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.
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