Developing a Business Idea

Developing a good business idea that is best suited for you is at the heart of any startup enterprise. You need to consider how your personality, interests, and strengths relate to the ideas you’re entertaining. This is going to be your career, so you need to consider whether you’re willing to stick to it for the long haul until it’s successful. You may be lucky and already have identified your business idea, but if not, there are several things to consider.

 

Life goals

There are questions you need to ask yourself regarding what you want out of life with your new venture:

• Do you want to make a lot of money?
• Do you want to be your own boss?
• Do you want to be a sole income producer or manage an organization?
• Do you want to earn income when you are not working?
• Do you want the challenge of creating something from scratch?
• Do you want to achieve a work/life balance?
• Do you want to build a legacy business to pass down to your children?
• Do you want to pursue a passion as a business?

 

While making a lot of money sounds like a life goal, money is only a means to an end. The real question is ‘what does the money mean to you?’

• Do you want financial security for you and your family?
• Do you want to be able to afford expensive material things?
• Do you want to afford experiences such as travel?
• Do you want the status associated with wealth?

 

Another question is what kind of time commitment are you planning?

• Will your startup enterprise be fulltime right from the beginning?
• Is it a part time venture in addition to a full-time job until it can support you?
• Is it a part time endeavour as a retirement project?

 

Enjoyment

The phrase ‘find what you love to do and make a business of it’ is a worthy guideline for your new enterprise. Even if you can’t perfectly align your business ideas with your passions you should still pursue a business that you will enjoy.

 

There is major difference between a hobby and a business. For example, while you might love renovating as a hobby, it is much different to run a renovating business where you are dealing with fixed budgets, deadlines, subtrades, demanding clients, etc. If your prime objective is to be in a business you really enjoy, these business dynamics might take the fun out of it and maybe renovating should remain a hobby while you work at something else.

 

Consider whether you want to risk taking the fun out of your passion or hobby by turning it into a must-do career. And keep in mind that 20% of businesses fail in their first year and 50% by the fifth, according to the Bureau of Labor Statistics.

 

Market Trends

When considering your new enterprise, it is important that your ideas are supported by market trends. The business isn’t about the fact that you love a business idea; it’s about your potential customer. If your business idea is associated with a declining trend such as drycleaning, it will be difficult to succeed because people are increasingly less likely to dress in business attire in the future. Ideally, you want your new business idea to fulfil an untapped need in the market not being fulfilled by anyone else.

 

Some current market trends:

Software Engineering & Development

Software engineers and developers create, test, and maintain software on a variety of platforms, from mainframes to mobile devices. The demand has been high for many years, and it is expected to experience double digit growth for the foreseeable future. Cloud computing and ease of remote access make software development an ideal home-based contract business. Other IT opportunities include Systems analysts, SW & HW technicians, security specialists and network engineers.

 

Home Renovations

Renovation contractors seem to do well, even in uncertain economic times, and this trend is expected to continue. Their roles can be as individuals, general contractors or subcontractors. The business can be general construction or specialized. It is ideally suited to self-employed individuals for several reasons:

• The work is performed at the customer location so business premises are not required
• Most renovations are performed on a contract basis.
• Startup capital investment for tools and machinery is typically much less than required for new construction.

 

To be a successful renovation contractor, you should have:

• Extensive experience in building construction, with hands-on expertise in at least one of the trades and knowledge of the others
• Good contacts within the industry, so if needed you can call in sub-contractors to get specialty work performed in a timely fashion
• Current knowledge of the local building codes and safety regulations
• Licensing and certification (if required in your jurisdiction)
• Good organizational skills

 

Online Stores

Traditional retail stores have increasingly been challenged by online stores and this trend is expected to continue. This has opened a significant number of excellent business opportunities.  By using fulfillment programs, such as those offered by Amazon, you can outsource your product inventory storage, packing, shipping, returns, and customer service queries for a marketing, inventory storage and distribution fee. Sellers are responsible for shipping their products to an Amazon fulfillment center and for creating their product listings on their Amazon store. Once listings are live and sales are made, the seller begins receiving their portion of the proceeds on a weekly basis.

 

Senior Care Services

For obvious reason, senior care services continue to trend upwards as the population ages and offer one of the best new business opportunities. Baby boomers are a wealthy demographic compared to previous generations, and therefore, they can afford to pay for the services necessary to maintain their lifestyles. This includes continuing to live at home in their own communities. However, many seniors suffer from various mobility and health issues and are unable to drive their own vehicles or take care of household chores such as landscaping, cleaning, cooking, or caring for their pets. Others travel extensively and require house sitting or pet sitting and property maintenance services. If you’re not interested in starting your own business from scratch, various senior care franchise opportunities are available, too.

 

Many inventions were born out of necessity and some services were created to make life easier. If you’ve ever thought, “It would be nice if someone would make something that…,” you might have a business opportunity by creating it yourself.

 

Home-Based Businesses

There is a significant upward trend in home-based businesses and there is an endless list of home business ideas that can align with your passions and goals. One of the best aspects of a home business is the ability to turn a hobby into income. In addition, they can provide the flexibility to be home with children or seniors. All of this at a much lower cost and risk than a traditional bricks and mortar business.

 

Franchises

Depending on which one you choose, franchises can offer an opportunity for entrepreneurs, whether they are bricks and mortar or home-based businesses. Their distinct advantage is that they come ready-made with a product or service, a brand reputation, and support. While franchises can speed up your business development, they can also be expensive to buy and operate. They also may require a major commitment of time over the long term.

 

Verifying your Business Idea

Once you’ve settled on an idea that that is a good fit with your important selection criteria, such as lifestyle goals, the next step is to test the viability of your idea as a business. Without a winning concept, all the planning in the world won’t make your business successful. Many people want to start businesses just because they always wanted to do it, but it must make sense. Some questions you need to ask yourself include:

 

Is the market big enough?

Before spending a great deal of money and time on something that won’t work, you need to see if there is a big enough target market for your product or service. Common mistakes are thinking that the market is bigger than it is and that you will have unobstructed access to it. You may have heard some entrepreneurs say something like, ‘There are 100 million people in the US and Canada who could buy my product. If I only sell to 1%, my potential market would be 1 million people’. The reality may be that you will not be able to access that many people.

Will people pay for your product or service?

It is one thing to have a lot of people like your product or service idea. The real question then is whether they are also willing to pay the price in the volume I require to make a reasonable profit.

 

Return on effort?

Entrepreneurs often do not factor in their time when evaluating their business ideas. You may make a profit, but if you factor in your time, you may find that your hourly rate on an ongoing basis is dismal. This occurs most often in a service business where you are trading your time for money. Another might be a retail situation where a whole family contributes their time for an equivalent of a good single wage.

 

Competition?

The most common mistake made by entrepreneurs is not properly evaluating the existing competition related to their product or service. When I was advising startup enterprises in my consulting practice, in a few instances I was able to identify, through a simple Google search, well established competitors, of which they were completely unaware, already supplying their product or service. There was just too much competition for their new business to prosper and they had no distinctive value to secure a share of the market. On the other hand, some markets are big enough and /or growing enough to accommodate additional competition.

 

Financial risk?

Is the idea worth risking not only your personal funds, but also those of family and friends? Even after you have raised your seed money, how much do you need for the next steps and do you feel you can secure the funding?

 

Time Commitment?

You will probably work more hours than you ever have before and may have to continue doing it for longer than you ever thought possible, even if you buy an existing business. Are you willing to make this personal commitment your enterprise?

 

Business Timing?

Is it a good time to launch your startup enterprise? Is your regular income, that will used to fund the business, uncertain? Do you have high demands on your time such as a new baby or sick relatives? Are we in or heading into a recession?

 

After this relatively quick analysis, if you are satisfied with viability of the business, you can proceed to the full business plan. Writing a business plan is the best way, other than going out and doing it, to test whether an idea for starting a business is feasible. In this sense, the business plan is your safety net. If working through a business plan reveals that your business idea is untenable, it will save you a great deal of time and money.