The Ultimate Guide to Successful Business Ideas
This Ultimate Guide to Successful Business Ideas will help you go from "no-clue" to "wow there is a lot of business possibilities out there". We are going to look at:
- The current problems this guide will solve,
- Why business ideas are important,
- The equation for the idea and mapping that out,
- Top characteristics of an awesome business idea, and
- Tools and exercises to help you think of your next successful business idea, by incorporating all of the above.
The Problem with Business Ideas
1. Thinking of profitable business ideas is tricky.
How do you come up with business ideas that solve an existing problem? And how can you make sure this problem is big enough to make money, or if people even care about this problem? This guide will explore exercises for identifying problems, and combing the problem into your business idea to find profitability.
2. The material out there is not very helpful
I have had countless encounters with people in my life who are stumped on how to think of business ideas that have strong potential. For a long time in my life, business idea creation has continued to fascinate me because I could never do it, or I if I did it was a bland idea like “Accountant”. After scouring the internet over the years, I never found a solid resource that had practical tools to help me think of business ideas. Usually, someone just writes a list of ideas that are general, does not provide reasons to support the idea, and does not relate to our current time period.
3. We all sometimes lack creativity and inspiration
Sometimes it can be hard to think of a business idea because there are not many structures to thinking of one, or properly explained exercises. Learning the basic characteristics of why and how a business idea is created can be very helpful in the process.
In this guide will share my exercises for thinking of creative business ideas that have real potential for current opportunities, while walking you through my thinking. If you read along and follow this guide, you will have a new business idea in less than an hour.
Why a Business Idea is important?
Business ideas are the base of the entrepreneurial pyramid. Without an idea at all, or a bad idea, your pyramid will crumble in this business environment. Secondly, no business idea equals no revenue can be generated, so you can see it begins with the business idea. Once you have decided on your idea, the rest of the pyramid can be built.
Let’s begin with you
One of the most important things about thinking creatively starts with you. You as a person have to be comfortable with yourself, your ability to think, and your openness to new things. By being comfortable with yourself you won’t put yourself down or think negatively, which is a creativity killer. Secondly, the best thing you can do to wind-up the creativity gears for business idea brainstorming sessions, is to create new experiences. This doesn’t have to be something like skydiving or facing your fears, it can be as simple as trying a different coffee shop instead of your usual, or picking up an instrument if you aren’t that musically talented. These new experiences give you more ammo to think of things in a different perspective.
Value you can bring:
The value you bring to the company is a very broad piece of the equation, and I left it that way for a reason. The value you can bring can encompass your strengths, talents, and experiences you can bring to the table to run and start your business. Other ways you can bring value to an idea is through your connections or financial abilities. For instance, if you have a million dollars to build a company, that is a lot of value you can bring to solving the problem. Connections can be great as well. A friend who knows how to build mobile apps or who has tools you can use like photography equipment, can also be very valuable to the idea. By seeing what value you can bring, it can allow you to think of how you will craft the solution with what you have.
This is exactly as it sounds. What is the problem you and/or others are facing. Finding problems can be the tricky part, however, if you learn how to spot them, it becomes easy over time. One of the best ways to spot problems is in the news, and I write about this in length here. Other ways of finding problems can be by interviewing a selected group of strangers. For example, if we had the resources to start a business to help Dentists (pretending we were a dental assistant for five years and can bring value/ passion to this industry), we could call them up and ask questions about what they need help with in their business and would pay for it.
The business model is the part of the equation that brings in the money. The business model asks three crucial questions about the business idea.
Who is your customer?
What do they value?
How will your business idea make money?
Different business models have different outcomes. For instance, setting up a retail business model will involve a lot more costs upfront with rent, staff, utilities, etc. The benefits is that you can build a relationship with your customer a lot quicker with the personal interactions. The tricky part is getting them in the door though. That is where a different model, such as a eCommerce, comes in. The costs will be much lower, but it is harder to build trust and connection with your customers, as it is difficult to personally greet them as they come to your site.
Your business model can also help you decide if you want to provide a service for this solution, or a product that can solve the problem. This is where different strategies come into play with different business models, and choosing the right one can be key to success. Since you will know the industry you will be starting the business in from identifying the problem, look at competitors to see what model they chose. Some models tend to work better than others in different industries and environments, keep that in mind.
…. Combining the three you get your business idea
Where does your potential business idea fit?
Determine in what quadrant your business will be in. Each one has benefits and cons.
The high-end businesses are in the upper left hand corner. These companies do not have a large customer base, however, they have a smaller customer base that is loyal, and loves the brand. High-end businesses specialize in providing the highest quality products. For example, Louis Vuitton, or Ferrari are high-end brands.
This type of business is cut out for someone who wants a ‘side-hustle’. Here you won’t have a significant amount of customers to serve, and your products or services may not be made from the highest quality. However, you can still make some extra money on the side with this model.
Think Walmart and Amazon.com, when you think of Mass Market. These types of businesses appeal to a wide range of people, and have low price points to attract the general public. It may sound like an awesome model to pursue, but it can be tricky to break into this market without significant dollars to invest. This is because competition is tough here, and those big names like Walmart will do whatever it takes to wipe you out.
The Golden Goose ideas make wonderful businesses. They have the potential to price their products high, while attracting a large market to buy their products. Think Apple or BMW. They have a large raving customer base, with a product or service that is priced quite high.
This map is a great way to brainstorm what kind of lifestyle/ profitability your business will bring with each model. For instance, taking a high-end approach, you may have to be more professional for your clients, than say a mass-market business, as they do not expect the same level of service. It might sound crazy, but someone may choose hobby-business to fit their lifestyle if they wanted to keep their day-job and social life (a golden goose may sacrifice these things to take care of business matters).
Top Five Characteristics of a Great Business Idea
Scalability is the ability to grow your business five or 10 times, without your business model collapsing from the pressure. For example, a one person consulting business’s revenue is limited to the amount of hours that one consultant can work in a year. We could easily figure this out by taking their hourly rate and multiplying to by how many hours they can work in a year, to reach max revenue. A business like this is not scalable. To make it scalable, this person would have to change their business model to bring on more consultants to grow the practice. Define your how much you want to make, and see what business models can produce this on a large-scale.
Sustainability is the business's ability to run for 50 or 100 years, without using up its key resources it needs to succeed. A great example of this is the pop industry. Lately in some parts of the world where pop is produced, there have been shortages of water which is a key resource in creating pop. This problem has lead to initiatives by Coca Cola and others to help the keep water supplies healthy. If they don’t do this, they could be out of business in 20 years. How will sustainability affect your business idea?
3. Market fit/ Demand
Market fit/ demand is exactly like it sounds. The market will determine if there is a need for your idea, so it is important to test this. You can test your idea for market fit/ demand by:
Defining who your target market exactly is
Survey your target market to see if your solution actually solves a problem of theirs, or if it is the right solution for that problem. This may mean cold calling 200 people, or surveying people in the streets for a month or two.
4. The Five Year Plan
The five year plan is so important because if you don’t plan to be in business five years from now, you probably won’t be in business. Develop a roadmap of where you will be in five years. You can do this by mapping out a financial projection of your estimated costs and revenues. To do this effectively, create a few good and bad scenarios, and adjust it monthly as you go along to see how you are matching up.
This may sound obvious, but your idea cannot be based on “everyone will be a customer of this product so we will make millions”. By creating the financial projection above, you can create a really rough estimate of when you will become profitable, and how much profit you will make for that year. This is more important than incorporating your passions into your business, because if your passions can’t make money, then it may be best to keep it as a hobby and not a business.
Tools to consider when looking for problems
This startup Matrix, developed by Eric Stormberg, this dynamic spreadsheet gives you a top level view of the industries new startups are entering. It also gives a great place to see where there is fit for other ideas that could lead a great brainstorming session for you. Access it here.
This book is honestly my favourite for learning what your strengths are to incorporate them into your business idea. After years of reading other books that provide no actionable tests or surveys, I was feeling lost. However, this book will help you find your top five strengths through data-backed tests, so you can begin incorporating them into your business idea. By taking the strengths you find, you can begin to develop them further and add it into the “Value you can bring” piece of the business idea equation. Get your copy here.
If you want to jump right in to thinking of business ideas, with the above in mind, check out the three different exercises next! Some of these exercises are creativity tools that have been modified to help you think of business ideas.
Practical Exercises to get you started:
1) Business Ideas From the News
I have written a full article with several examples of this here, but I want to cover it in this guide so you have an ultimate resource for your reference.
Business ideas from the news is a way of thinking of business ideas from the problems people have, or the possibilities created straight from the news. The great thing about this tool is that it can be used every day to think of new business ideas that have some degree of validation, as news is published almost by the minute these days.
So how does it work?
Well, open your favourite newspaper, or news site that you use to get reputable information. What is going on today? Below are two examples of news articles I saw during the time I wrote this that present business ideas.
This news article is about a “new alternative to payday loans”. A non-for-profit has opened up for Ottawa residents that will provide low-interest loans for low-income people. Instead of paying interest rates near or above 20%, low-income people can now access a fund with much lower rates, and people are loving it. What if you did this in your area? I am sure a charitable fund or non-for-profit would thrive in many United States communities, as well as others across Canada. The great thing about this article is that it has already validated the idea of it. Are you looking to enter finance with an ethical stand-point? Why not try implementing something like this. With this exercise it is not always about finding an idea that can be a stand-alone business idea, maybe it will become a segment of your existing business or become a separate business unit.
Now you may be thinking, well Mike, this is an obvious opportunity being shown here. If you are thinking that, here is a little more in-depth article stating how you can protect your privacy online, by managing your phone permissions and what is revealed. If you read the article it has a series of steps you can follow that will help mitigate the potential threat that may be lurking from certain apps. What if you made an app (how ironic), that did all these steps for you? That way people wouldn’t have to spend hours going through all permissions on their phone to see who is accessing location, using a separate password manager every day, and manually setup two-step authentication. A feature could then be built in to access their personal information that these businesses keep by sending an automated request for the user. The app would be able to do all this for you.
This way of thinking may come easy for you, or if you were like me this had to be something I practiced every time I read the news to finally use this technique without guidance. How do you practice it? Every day, or even once a week, flip through your newspaper and instead of reading for general information see if you can see where a business can start from the problem being presented. The great thing is that a lot of news centers on problems, and if you can find solutions to those problems then a viable business is born.
*Tip: Look for articles that revolve around uncertainty. The reality of uncertainty presents massive potential for businesses, and new business ideas. Take the Brexit as my first example. The uncertainty of what would happen when the UK leaves the EU became a huge ordeal. What were the people going to do with their money and the banking regulation? How were businesses going to operate in that new taxation environment? Will new regulations relate only to the UK that will affect EU-wide businesses? All these are uncertainties that can present business ideas. If you knew some information about EU/UK tax laws, you could start your own innovative tax services company that specializes in helping UK companies comply with the new systems in place from the Brexit. When the 2008 financial crisis happened, a lot of uncertainty was present about people's money situations. The uncertainty provided a way for business ideas focused on eliminating people’s money issues. Debt consolidation and gold buyers saw huge growth during these hard times, as the need for these services became apparent.
2) Random Associations Exercise
The random associations tool can help you think of creative business ideas on its own, or can be used in conjunction with business ideas in the news exercise, to solve the problem at hand in a way you could not see before. Let’s begin with the three basic steps:
Step 1: Creating your beginning statement.
You will need to create a statement that we can relate two random stimuli to later. The statement can revolve around anything, but I recommend it relating to:
1. A problem you experience daily or weekly, or a problem your family members experience
2. A new trend or invention that fascinates you
3. The industry you want to start a business in
The trick to this is to use as little words as possible in your statement to avoid working around the actual problem or theme you have. Sometimes you may have to rewrite your sentence if it does not relate directly to the problem
For example, I began with a statement from one of my friends that said,
“The problem I have is that my cat needs to eat three times a day, but my job does not allow me to be home all the time to feed my cat”.
I thought this statement has two clashing problems. The first problem could be that she has a needy cat that needs to eat a lot. The second problem would be that her job is not flexible enough for her lifestyle, so I remade the statement:
“The problem I have is that I need to feed my cat while I am at work”.
Once it is simplified, write this statement down on a piece of paper.
Step 2: Using Two random objects.
Next grab the next thing beside your desk and write it down on a piece of paper. This will be your first stimuli. I grabbed a T.V. remote.
Now either grab another object at random from a different room, or you can choose the word of the day from Dictionary.com which is what I like to do as it guarantees randomness, and I don’t have to dust off my paper dictionary. The word of the day also helps motivate me to do this as many times in a week as I can. The word of the day I got is “Frondescence”, meaning leafage or foliage.
Step 3: Create the random associations
The last step to this exercise is to create associations with the two words, and the problem statement. How can the problem of feeding the cat while I am at work be solved with Frondescence and a T.V. remote? The trick is to write everything that comes to mind, even if they makes no sense. Spend about 10 to 15 minutes doing this. Below are some random thoughts that come to mind when I think of the two random stimuli together.
1. Leaf controlled sensor
2. Turning leafs on and off
3. Changing the leafs crunch with remote
4. Flower channel on TV
5. Camouflage remote
6. Foliage triggered electronic
7. Flowers movement trigger infrared
Now that I have got my gears turning about these two random stimuli, I am going to relate it to my problem using the examples I thought of above:
1. Hidden camera under foliage will view cat to trigger food dish
2. Create a button or mat the cat walks over to dispense food for cat
3. Infrared sensor hidden from the cat to dispense food if cat is in front for 5 seconds
The last example is my problem solver. I thought of this from the two stimuli, the infrared came from the T.V remote and the idea of hiding it came from the word foliage and that association made me think of camouflage. This whole process took me about 25 to 30 minutes of my time, and I already have a product idea for the busy cat-lover. Try to do this without picking up your phone or your laptop. It is important for your mind to have time to think.
Ready for more?
To take this a step further and make it a little more fun, you can add in several other random stimuli and try and relate them all. Or try several problems with only a few stimuli, and try to solve all the problems with what you have.
Why this works?
The process of trying to relate two objects that you have never tried to tie together, will allow your brain to uncover associations that are buried deep in your mind. We store a lot of information in our brain, and recovering that information is one of life's biggest mysteries and struggles. Luckily, with the random associations technique you can start to access some of this ‘hidden’ information.
As I mentioned before, this is a great tool to use with Business Ideas from the News. To do this, take the problem you found in the news article, and use that as your beginning statement. This will allow you to break the previous thinking you had before, and I guarantee you will have a different answer than if you performed the technique by itself.
3) Alternative Uses & Problem Master
This exercise is a combination of two separate creative thinking tools designed for business ideas. The alternative uses technique says take an object and write 7 to 10 alternative uses for that object. The classic example is a paperclip, but I encourage you to use a weird or foreign object. The Problem Master creativity tool works by listing of all the problems you and anyone in your life encounters, and then seeing what you can do about it right away. Problem master’s thinking is similar to business ideas from the news, except it is a problem in your life, and is not a problem presented in the news relating to a larger audience.
The object I first grabbed is a film container, the ones used back in the day to hold physical film. (I swear I am not that old).
Below is a list of alternative uses I thought of:
1. Medicine container
2. Little Snack container
3. Mini candle holder
4. Coin holder or money holder
5. Single flower vase
6. Paint holder for painting (disposable)
7. Coin-rolling holder
8. Storage container for bulk spices
9. Water-tight matches holder
10. Aroma canister (punch holes in top and put in essential oils)
Here are a list of problems I gathered from texting my friends:
1. “I don’t have enough time in my day”
2. “I don’t have enough money”
3. “I am having trouble finding the career I want”
4. “Finding time and motivation to fit in activities outside of work”
5. “Ways to save money”
Once you have both lists written, go over them to see what line from the alternative uses would solve a problem that your friend presented to you. Feel free to write down more uses if you don’t see the one there. The trick is to not force the solution, and instead keep the brainstorming going until you have that “ah ha’ moment.
Here is what I came up with from my examples. I would begin by setting up an etsy storefront, and possibly a Shopify website as another means of sales. The item I would be selling would be an old film canister filled with motivational quotes written on paper that people can read to motivate themselves, with each canister containing a mystery surprise such as a month pass to a gym. It solves the problem of helping to find “motivation to fit in activities outside of work”, and etsy markets already have established sales in the printed quote section, with this one product specifically having over 500 reviews! Of course the outside of the canister would need designing to be appealing to carry in a purse or backpack. This idea could start in an analog style with paper, and you could make a digital version next.
Now that you have learned how to use these three exercises to think of business ideas, I want you to actually utilize these tools and come up with 10 new business ideas in the next 24 hours. If you are up to the challenge I encourage you to email me at my about page, I can help give you random stimuli so it is completely random, or help you think of business ideas from your favourite news article. I would also love to hear what you come up with from these tools!
Thank you for reading and comment below with the ideas you come up with!