January 18, 2017
How to Find a Business Idea
Post on @Quora by Nolan Jones: How to Find a Business Idea
Here are the steps to find a business idea.
If you want to review a list of business ideas before you get started, you can get them here.
The first factor you should always consider when brainstorming for a business idea is how passionate you are about the subject. After all, it’s something you’ll do every day, so make sure you enjoy it. Don’t just consider how much money you could make. Instead, choose a business idea that you would love to do every day. It sounds idealistic, but it’s very important and will affect your daily happiness. Think long-term, and ask yourself if you could see yourself doing this ten years from now.
The second factor to consider is your strength. What are you good at? What skill sets do you possess? Keep in mind that you don’t have to be the best in your industry. Many people start their own business with average skill sets, and succeed.
One of the best ways to identify your strengths is to ask your family and close friends. They’ve probably noticed certain talents that you possess. Many times, we don’t even know our own strengths. Send everyone an email and ask them to identify your strengths. You might learn something new about yourself.
The intersection of your passion and your strength is a potential business idea. Try to come up with as many intersections as possible.
Solve a Problem
The next step is to determine if your potential business idea solves a problem that people are willing to pay for. Go through your list of possible ideas (intersections), and circle the ones that solve a problem that you think people would pay for.
You should also ask potential customers if they would pay for your product or service. If the majority of them are willing to pay, then you’ve found a promising business idea.
This is a crucial step that many people fail to perform. I’ve seen many businesses skip this step, and ultimately fail. Whatever you do, don’t offer something nobody wants. It would help if you’ve experienced the problem yourself, so that you’ll be able to relate to your customers.
Choose a Niche
Try to avoid business ideas that are too general, such as a financial planning site. It’s much better to offer a niche product or service. Chances are, there’s less competition in the niche markets. If you select a general business idea, you’ll have to compete with an enormous amount of competitors, and will struggle to stand out. It’s much better to dominate in a small niche, than to pursue a small market share of a large niche.
Next, you need to consider the demand. How much demand is there for your product or service? If there are only a few people who are willing to purchase it, then it’s not worth your time. You need to check the demand for each business idea from the previous step, and make sure that it’s adequate to generate enough revenue.
Google Keyword Planner is a tool you can use to determine the volume of traffic for various keywords. It’ll help you select a niche that isn’t too competitive, while making sure that there’s sufficient demand. Market Samurai is another tool you can use to conduct this analysis, but it’s a bit more difficult to use for newbies.
You also need to consider how you’ll compete against competitors. If they’re offering something similar, why should they purchase your product or service? What differentiates your offering from the competitors? What makes it unique? The differentiation must be something that your customers care about. Your differentiation, or competitive edge, must make customers want to choose you over others. It should fill a hole in the market. Keep this in mind as you choose your business idea.
You need to know exactly who your target customers will be, and if they have the means to purchase your products and services. Look at your list of potential business ideas, and make sure you know which customers you are targeting for each idea. This becomes relevant when you market your product or service. You need to know who you’re targeting before you spend any time and money attracting potential customers. Be very specific when you identify your customers. Don’t mindlessly target everyone. Go after a specific group of people who share common traits.
Another aspect that you need to check is if there will be repeat business for your product or service. Sometimes, businesses outperform initially, but slow down because they don’t have repeat buyers. Be aware of this potential issue. It’s easier to keep a business afloat when there’s continuous demand for your product or service. Avoid the fad, which will disappear in a few years. It’s something you need to keep in mind.
Cost of Starting the Business
You need to consider how much you’re willing to spend to start the business. How will you fund it? Will you use your savings, or will you reach out to investors? Make sure you’ve thought about this before you commit to an idea.
Active or Passive Income
Ask yourself if each business idea will generate an active or passive income. Ideally, passive income is better, since you do most of the work up front and merely maintain your business once it’s set up.
In contrast, an active business is typically more demanding, as it would require you to do a lot of work throughout the life of your business. If you don’t mind operating an active business, then you can skip this step. But I’ve seen entrepreneurs who own passive businesses, and I consider them lucky. Once the business is up and running, they work less than owners of active businesses.
Active businesses will require more customer interaction, but passive businesses will not. It’s a matter of preference, and will impact your lifestyle.
Duration of Launch
Another aspect you want to consider is how long it will take you to launch your business. Ideally, you want to avoid those that take a long time. Imagine working on a business idea for two years before it’s ready to launch. Are you really willing to wait that long? Most people want to be profitable as soon as possible, so cross out the ideas that would be time-consuming.
Physical vs. Digital Products
Before you commit to a business idea, you should understand the pros and cons of offering physical products versus digital products. The mains differences are that physical products require design, manufacturing and storage, which lead to more upfront capital cost. With digital products, such as an online course, you don’t have to deal with manufacturers or warehouses, since your e-products are made by you and stored in the cloud.
Execute Your Idea
After you’ve considered all these factors, the business ideas that you still view as viable are the ones you should seriously pursue. Keep in mind, your first business idea may fail. View it as a learning experience. And if you’re stuck and don’t know which idea to pursue, just start something. Once you start working on a business idea, you might come up with better ideas.
Pondering will not get you anywhere. In fact, most people never start their business because they over-analyze their list of ideas and succumb to the fear of failure. The most important attribute successful people possess is their ability to execute.
Start something. Anything. It’s the first step all successful entrepreneurs take. I know a few people who constantly read books and take classes on entrepreneurship, but never execute. After several years, they’re still reading books and taking classes. Don’t let this be you.
If you’re surrounded by people who have a 9-to-5 job, you need to go out and seek entrepreneurs to mingle with. Once you do so, you’ll begin to think like them, act like them, and live like them. As they say, you’re the average of the five people you spend the most time with.
Your new friends might even introduce you to people who can help you find a new business idea and launch your business. Networking with successful entrepreneurs can be very effective in getting what you want. Make sure you’re also willing to help them. Reciprocity is important in business.
In addition to networking in person, you can also network online with fellow entrepreneurs. Entrepreneurs’ Organization is an online global network that helps people who want to learn and grow through peer-to-peer learning and connections with experts. They have over 11,000 members around the world in 48 countries. It’s a huge organization.
Start socializing with a different group of people as part of your entrepreneurial journey. Believe me. It makes a difference.
Become Educated in Entrepreneurship
If you’ve never taken a course in entrepreneurship, you should consider taking one. There are many online courses you can take to help you get started. Choose the one that suits you best. Before I started my business, I searched for courses that were taught by entrepreneurs with real-world experience.
As an example, here’s a short mini-course on entrepreneurship taught by a serial entrepreneur.