How to identify a fantastic new business idea
At some point in the past, you may have had a sudden moment of inspiration for what you thought could be the next McDonald’s, Tesla, or Amazon. Maybe you quickly awoke from a dream with a thought, or you’ve known your whole life that one day you wanted to start a business of your own.
Knowing whether your idea is just a fanciful thought or something that could go the distance is an important distinction to make. If you decide it’s something you want to follow through, it’s likely to take a lot of commitment, time and maybe money initially. It’ll take a lot of thought to identify whether’s it’s a good business idea or not, and here will be helping you to identify which factors are most important when coming to a decision.
Early planning is as important, if not more, than any other stage. Don’t skip over it lightly. This guide will be a starting point, and there’ll be a lot more to get done.
A few Steps on How to Identify A Great New Business Idea:
The first step, of course, is how actually to come up with a business idea. Some self-reflection here is essential, as, at the beginning stages, you will be the company’s main asset and director. Think about what your strengths are and be honest with yourself about your weaknesses too. Think about your interests, something that bores you might not be sustainable in the long run. Working every day or pulling long nights is likely to be less of a chore if something naturally interests you.
Is there anything that would make your life better that doesn’t exist yet? Maybe there’s something you wish you had to boost your productivity, but no one has brought it to fruition yet. Maybe you’ve assumed an app for something important exists until you look through the store to see that no one’s got further than the stage you’re at of it just being an idea.
Maybe you haven’t got any of these unsolved problems at the front of your mind already, which means you may require a little nudge of inspiration. Get up to speed on successful business people of the past and what their origin stories were like. They may have books of their own out filled with advice on how to follow in their footsteps. If you have a rough idea, have a rummage around for what slightly similar products and services are out there so you can draw inspiration from what they get right and wrong. Social media can be an excellent place to see if others have similar praise and criticism to you. Everyone seems to love shouting their opinion online!
If your inspiration has already come to you, then it’s still important to get feedback from as many sources as you can to gauge whether others also have the same problems or needs that you have that can be solved.
The next step is working out whether people will pay to have this problem fixed. There’s a difference between noticing something that others find annoying and finding a gap in the market on which people will spend their hard-earned cash on. Buying customers are what makes an idea successful rather than a failure, so getting feedback on whether people would go out of their way to pay for what you want to offer is the key. People might disagree with your idea, but it’s hard to disagree with a line of paying customers.
Extra note – don’t just ask your friends for opinions. As lovely as they may be, they’re unlikely to give you an honest opinion if they’re worried about hurting your feelings. Strangers are less likely to be polite, and that’s a good thing! You need honesty and although asking people close to you isn’t a bad idea, make sure you ask other people to build up a complete picture of what people think of your idea.
Now you have to work out your price point. You don’t have any potential customers if you can only provide your solution at a cost that no one can afford. If you think you can provide it at a price the market can endure, then you need to start thinking about scalability. Hopefully, what you provide will benefit from economies of scale and become even cheaper to produce the more you make.
Many things can disrupt this simple equation. A variable price model may show that as you scale your business, your costs increase to the point where selling your good at a profitable price makes it too expensive for the market to endure.
It’s also essential you’re open to advise throughout the whole process. This is likely the first business that you’ve got going off the ground, and you’ll likely become very personally attached and whilst this is a good thing, it should blind you to the insights of others. Be prepared to hear uncomfortable truths about the difficulty of scaling or the possible lack of demand. Not every piece of advice is necessarily correct, but you must be aware that you don’t start with all the answers in your head.
A final thing to consider is the marketability of your idea. Sure, you might be confident that people will want what you have once they understand it, but can they quickly come to that realisation through online or in-person marketing? Not every potential customer can have you explain to them why your idea is excellent.
You need to imagine a marketing campaign to convey why your product is so important and valuable. Fair enough if you don’t have every detail of that worked out from the beginning, but you should have a general idea of how you could get someone’s attention and encourage them into becoming a customer. Marketing over Facebook to a stranger is a lot more complicated than sitting down with your mum or best friend to talk them through every detail of why your idea could be brilliant.
In conclusion, initial research, price points, scalability and marketability are the main factors you want to know can be done right when your business starts. These are the tests through which it is most important to measure whether you have a good business idea. Good luck!
If you’re ready to dive into your new business, you can find more about how to set it up here.
Other useful links from our knowledge centre:
How To Sell Your Small Business
How To Get Into Business Operations
How To Check If A Business Is Registered Via Companies House
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