more than a promotion--a teaser for its same-day delivery service--Trayford saw as the basis for a business. Three weeks later he borrowed $19,500 to launch Citipost, pitching the service to companies in publishing, media, and financial services.
His first sales call was to Random House, a publisher that delivered hundreds of books every day to reviewers, agents, and others in Manhattan. "We had a lot of concerns at first, but the cost savings outweighed the risks," says Kevin Farrell, who listened to Trayford's pitch at Random House and is now vice-president of real estate management at Bankers Trust. "A lot of this publicity material was going out by UPS and FedEx, so the savings were tremendous, at least 50%." Within four months Citipost was handling all Random House promotional materials. Using the same principle of focusing on intracity delivery and on high-volume industries, Citipost has expanded around the country and overseas. Last year its revenues reached about $20 million.
Rule 2
Take every complaint you hear seriously
Company: Misty Mate Inc., in Tempe, Ariz.
Time from idea to start-up: Two years
Initial investment: $80,000
What Steve Utter was hearing from employees couldn't have surprised him: it gets hot in Arizona in the summertime. Nonetheless, he was unhappy that the oppressive 110-degree midday heat was melting away productivity at his Phoenix-based construction company. "We'd start before the sun even came up," recalls Utter, "and we'd be lucky if we made it to noon."
A logical response might have been for Utter to switch over to interior remodeling. But all he could think about was that if he could boost productivity, he could add as much as $100,000 to his bottom line. Just as he was sweating out a solution in 1987, he came across a fog nozzle used with garden sprayers to spread insecticide in a fine mist. If he could somehow connect the nozzle to a tube and a portable water supply, Utter figured, he might be able to create a personal misting device to cool his workers. He also realized that the product would have broad appeal. "I had million-dollar signs in my eyes," he admits.
Over a two-year period, Utter's employees served as guinea pigs, testing out the device as he toyed with it. Once they were satisfied, he applied for a patent. The original Misty Mate cost $175 and consisted of a backpack water supply with a flexible tube and a nozzle. "We started showing it to other construction companies, and they said, 'We want to buy these,' and we ended up getting a lot of media coverage because the original ones were a large size and very conspicuous."
Misty Mate now costs $25 and consists of a fanny pack that straps to the waist and a stiff but flexible tube that clips to the shirt collar. Sales of the device have doubled every year, reaching around $7 million in 1997.
Rule 3
Wait for your boss to say no--then go
Company: Steeplechase Software, in Ann Arbor, Mich.
Time from idea to start-up: Six months
Initial investment: $30,000
