Starting a business can be a rewarding and fulfilling experience, but it can also be challenging to know where to begin. Your first question might even be “what kind of business should I start?” One of the most important decisions you’ll make as an entrepreneur is how to choose the right business idea. In this blog, we’ll share expert tips and strategies for finding the perfect business idea for your skills and interests.
Here are some steps to help you choose the right business idea.
Step 1: Assessing Demand for Your Business Idea
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Identifying market gaps and niches
Why is this important? If you can find a gap in the marketplace, or a niche that is not currently being filled, you have the opportunity to create a business with an audience that is looking for just what you have to offer.
As a side note: If there is currently no one doing what you want to do, spend some time doing a little research to find out why. That will be part of your next step to make sure there is enough of a market for what you want to do to make you successful.
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Conduct market research to understand what customers need
Our ideas don’t matter as much if there is not a need in the marketplace for them. Market research will help you determine what it is that your customers want and need so that you can build your business around that.
Check out this resource from the SBA.
Market research and competitive analysis (sba.gov)
- Analyze competition and market trends
What do you know about the competition that is out there currently meeting the needs of your potential customers? The secret to a successful business is to know as much about their competition as they do about their own business.
Being aware of market trends will help you plan for the future. Consider how some industries have change dramatically over the years as times, customer needs and technology changed. Is your business idea one that is on track to be sustainable or obsolete in a few years?
Step 2: Choosing a Profitable Business Model
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Explore different business models, such as e-commerce, subscription, and franchise
Choosing the right business model may come to you naturally. Maybe you are passionate about online businesses, or you have always wanted a brick-and-mortar store in your quaint downtown. The right business model could be any of those or a combination of them all.
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Assess the pros and cons of each model
Each of these models come with both pros and cons. Some are related to the market, itself, and some could be related to your strengths and skill set. It’s important to look at each objectively to make the right choice.
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Identify the best model for your business idea
Now that you have looked at the pros and cons and done some research, it is time to nail down the business model that is right for you. The important thing to note is where and how your target market is likely to be looking for a business like yours and then build your model there.
Step 3: Creating a Winning Business Plan
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Outline your vision, mission, and goals
Before you move any further, I would suggest you spend some time coming up with clarity in your mission and vision for your business. Why? It can guide you in all the choices you will need to make along the way as you start, grow and scale your business.
To help you get started, check out this worksheet to create your vision statement.
Creating Your Vision Statement
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Conduct a SWOT analysis
A SWOT is an analysis of strengths, weaknesses, opportunities and threats. This is a great exercise to do for both yourself as well as your top 3 competitors. You will find out a lot about them and yourself and possibly identify some gaps in the marketplace.
Here is a worksheet you can use to do that.
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Developing a marketing and sales strategy
Marketing is what you do to bring customers to your business and sales is what you do to generate and grow your revenue.
Marketing can, and should, include things like your website and social media. It can also include print, networking opportunities and community involvement.
Sales are ways you generate revenue once they are inside your doors. More specifically, it is the ways you can increase the amount of money they might have been planning to spend with you.
This could be through VIP events, loyalty programs, special events and bundling of products and services- just to name a few.
The SBA has a great resource to help you.
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Create financial projections and a budget
This is often the part that entrepreneurs like the least- especially if you are a “creative.”
The important thing to remember is that it is the financials that tell you the health of your business. It is the Profit and Loss, Cash Flow and Balance Sheet that will tell the story about your profitability, whether you’ve got your pricing right, whether your expenses are too high or if you need to look at new revenue streams.
A budget might seem constraining, but it can be what keeps you from making mistakes that are hard to come back from. It can help you make smart decisions in so many areas of your business so it is worth it to create a budget and use it to manage your business.
The SBA offers some great advice in this area.
Manage your finances (sba.gov)