There has never really been a better time than the present to be an entrepreneur.
The costs associated with starting a business are low, technology instantly opens you up to a global market at the click of your fingers (or mouse), social media has made marketing more efficient and less expensive and the ‘start-up’ world is packed full of people to reach out to about your best moves as a fledgling business.
Ironically, some of the pressure that the state of the business world offsets actually loops back around making one of your earliest decisions much more difficult: choosing a business idea.
When you know that you have such an excellent chance to succeed, it can be really difficult to make the first step of committing to the ‘right’ business idea. Let’s take a look at some tips for how to make that decision.
Table of Contents
Evaluate Your Options
If you’re seriously interested in starting a business, it’s likely you’ll already have a business idea in mind. Whether that’s true, or whether you’re looking for a brand-new idea, the first step in defining a business idea is to start thinking creatively with a series of mind maps that will act as a personal assessment and allow you to slowly eliminate the options that are not right for you, while highlighting areas that could be improved with a novel business idea.
Firstly, compose a list of 10 things that are great about yourself. This should include attributes and qualities that you are proud to have and can include things like being patient or being great at customer service. The next list you write should be of things that you are not so good at. 10 things that you could consider weaknesses such as not being great with computers or not liking travel.
Next, think about your personal life. Analyse both the joys and challenges that you face as a member of your city, country, community and family and brain storm ideas that would improve your personal life. Ideas may come in the form of a product or service but should always be centred around making your personal better whether that’s by increasing convenience or ease, improving productivity or efficiency or even enhancing happiness and joy.
Repeat this task but concentrating on your professional life. Whatever your current profession is, think of options that would improve any aspect of your working experience. Think could include the commute, your lunch breaks, meetings, communication, working at home and the working social atmosphere.
These lists based on your own experience are a great way to kick start the creative process when thinking up potential business ideas. For further inspiration, you should always be listening to the opinions of others. Not only do they offer a fresh pair of eyes and a unique perspective, they will also have a completely different life experience to you, allowing you to pick up on potential areas that need improvement or gaps in the market that you may not have noticed before. Before doing proper market research, talking to new people is the best way to increase your pool of business ideas. Anyone could be the source of inspiration which is why it’s important to listen to everyone including a range of friends, family members and work colleagues; paying particular attention to their frustrations and grievances as these are the areas they would most like to see improved.
Once you have a plentiful bag of ideas for life and work improvement, you can cross reference them with your two original lists of strengths and weaknesses. You will be able to quickly see if any of the business products or services require the use of one of your weaknesses and can therefore cross it off the list. Additionally, you can identify which of the business ideas could be supported by one of your strengths and can therefore keep the business idea as one that could potentially be developed.
Go With Your Passions
Imagine two business ideas: idea A is something you are personally connected to but that you know has a lower chance of success or would require a lot to get going. Idea B is a more generic idea that has solid prospects. A lot of the time, you will actually want to go with A. Many start-up businesses fizzle out as the entrepreneur loses their passion for the project. For any business to last and become successful, it’s vital that there is someone behind it that stays committed and engaged with the idea throughout. Essentially, entrepreneurs should base their business on doing something they love.
To succeed with your novel business idea, it’s important that you are not only passionate about your business initially but that you will continue to retain that initial excitement and interest. Unfortunately, passion doesn’t always last. Even when an idea for a business grips you and the excitement of launching your idea fills your daydreams, it’s important to take stock and think about whether this will be something you’ll still be interested in several years down the line.
Having a business idea that you’re passionate about will result in higher motivation, stronger determination and a greater chance of success. All businesses face trials and obstacles that can be tough to get through. With lack of motivation and passion, it would be too easy to give up during these times, however, with a business idea you believe in, you will be much more likely to dedicate the time and resources necessary to fight through the tough times.
To ensure your continued engagement in your project, it’s best to base your business on something you’re already interested in or something you find meaningful. Budding entrepreneurs should write a list or brain storm of things they find enjoyable, specifically things they already love to do in their spare time and things they have enjoyed for a substantial amount of time. Additionally, they should include causes and passions that they already have a deep connection to and that they really care about. This new list of passions, hobbies, cares and joys can be cross-referenced with your list of business ideas to narrow your options down to include only those that roots in the subjects, products, activities or ideals that you are passionate about.
Stick with Your Skills
The best business ideas for entrepreneurs to pursue are ones that utilise the skills, experience or knowledge that they already have. If possible, try and root your business in an area of which you already have a great understanding of. This will give you a head start in not only managing your business but also in evaluating whether it will be a success from the outset.
Unfortunately, many entrepreneurs that feel like they may have struck upon a golden business idea that couldn’t possibly go wrong when in reality it’s more likely that they’re ideas come from a place of naivety and a misunderstanding of the market of industry it would be working with. Gary Vee is one of the biggest advocates of this, as well Tom Bilyeu, and their stories are the living proof.
Building a business from scratch already requires the learning of number of new skills and can be a scary and intimidating process that requires grit and determination. Building a business that requires a whole new skillset to implement and without an underlying understanding could result in a number of mistakes, misdirection’s and lack of morale.
If your business idea is not in an area you are familiar with, it’s imperative to take all the time necessary to learn as much as you can about the realities of the industry, production, market, customers, process and profits that your product or service will be interacting with.
It’s a Lifestyle Choice
Firstly, starting a business is not a side project. As your business begins to grow it will consume increasing amounts of time, energy and resources. If a business becomes successful and effectively lifts off the ground, it will most likely require you to quit your current job and put your responsibilities and life plans on hold as continued success will only be possible with 24/7 commitment. Indeed, starting your own business and being an entrepreneur does not come with an hourly pay check, an end of day home time or holiday leave. Instead, you’ll be faced with round the clock responsibilities related to your business and every deal will be consumed working towards the business goals that you have chosen.
These responsibilities and workload may slow down but will never stop, even as you become successful and established. This is why it’s so important to choose a business that will cooperate with kind of life you desire. Write down the ideal working day for you in 3 years from now. Next, think hard about what your business will look like in 3 years and write down all the responsibilities that you will face and all the factors that will make up a typical day. Include the hours you expect to work, the people you’ll work with, the location, the commute, the daily chores and responsibilities that you’ll have.
Budding entrepreneurs should do this task to force themselves to think carefully about whether their business daydreams will match up with the reality they will be facing. For example, if you can’t stand early wake up times but your future day job requires you to be up before dawn, will you be happy with the business that you’ve chosen? Choosing the correct business can enable you to balance your business and personal life effectively, helping you to avoid some of the things you are unwilling to accept as a part of your future routine like being stuck in an office, having a long-distance commute or working unsociable hours. Additionally, knowing clearly what sort of responsibilities and expectations you’ll be faced with in the future will allow you to scrap any business ideas early that don’t provide a life that aligns with your ideals and focus on the business plans that provide an exciting and compatible future.
Do Your Research
Having an intense and long-lasting passion for your business idea is undoubtedly an essential aspect of forming a successful start-up. Unfortunately, it isn’t enough on its own to get a business off the ground. You need to make sure that the love and interest you have for your business can also be found in customers. Before throwing caution to the wind and investing your life savings into your business idea, it’s important to do a substantial amount of market research to make sure it’s a viable business.
Firstly, it’s important that the product or service that you will be providing is something that people will actually want. Entrepreneurs should make the effort to define and understand their target market and focus on providing them with something of value. Good market research in an invaluable resource to understand exactly what customers need and what they would think of your product or service. With the right research you can get to the bottom of your customer’s needs and problems as well as find out all their opinions and suggestions regarding your business idea. Having a good understanding of your customer base will not only help you in the beginning when deciding if the business is feasible, it will also be an incredible tool to refer back to throughout your business as you evolve with respect to your target market.
The second aspect of market research that is important to carry out is the in-depth understanding of the competitors you and your product will be up against when you launch the business. If the market is completely saturated with competitors, it will give you an indication of whether the business idea is worth pursuing. Additionally, understanding how a competitor has achieved success in the industry will help with inspiration on how to conduct your own business.
Test the Idea
The best way to know whether your business idea is good fit for you and your future is to gain some direct experience in the field. Take a part time job or get work experience in an existing similar role to get to grips with the day to day realities of the role. Not only can you decide whether you enjoy the role, you also get some behind the scenes knowledge on what makes a successful similar business tick and how much work is involved.
Additionally, starting a conversation with existing entrepreneurs in the industry is a great way to understand some of the challenges that your business might face as well as beginning to build up a network of contacts that could be useful should you decide to go ahead with the business. Be aware that businesses and entrepreneurs might not want to form a relationship or impart wisdom if they believe you’ll be indirect competition with them so it’s best to reach out to entrepreneurs from further afield.
What Are Your Resources?
Probably the biggest limitation to start-up businesses is whether they’ll be supplied with the appropriate resources in order to become successful. Predominantly this refers to funding. When you’ve narrowed down your list to business ideas that match your skillset, your lifestyle ideals and your passions, the next step is to ensure you have the funding and availability of resources to support it.
Entrepreneurs should conduct a cost and revenue analysis where they write out a list of all the potential avenues of revenue and costs that they will encounter for the start-up and beyond.
There are two main options for funding a start-up: self-funding and venture capital.
Self-funding is self-explanatory, it involves you paying for all the start-up costs. Venture capital is the alternative that constitutes accepting the required money from other people to launch the business.
Self-funding is the much more probable option for a new entrepreneur and the initial business plan you draft up should be kept online with your financial capabilities.
Profitability
The last thing to seriously consider when deciding on a business idea is if it will be profitable.
Whether a product or service becomes profitable depends on a number of factors including the necessity of the product, the size of the customer base, marketing, cost of production, retail value and scale of production. Your business idea may seem ideal in every sense but if it cannot turn a profit, it will be a futile endeavour.
Entrepreneurs should take the time to fully understand and project the earning potential of their business before investing in it.
Additionally, the profitability should align with your future plans. If the business has a lower earning potential but still remains profitable, ensure you are prepared for the realities of how much you will be taking home as a salary each year and that it will be able to fund the lifestyle you desire.
Conclusion
The nature of your business idea is really the most important part of being an entrepreneur. It dictates success, whether that be market appeal, investment opportunities or marketing capability. It’s imperative that you spend the time needed to be certain that your idea is the one. Failing to do so can lead to disaster.
