How to find an idea for your business

So you have decided to start your own business. Great!

For some people it’s like that comic book light bulb lighting up when they get the idea. They know right away what they want to do, then go ahead and do it. For the rest of us, it’s different, and a bit more time consuming to figure out what kind of business we want to start.

You may have a slight idea of the general area of business you will want to be in, but in any case, following the steps below will benefit you.

 

Define your goals

This should be your first step. Why?

Because your entire strategy will depend on it. If what you want to do is have a little bit of extra income every month, you will work in a completely different way than if your goal is to become the next J.D. Rockefeller.

Put down on paper an estimate of how much money you wish to make, as well as how much time you are willing to spend on your business project.

Keep in mind though, that the results will in most cases come slowly, and require work. A lot of it. But put the hours in, and with the right groundwork and tools, you’ll be that much closer to reaching your goals. For most projects you will start to get closer to your goals after 6 months to a year (excluding the Rockefeller-goal).

Please try to make it realistic as well. You will not be able to be a millionaire working two hours a month. And no, playing the lottery does not count as work.

 

Find out what you can offer

Next, think about what you can offer. Not the details, but in broad, general terms. Of what fields are you knowledgeable?

If you’ve worked as a PC repair guy, odds are you have good knowledge of computers and could offer something related to this.

If you’re an animal lover, you might want to work with animals.

If you have a burning passion for cars, the car business could be the perfect field for you.

Before you decide on what to offer, have a look in the market to see what is already out there.

 

Define your world

Your world is your market. Where you operate and where your clients are.

Normally you would limit your world by geography, f.ex your neighbourhood, your city, your country etc.

In some cases though, you would limit your world by other factors, such as behaviour or lifestyle. Gamers, snowboarders, dog owners etc. This is very useful when doing business over the Internet for example.

What you decide to be your world depends on you, and the type of business you wish to build.

We will discuss the concept of your world further in a later article.

In any case, decide on where you wish to operate your business. With that in mind, we’ll move on to the next step.

 

Look to your competitors

This step is not, as you might think, to discard any idea that is already existing in your world, but rather the opposite.

Be careful about investing in elaborating a business that has no competitors.

You know the expression “supply and demand”? The theory behind that is that the market naturally adjusts itself to match supply with demand.

If there are many people looking to get a certain type of products, the prices go up. Higher prices often means more money can be made, and more people wish to sell these kinds of products. This in turn leads to higher supply, which makes the prices fall as demand is met, and clients in many cases go looking for the cheapest option. Lower prices lead to a drop in supply as companies decide to change focus to pursue higher margin products, or even go bankrupt. For most product types that have been around for a while, the balance between supply and demand is quite stable.

Why am I mentioning this?

For the simple reason that the size of the market can in most cases be determined by the number of competitors.

Many competitors means many people are making money in the market, while few or no competitors means that it’s either a very difficult market to enter, there is no potential, or it’s a completely new product. In the last case it’s even more important to do the analysis right.

 

Analyze clients

When you’ve found a market with sufficient potential, it’s time to find out whether or not the customers in this market are happy with what is currently offered, or if there’s something they would wish to be different. There almost always is. If the amount of people requesting this is sufficient, congratulations – you’ve found your niche.

Let’s say you live in a rural area where there are several music schools, and the population in general is quite interested in music. You know there’s money in offering music lessons, because of the amount of competition making money (if not they wouldn’t be there). Most schools offer lessons in classic guitar. Several clients however, are interested in learning to play the electric guitar.

If you in this case, know, or are interested in learning, how to play electric guitar, you have a niche market.

It doesn’t have to be a huge difference, just enough to make a difference. It could be a lower price, a higher quality, better design, better service etc. You get the point. There’s no need to reinvent the wheel, you just need to stand out a little bit from the rest.

Now all that’s left is designing an offer that fits the needs you discovered, and go for it.

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