Coming up with a business idea is the first step to starting a business. To begin, you can identify problems you or others are having. Some people take an unstructured approach to determining how to come up with a business idea. Others are more efficient when following a step-by-step process that guides their brainstorming sessions.
It’s wise to start with a problem because business is essentially solving customer’s problems in exchange for money. Once you have an idea, validate it through feedback. Finally, make your idea a reality by securing it and starting the business.
After you decide on a business idea, you need to register the business as a legal entity to secure its name. Additionally, registering the business as a legal entity, like a limited liability company (LLC), would protect the business owner’s personal assets if a lawsuit ever occurred against the business. Rocket Lawyer is an online legal service that assists with business registration. It also has attorneys on staff to assist with your legal questions. Start using Rocket Lawyer today for $39.99 per month.
Here’s how to come up with a business idea in five steps.
1. Look Inward for a Business Idea
The first and easiest place to come up with a business idea is through your own experiences. One day you may realize you have a problem that no one else can solve. Can you come up with a solution and solve it or a similar problem for others? Write down all problems like this, even if you can’t solve it initially. Additionally, look to your strengths, skills, and interests for inspiration.
Analyze Your Own Problems
The best place to look for a business idea is inside of your own problems. What challenges are you running into in your day-to-day life? This doesn’t have to be a brand new business idea. The problem can be as simple as firing your lawn care company and finding it difficult to find another quality company. That’s a potential problem worth exploring.
Use Your Current Strengths
Many current business owners build a business around their strengths. Strengths may be skills or knowledge you’ve learned from experiences like working in the corporate world or through hobbies. A good example is if you’ve been in sales for 20 years and are looking to apply those skills to a certain industry, such as real estate, or you’ve learned a lot about cycling through your hobbies and are good at helping friends fix their road bicycles.
Niche Down Your Current Skills
Another way to come up with a business idea is to narrow down what you do at your current job and provide a very specific service or product. A well-known business saying that relates to this is “the riches are in the niches.” That’s because specific services connect well to solve people’s problems.
For example, if you’re a general digital marketer for businesses, you may be able to brand yourself as a marketer in a specific niche, such as email marketing or Instagram marketing. Branding yourself in a niche will make it easier to connect with the specific business owners looking for your services.
Cross-pollinate Your Skills and Interests
Cross-pollinating to come up with a business idea is when you mix two unrelated skills or interests. For example, if someone has a full-time job as a software engineer at a tech company and enjoys tinkering with drones during the night and on weekends, a possible business idea they could pursue is creating and selling custom drone monitoring software for farms and industrial businesses.
2. Look Toward Others for a Business Idea
If you’re having trouble coming up with an idea from your own experiences, look to problems others are having. Friends and family are usually willing to talk about the regular challenges they run into. Maybe there’s a business idea that can help them overcome their challenges. You can also do research on trends and the current market to discover a business concept that makes sense for consumers today.
Listen to Family and Friends
Make it a point to listen to family and friends when they’re having issues. Maybe they can’t find reliable movers in your local city that won’t overcharge on a quote. Maybe they’re complaining about a specific problem with their motorcycle. Write down all of the business ideas you can think of that relate to the problems they’re struggling with, both product and service-based.
Turn to Social Media & Online Reviews
Social media is a great place to find family and friends complaining about the challenges they’re having. Often, people will go online to make a complaint before they tell friends or family. Additionally, look at what industries near your residence consistently have negative reviews.
Do the three closest pest control companies near your house all have 3 out of 5-star Google reviews or below? That’s an indication that a new pest control company with better customer service could take their customers.
Network With Other Business Owners
Many new businesses start when two people with different strengths come together to form a new type of company. A classic example is when Steve Jobs and Steve Wozniak created Apple. Wozniak had the experience and interest to build the computer. Jobs had experience in sales, marketing, and an interest in user experience. Wozniak couldn’t have sold the first Apple computer alone, and Jobs couldn’t have created it. Together, with their different strengths and skills, they were able to.
Follow the Trends
Another way to uncover a business idea is to spot and get ahead of a trend. Determine when a product is going to get big before it happens and start selling it on Amazon. The first movers on the fidget-spinner craze in 2017 made millions of dollars. Additionally, look nationally for trends and see if you can bring it locally to your city. For example, ramen restaurants started in large cities like Los Angeles, and now they’re spreading quickly throughout the United States.
Conduct Market Research
You can look to market and industry research for direction on a business idea. IBIS World provides reports that are updated quarterly on hundreds of specific industries. In the reports, it discusses if the overall industry in question is expected to grow or shrink. The cost of a report is around $1,095. Your local Small Business Development Center (SBDC) may be able to pull an IBIS World report and discuss it with you for free, so it’s a good place to start.
According to IBIS World, a local solar power installation business or massage business may be a good idea in the US
3. Brainstorm Solutions for Your Idea
When you identify a problem to solve, you may think of the solution right away. However, if you’re struggling to come up with a solution, there are strategies to help you think creatively. Create time during the day to think and make it easy to write record solutions. Additionally, look to others as a way to think creatively. Join local networking groups and entrepreneur networking websites.
Create Time to Think
Schedule time during the day to think through the problems you listed. Some people prefer to do this through meditation, where they sit and contemplate the problem anywhere from 10 minutes to more than an hour. Others go to float at a local sensory deprivation tank, which is a sealed chamber filled with 12-inches of room-temperature salt water for 30 to 120 minutes, to relax their brain and think more creatively. Consider spending time in nature and taking walks. The CEO of Facebook, Mark Zuckerberg, often has walking meetings in the hills around its headquarters in Menlo Park, California.
Make It Easy to Record Ideas
You may get an idea at any point during the day—while driving your car, in the shower, or eating lunch. When this happens, no matter how small the inspiration, write it down in a journal or on your phone. It’s also a good idea to place the solution in a place where you can see it easily. Consider writing it on a sticky note to think through it at a later time. If the idea is bad, don’t beat yourself up. During any creative process, it’s helpful to be your own best friend.
Network With Peers
Talking with others about the problem you’re seeking to solve, and possible solutions is a great way to think creatively. More extroverted personalities may prefer to talk to business peers than to write in a journal. If you don’t have any family or friends to talk to, consider joining a local Meetup or business group, like the US Chamber of Commerce, to find like-minded entrepreneurial individuals.
Join A Website
There are several websites available to connect with other entrepreneurs. These websites may also connect you with co-founders for your business. If you have a problem that you believe needs a solution, but the solution is out of your expertise, consider joining a founders networking website. For example, CoFoundersLab is the world’s largest network of entrepreneurs. Additionally, FounderDating allows you to connect with and get advice from like-minded entrepreneurs.
4. Validate Your Idea to Ensure Success
Validating your business idea involves making efforts to ensure the solution you want to sell is something customers will pay for. True validation comes when someone spends their money on your product or service. However, you may not be able to figure out with certainty how well your product will do in the market until it’s created, or your business is open.
Consider creating a few focus groups and surveys to gather feedback. Building an audience online is a great way to elicit feedback for your idea. Additionally, starting a crowdfunding campaign is one of the best ways to ensure your business idea is a good one.
Focus Groups, Beta Testing & Surveys
Focus groups are a selection of people that provide feedback on a product or service. If you have products that you can easily make, like baked goods, it’s a good idea to run a few focus groups to get their feedback. Beta tests involve testing different versions of a product or service (typically software) that isn’t complete, but you’d like feedback on. When it comes to online surveys, you can use a free tool for simple surveys like SurveyMonkey to solicit feedback from peers.
Build an Audience or Customer Base Online
Building an audience or potential customer base online before launching your product or service is a great way to validate your idea. For example, if you’re considering opening a tabletop gaming location, consider creating a Facebook group of local residents interested in tabletop gaming. This will take work, such as promoting your Facebook group during networking events. However, once the group is built, you will have interest validation and potential customers for your business.
Start a Crowdfunding Campaign
One of the best forms of business idea validation is running a crowdfunding campaign, which is a way to raise funds by preselling products and services. Typically, a crowdfunding platform charges a 5% fee of the overall amount raised and a 3% payment processing fee.
Ask Family and Friends
Asking family and friends should be the last method you use to validate your business idea. Often, they will give you positive feedback because they don’t want to hurt your feelings. Additionally, they may purchase your product or service just to support you. For example, they may support your crowdfunding campaign even though they wouldn’t have purchased the product or service from an unknown entity.
5. Make Your Idea a Reality
Once you receive validation that customers are willing to spend money on your solution to a problem they’re having, it’s time to make your business happen. Your first step is to create a business plan with thorough financial projections. Then, you’ll want to secure your business or idea through legal means. Finally, raise the capital necessary to make your dream a reality.
Create a Business Plan
All businesses need to create a business plan or a strategic roadmap you can use to guide your business decisions. The business plan contains several elements, including market analysis, competitor analysis, and financial projections. If you’re seeking funding from a bank or investor, you will need a business plan.
Many business owners choose to use business plan software to aid them in creating a plan. A business plan software walks users step by step through the plan creation process. Good software will include educational materials and easy-to-read financial charts. LivePlan is an easy-to-use business plan software that provides more than 500 sample plans to learn from. Get started today for $19.95 per month.
Financial Projections for Your Business Idea
The most important part of a business plan is the financial projections section. Unfortunately, it is also the most difficult. Financial projections include the income and expenses you estimate your business will have for 3 years into the future.
The income and expenses need to be broken down into specific items and by month-to-month for the first 2 years. Typically, you’ll create projected financial statements like profit and loss, cash flow analysis, and balance sheet. If you’re not using LivePlan software, you can use the free financial projections Excel template from the Service Corps of Retired Executives (SCORE).
Secure Your Business Idea
If you have a new business idea, it may need a patent, which is how you secure your idea legally so that another person or business doesn’t take it. Patents are expensive. You can file a patent yourself, but most business owners hire a patent attorney to do it for them.
Typically a patent costs anywhere from $1,500 to more than $15,000 if it’s a more complicated patent. You can save money by signing up for an online legal service consultation with an attorney. Rocket Lawyer will have one of its attorneys draft the proper patent paperwork and submit an application for a fee between $1,599 and $7,299.
Raise Capital for Your Idea
Funds for a startup or new business ideas are hard to come by. Banks typically don’t lend to startups. When they do, they require the borrower to have the amount they want to borrow in a liquid account like a certificate of deposit (CD) or savings account.
Investors are hard to find. You can go to local business networking events to potentially meet prospects. Before approaching an investor, have a well thought out business plan with thorough financial projections. Additionally, consider exploring a crowdfunding campaign as a source of capital for your business idea.
Bottom Line
Coming up with a business idea is difficult. If you’re choosing a new idea, remember that it requires deep creative thinking. Surround yourself with inspiration and take every opportunity to brainstorm everyday problems that need to be solved along with potential solutions. Remember, you’ll be spending a great deal of time working on your business, so you must invest time on the front end to ensure it’s successful.
Before opening your business, you need to register it as a legal entity with the state in which it’s operating. Doing this protects your personal assets in the event of a lawsuit against the business. Rocket Lawyer is an online legal service that assists business owners with registering their business as a legal entity, such as an LLC. Additionally, Rocket Lawyer provides affordable legal services like consultations and forms. Register your business with Rocket Lawyer today for $99 plus state fees.
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