Find and Analyze the Perfect Business Idea - Start Your Own Business Step 2
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I am looking into the question of what makes a good business idea and how you can find the perfect one. But that doesn't have that much to do with ingenuity and creativity, because the analysis is much more important.
I also take a look at the business model, because the best idea is of no use if it cannot be used to develop a profitable business model.
What Makes a Good Business Idea?
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| Find and Analyze the Perfect Business Idea - Start Your Own Business Step 2 |
Most prospective start-ups have one of the following two problems:
- Either they have no idea what exactly to do. You are looking for the great, unique, ingenious flash of thoughts and wait and wait and wait ...
- Or they have lots of ideas, new ideas every day, etc. The only question is, which business idea should you then implement?
In today's article I would therefore like to investigate the question of what makes a good business idea and whether the perfect business idea even exists.
First of all, the tip that you shouldn't look too hard for it. Instead, you should relax and first realize what the most important characteristics of a good business idea are:
- Customer Benefit
Customer benefit is a pillar of your own business idea. Your business, i.e. your products and services, must have a benefit for a certain target group. This can lie in the fact that the customer earns more, spends less, has more fun, has less anger, gets rid of worry, becomes more attractive, and so on.
A business idea only makes sense if you can define a clear customer benefit, which in reality hits a nerve with a sufficiently large number of people. - USP
Many start-ups want to be on the safe side. But one of the key success factors is uniqueness. The USP ( Unique Selling Proposition ), i.e. the unique selling point compared to competitors, is decisive for long-term success.
The keyword “blue oceans”, which I will go into further below, also plays an important role here. - Own Requirements
In Part 1 of this series , I already discussed the personal requirements for self-employment in general. But of course, you also have to fit the specific business idea yourself. - Profit
The word “profit” sounds negative to many, but that is exactly what a business idea has to be able to achieve. Only when a business idea is profitable is it good and you can make a living from it in the long term.
This can now be summed up in a simple formula:
Need + Uniqueness + Feasibility + Profit = Success
But it's not that simple after all and that's why I will now go into individual aspects in more detail.
Problems are a Good Place to Start
Instead of sitting at home and racking your brains in search of the perfect business idea, it is better to go “out” and talk to other people.
The best business ideas are based on problems from disappointed customers. Despite all the new products and achievements, the world is not perfect and there are problems and customers everywhere who are not satisfied with the existing products and services.
Therefore you should look carefully and listen. If you collect problems and look for solutions to them, you get a lot of potentially good business ideas.
Make a Wish?!
One should be careful with requests from customers. While problems are often expressed passively and you develop solutions yourself based on them, requests come directly from the customer.
But that doesn't mean that it's always a good business idea, because wishes are often expressed with great pleasure, but in the end, nobody wants to pay for them.
But that doesn't mean that you shouldn't listen to the wishes of potential customers. But you should rethink this and analyze whether a) these are just the wishes of individuals and b) enough people would pay for them.
Tips for the Perfect Business Idea
In addition to listening, there are of course other ways to develop ideas.
You read that correctly, it says “develop” and not “find”, because you can actively develop good ideas and you don't have to wait for the right inspiration. The “use” of existing problems mentioned above is also an active approach and can be combined with the following methods.
Creativity Methods
A brainstorming session is to develop a classic method, ideas. Of course, this makes sense, especially in a team, as you encourage each other. Further details can be found on the linked page.
A mind map is also an instrument for developing ideas. A mind map can also be implemented very well on its own. To do this, you start from a starting point and then expand it in various directions. In doing so, you often come across connections and “branches” that you have not thought of before.
Many other creative methods are beyond the scope of this article. So I'm planning a couple of separate articles on these methods.
Inspiration
Of course, inspiration plays an important role. So you can look at websites that specialize in ideas. Springwise.com is one of them. Of course, you won't find ready-made business ideas there that you can simply use without thinking, but you can certainly get inspiration.
Forums are also a great way to find inspiration and then develop it into ideas. How about a company support forum. There are sure to be a lot of dissatisfied customers. ;-)
Analyzing existing business competition (or doing surveys) should also be part of this. For example, you could offer special services or make certain services better than the competition. Or you can find gaps in the offer.
Success stories always inspire me a lot. If you read how someone became successful with a great idea, you usually cannot imitate it, but you get a feel for how you can come up with good ideas. And you are also very motivated, which is very important.
And of course, you can also find inspiration abroad or in other industries. Many successful companies have copied and modified other business ideas.
Analysis of the Business Idea
But how do you go about it now? On the one hand, analyzes are carried out.
I would also like to point out that brainstorming and analysis run more or less in parallel.
Market Analysis
The aim here is to find out what your market looks like. Even if you usually become active in a market that you know and where you have the know-how, you should get a precise picture of the current market. Many start-ups approach the development of business ideas for certain markets with assumptions and only imprecise detailed knowledge.
So it could be that there are already companies that offer a solution to a specific problem. Only you did not know this company before.
And of course, you should know how big the market is. After all, no matter how great a solution to a problem can be. If only 10 people have this problem, then it is difficult to build a successful business. The purchasing power of the potential target group also plays an important role.
Competition Analysis
Of course, you should also take a close look at the competitors. This is particularly possible on the Internet. With the help of tools, for example, you can see where the competition is in Google and you can find customer reactions to individual companies on the Internet.
Ideally, you have little or no competition in the market (sub-market) you are targeting. I have already presented the concept of the blue oceans here in a book review. Many self-employed plunge into the middle of the “red oceans” with a lot of competition and then have to fight to stay alive at all.
Fun and Know-How
It is also important to analyze your requirements for this specific business idea, as already described in Part 1 of this series. Do you have the necessary know-how to implement this business idea?
Fun and passion are also very important. Do you enjoy this idea and its implementation so much that you can work on it for years, including a lot of overtime?
Test Idea
Regardless of whether you had some ideas from the beginning or only after using one or the other method, your own opinion about the idea is not enough!
Nor is it enough to ask friends and family. Because they have a talent for not wanting to hurt you. There is hardly any honest and independent opinion.
That's why you should test your business idea and it's usually easier on the Internet than offline.
For example, you could put a trial shop online with just a few products. You don't need an expensive layout or large logistics for this. But you can already test whether your products are popular with the potential target group
In this context, of course, Google Ads ads are very interesting. You can use it to bring traffic to this test website without having to wait for good Google rankings. But ads are a very good way of testing the potential of your business ideas. Tim Ferris shows this very clearly with a few examples in his book The 4-Hour Week.
Or you can first create a small eBook that contains basic tips and information on a topic for which you want to offer a service later, for example. Based on the number of downloads and the feedback, you can see how the idea is received.
Overall, of course, it is better if the tests are close to the real “buy”. Because it is one thing whether people download an eBook or sign up for a newsletter. It's completely different when you have to pull out your wallet. Only then does it show whether your business idea is profitable.
Do Better - Don't Imitate!
I would like to go back to one aspect of the business idea because I see so often that it is done wrong.
Again and again, I see new projects on the Internet that simply copy the idea of a successful website 1: 1 and try to be successful with it. This only works to a limited extent offline, but at least there is still the “location” factor. A business idea that I copy 1: 1 from the neighboring town can be quite successful in my town.
In contrast, the “location” factor hardly plays a role on the web. Whether an online shop comes from Hamburg or Munich is irrelevant, unlike a retail store.
It is therefore important to improve existing business ideas and not just copy them.
What Does Better Mean?
That can mean a lot. Amongst other things:
- Easier
You can make products or services easier. There may already be solutions to problems or requests, but these are too complicated. - Faster
You can be faster than the competition and therefore stay ahead. - Cheaper
This is a tricky point. Of course, there are good examples of business ideas based on “Cheaper”. But then you should also make sure that the competition cannot be so cheap overnight. - High Quality
Why always mass? You can also go for class and have higher quality products. This is usually used to address more affluent customers. - More in-Depth
You could expand your range, for example, and set yourself apart from the competition. - More Concretely
You could specialize further than the competition and thus position yourself more clearly as an expert. - Different
You should be different. But of course on a sensible and sensible economic basis. Just aiming at the point of “being different” can also go in the pants.
These points show that it is usually not important to find Columbus' egg. Evolution and not revolution is the motto!
Some tinker for years on their perfect business idea, just so that it revolutionizes everything. This happens now and then, but 99% of successful business ideas are more likely to be in the evolution category.
Elevator Pitch
A good test of whether your business idea is worth something is the so-called elevator pitch. Anyone who manages to “sell” their business idea in the short ride in an elevator (ie a maximum of 30 seconds) has something good in the hand.
In this formulation, of course, the key points mentioned above should appear, i.e. customer benefit, feasibility, USP, and profit.
With an elevator pitch like this, you shouldn't stall or stammer. It has to come like a shot from the gun and convince, then it's good.
But be careful: No matter how good the idea and elevator pitch is, you should always keep in mind that they are only worth something if you implement them.
Think Long-Term!
And you should think long-term with all current analyzes and creative methods. It may have sounded like a great idea in 2010 to sell “vuvuzelas” for the World Cup or “toilet paper” for the outbreak of Corona, but these are not long-term business ideas. You don't build anything that will work for you in the long term and bring you money.
This is why it is important to think about:
- How could I develop the business idea further?
- How scalable is this idea in the future?
- Which changes in the market could jeopardize the business idea?
- What are my next steps and the next but one?
- Will I still enjoy implementing this idea in a few years?
- Is the business model behind it so stable that it will still work for years?
- etc.
Building up a business does not mean getting rich “overnight”, even on the Internet, but working for the long term.
I have already mentioned several times in this article that a business idea has to be profitable and you should take that very seriously. If a good business idea is to become a successful business model, then you have to be able to earn money with it. No matter how much fun your work is, if you don't earn enough money as a self-employed person, then you have a problem.
In some cases, you can already judge this during the brainstorming phase. But you will only know more precisely when you draw up a business plan, calculate the costs and income and go into depth. When calculating your prices, the question of how much money you have to earn as a self-employed person also plays an important role. That is why I will go into this in more detail several times in this series of articles.
Checklists for Start-Ups - Business Idea & Analysis
At the end of this long article, a summary of the most important points follows in a checklist :
- 𐄂 My business idea has a clear customer benefit.
- 𐄂 There is a sufficiently large target group for my business idea.
- 𐄂 This is also willing to spend money on it.
- 𐄂 I set myself apart from the competition with my idea.
- 𐄂 My business idea is profitable so that I can make a (good) living from it.
- 𐄂 I put my idea through its paces.
- 𐄂 I have the necessary prerequisites and motivation to implement the idea.
- 𐄂 I can implement the idea with reasonable effort.
- 𐄂 My business idea is also promising in the long term and can grow.
- 𐄂 I am ready to put the idea into practice.
Here you should be able to tick all points.
If this is not the case, you should continue working on your business idea.
So It Goes on
The next step in the series of articles “ Becoming self-employed ” is about concrete planning for one's independence.
Do you find out how to define goals, make plans, and whether you even need a business plan?
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