Successful startups are built upon good business ideas. So, where do they come from and how can you test whether your new business idea will work?
You need three key ingredients to succeed when starting up.
Good business ideas don’t have to be unique (most aren’t). Many successful businesses simply offer their own version of products or services that are already available, whether they’re better quality, more convenient, cheaper or otherwise different and more appealing.
Often business ideas are updated versions of ones that have been around for a while. Inspiration for business ideas sometimes comes from other sectors or places and although some good business ideas are complex, most are simple. They can result from someone wanting to solve a problem or after they spot a gap in the market.
The ultimate test of whether a business idea is good comes down to sales. You must be able to make enough profit to keep the business afloat and pay yourself and any staff. If you can’t – you don’t have a business.
Just because you think your new idea is fantastic, doesn’t mean it can be turned into a successful business. Many people have launched businesses on the back of ideas they believed in, only to find out the hard way that they were wrong.
If your business idea is to succeed, enough people must buy from you at the prices you charge, to create enough profit to keep the business afloat and generate a wage for you and any employees. If that doesn’t happen – you don’t have a business.
To make it less likely that you’ll start a new venture that will fail because your business idea isn’t viable, you should test it thoroughly long before you launch. Ask others what they think of what you’re planning to sell and, crucially, how much they would pay for it.
Some people mistakenly don’t do basic market research, or they only ask friends and family, who can be reluctant to criticise. But you must speak to potential customers and encourage them to be totally honest about your products, services, prices, and brand. Below you'll see some of the places you can canvas opinion and conduct product research on the cheap.
Listen carefully and be prepared to act on their feedback, which might mean relatively small changes to improve your chances of success. Alternatively, big changes or a total rethink might be necessary if your idea isn’t well received by most important people of all – potential customers.
Harsh feedback can be difficult to take, but don’t ignore it, because it can prevent you from making a big, expensive mistake. Use it to improve your business idea so you’re more likely to succeed.
Potential customers might love your business idea, leaving you even more confident that you’ll succeed. Take the opportunity to try to make some sales or take orders, because they could help you to get off to a great start.
Many people base their business on their hobby or things they love, whether that’s coaching football, making honey, teaching piano, brewing beer, fixing cars or running a cafe.
If you’re doing something that you genuinely love, often it doesn’t seem like work. Your knowledge or skill could be highly valuable and it could give you a competitive edge, while passion is a great motivator and it can help you to deal with less appealing aspects of running your own business.
For example, Nila Holden (pictured above) turned her love of baking into a full-time business, leaving her public sector role behind. "Nearly four years on, I now run a small bakery production facility and employ a team of staff producing high-end products for quality outlets and corporate clients," says Nila. "It's great, although there is far more pressure now I have to cover salaries and overheads."
You might be able to turn your hobby or passion into a successful business, but it’s not a given because it alone won’t guarantee that enough people will pay your prices for what you’re offering, which means you don’t have a viable business idea.
Much also depends on how much you need to earn. Not everyone starts a business to get rich and famous, some people are happy to earn less so they can do something they genuinely love.
Your hobby or passion might provide enough sales to sustain a part-time business that gives you enough income to live on. Alternatively, you might be able to combine it with other earnings (possibly part-time employment). Before starting a business based on your hobby or anything else, you should accurately work out whether it will generate sufficient returns.
Some people struggle to come up with a business idea because they think it has to be unique. It doesn’t.
If you can come up with a genuinely unique business idea that enough people want, you may well earn a fortune. Although rare, it happens.
But, in reality, most business ideas are variations on things that already exist. They’re not unique, just different. That could mean products or services are of superior quality or more convenient or more environmentally friendly or cheaper or available in new flavours or more compact, etc.
If you decide to start a business that’s similar to others, find ways to be different. Your business must stand out if it is to attract customers, and you must give them clear reasons to buy from you rather than your competitors.
Don’t simply set out to be the cheapest option, because price might not be the only factor that influences customer buying decisions. Some customers will willingly pay more for better quality. Moreover, you might not be able to beat some of your competitors’ prices, so find other ways to appeal.
According to figures from the Office for National Statistics, the number of self-employed individuals has risen from 3.3 million people (12% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017. With self-employed numbers at an all-time high, that also means there are more types of businesses operating. Here are some of the most on-trend business ideas right now.
If you go to any town or city, you’re likely to find a bustling street food market with an ever-expanding selection of cuisines to sample. As consumers have embraced this casual and fun approach to eating out, so too have more and more startups, making it one of the most popular business ventures. Street food also has the scalability factor. Many popular restaurant chains started out that way. Just don’t expect success to come easy or on the cheap.
"The quality of your food is everything. To succeed, you must work very hard. Customers see the glamorous and fun side of the industry, but it’s seven days a week of hard graft, with occasional reward."
Offering your own dog walking services is one of the cheapest and simplest businesses to set up. It’s also a great option if you don’t want to be stuck in an office all day. With an estimated 8.5 million dogs in the UK, there’s also the opportunity to scale your dog walking business to be much more than one man and his dog.
"We've grown a huge amount. I now have a team of 20 full-time employees, seven new vans on the road and we walk around 180 dogs per day."
Sports nutrition products have a mass-market appeal far beyond just bodybuilders and professional athletes. In 2015, sales of nutrition products were worth £66 million, while two in five (42%) UK consumers aged 16-24 have consumed sports nutrition products in the past three months. Many sports nutrition brands have also built a loyal community of followers by putting on events such as run clubs - which also provide all-important brand exposure on social media.
"We found that heavily refined sports nutrition products weren’t giving us what we needed as runners. We set out then to start making performance nutrition from natural ingredients."
Designing and selling handmade jewellery has become increasingly popular with the emergence of marketplace websites such as Etsy and eBay. Not only have these websites made it much easier to sell your products online, they also attract the increasing numbers of customers who prefer to purchase unique items. The next phase is to sell your products in person at craft fairs and to find other stockists.
"Selling at fairs can be a great networking opportunity and I’ve been approached by a few new stockists whilst selling on the day. It’s a great way to interact with your customers and meet some of your online followers in real life."
Powered by the online market, the greetings card industry has grown 6.12% in the last five years. Smaller businesses might take a different approach to their larger counterparts, instead offering unique and quirky designs that cater for specific interest groups.
"Originally I handmade every single card that someone ordered. I remember being so excited about my first few orders, I hand wrote the addresses in my best handwriting."
"Since then, I’ve built a much more automated process. 95% of my cards are pre-printed with my designs with just a handful that I’m testing out being handmade. It means the quality is more consistent for the customer and it also means I have more time to focus on growing the business."
eCommerce has enabled many fashion brands to launch without the prohibitive costs of running a high street store. There are still significant startup costs, for example, getting your products designed and shipped, but the scale and growth opportunities can be huge.
"I’ve always been interested in fashion and making my own garments and accessories. When I couldn't find items I wanted to wear in stores, I started making them myself and it struck a chord with my peers. I guess I was my main customer and inspiration!"
Once you've got your business idea, you don't want to lose that all-important momentum. This guide will help you get your business up and running in 20 days.Read more
We've taken a look at some of the most on-trend businesses in 2017 and the skills and attributes you need to launch yours.Read more
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