smišljati

1. to think up; to devise; to come up with
   Već nedelju dana smišljam kako da joj kažem. — I've been trying to work out how to tell her for a week now.
   Stalno smišlja nove poslovne ideje. — He's always coming up with new business ideas.
2. (of excuses, stories) to make up; to invent
   Nemoj da smišljaš izgovore, samo reci istinu. — Don't make up excuses, just tell the truth.

The perfective is smisliti; often followed by a clause with "kako da…".