Introduction
Coming up with a great business idea can be challenging. However, with some research and brainstorming, you can develop an idea for a viable, profitable business. Here are some tips for how to come up with a business idea:
Conduct Market Research
One of the best ways to come up with a business idea is to look at existing markets and identify potential opportunities. Some things to research:
- Industry trends – What industries are growing or declining? What new technologies are emerging?
- Customer pain points – What problems do people have that aren’t being adequately addressed? What needs are not being met?
- Competitor weaknesses – What are competitors doing poorly or failing to do? How could you do it better?
- Economic factors – What macro-level trends could create opportunities?
Identify Gaps in the Market
Look for gaps or holes in existing markets. These could represent opportunities for a new product or service. Some gaps to look for:
- Geographic – Products/services targeting certain locations
- Demographic – Serving groups with specialized needs (seniors, youth, etc)
- Price – High-end or budget-friendly options
- Feature – Products missing key features people want
- Service – Providing superior customer service than competitors
Solve Your Own Problems
Think about irritations, problems, or difficulties you encounter regularly. Chances are good that if you have a problem, many other people do too. Your solution could fill a need.
Get Inspired by Existing Ideas
You don’t have to reinvent the wheel. Look at existing products and services, and think about how you could improve upon them.
- How could you make them cheaper or higher quality?
- What features could you add or remove?
- How could you tailor them to new target markets?
Find Ways to Leverage Your Skills and Interests
Think about your own background, training, hobbies and interests. These represent expertise that could provide value. Possible approaches:
- Teaching/training others
- Consulting/advising businesses
- Selling products or services related to your skills
- Creating a blog or YouTube channel
Brainstorm and List Ideas
Set aside time to brainstorm as many ideas as you can, without judging how viable they are. Consider using creative brainstorming techniques like:
- Free association – Randomly shout out words related to business ideas
- Mind mapping – Write down a concept then branch out related ideas
- Individual brainstorming – Generate ideas solo then come together as a group
- Question assumptions – Rethink how things are typically done
Once you have a broad list of ideas, start paring it down by identifying the strongest options.
Evaluate and Select Ideas
With a list of possible ideas, now it’s time to evaluate them to choose the best options to pursue. Criteria to consider:
- Market potential – How large is the target market? Growth trends?
- Competition – How many direct and indirect competitors? Can you differentiate?
- Costs – What are development and ongoing costs involved?
- Profit potential – Projected profit margins and ROI
- Your interest – How passionate are you about the idea?
Test Ideas with Customers
Conduct basic validation of your how to come up with a business idea before investing significant time and money.
- Make a basic website or landing page explaining the concept
- Run surveys to gauge customer interest in your business idea
- Interview or speak with potential customers about your how to come up with a business idea
- Ask people to pre-order or join a mailing list for your new business idea
If people show interest, it’s a good sign. If not, consider pivoting or shifting your approach.
Partner with Complementary Businesses
You may be able to partner with existing businesses to jointly offer a new product or service:
- Joint ventures – Team up with other companies on specific projects
- Resellers/licensing – Distribute your product through other channels
- Strategic alliances – Coordinate and share capabilities with other firms
These arrangements allow you to leverage other companies’ resources.
Consider Franchising or Licensing
Franchising and licensing allow you to benefit from an established brand while running your own business:
- Franchising – You buy a license to run a business using someone else’s model
- Licensing – You pay royalties to sell products under another company’s brand
Both let you capitalize on a proven business system with lower risk.
Focus on Something You’re Passionate About
Starting a business is hard work. To power through the challenges, it helps to work on something you feel passionate about. Make sure your idea aligns with your deeper interests and values.
Don’t Try to Boil the Ocean
It’s better to deeply understand a specific market need than to only have surface knowledge across different areas. Start niche, then expand from there.
Keep Iterating on Ideas
Coming up with ideas is an ongoing process. Be willing to regularly refine and pivot your business concept based on new data. Don’t fall in love with just one approach.
Tips for Evaluating and Developing Your Ideas
Once you’ve come up with some promising business ideas, here are some additional tips for evaluating and fleshing them out:
SWOT Analysis
Conduct a SWOT analysis on your ideas:
| Strengths | Weaknesses |
| Core competencies | Gaps in capabilities/resources |
| Competitive advantages | Lack of competitive differentiation |
| Strong brand reputation | Shortcomings compared to competitors |
| Opportunities | Threats |
| Industry trends you can capitalize on | Competitors duplicating your ideas |
| Changing customer needs | Shifts in economic/market conditions |
| Partnerships and licensing | Potential regulations |
Define Your Customer Avatar
Create a fictional persona that represents your ideal customer. Specify details like:
- Demographics – age, gender, income, location
- Psychographics – values, interests, personality traits
- Behavior – shopping/buying preferences, motivations
- Pain points – problems they face
Understanding your ideal customer helps refine your offer.
Outline Your Value Proposition
What core value will you provide? How will you address your customers’ needs better than alternatives? Your value proposition should be clearly definable in a sentence or two.
Determine Required Resources
To launch your idea, what resources will you need in areas like:
- Staffing and team – Key roles and skill sets
- Funding and financing – Startup costs and funding sources
- Physical space and equipment – Offices, retail space, manufacturing facilities
- Inventory and supplies – Materials, ingredients, technology, software
- Partnerships and vendors – Suppliers, consultants, distribution channels
Make Financial Projections
Develop financial estimates for startup and ongoing costs. Project revenues based on expected sales. Estimate profits based on realistic margins. Thoroughly understanding the financial aspects is critical.
Conduct Competitive Analysis
Research direct and indirect competitors. Analyze their offerings, prices, target customers, strengths and weaknesses. Identify how you can differentiate or provide better value.
Develop Your Go-to-Market Strategy
Plan how you will launch and promote your products/services. This includes:
- Pricing strategy – Price points, discounts and incentives
- Sales and distribution channels – Online, retail, etc.
- Marketing and advertising – Digital, content, PR, tradeshows
- Partnerhips and affiliates – Referral programs, sales partnerships
- Customer service and support – Service policies and support channels
Make a Business Plan
Pulling the elements above into a comprehensive business plan clarifies objectives and tactics. It’s also critical for securing funding and partners. Include:
- Executive summary
- Company overview
- Products/services
- Market analysis
- Competitive analysis
- Marketing plan
- Operations plan
- Management team
- Financial plan
- Fundraising
Protect Intellectual Property
Consider if/how you can protect your ideas and prevent copying, such as:
- Trademarks – Protect names, logos and branding
- Patents – Protect inventions and proprietary processes
- Copyrights – Protect written works, code and media
- Non-disclosure agreements – Ensure confidentiality
Incorporate Feedback and Validation
Get feedback from prospective customers, subject matter experts and mentors. Be willing to refine your concept and test assumptions. Validation is crucial.
Key Takeaways
- Conduct thorough market research to spark how to come up with a business idea
- Identify gaps in markets that your business idea could fill
- Improve upon or pivot off existing products to generate how to come up with a business idea
- Leverage your skills and experience to create business ideas
- Brainstorm extensively, then evaluate and narrow down your how to come up with a business idea
- Test and validate your business ideas before moving forward
- Continually refine your thinking around how to come up with a business idea
With research, planning and persistence, you can develop a viable business idea. Validate assumptions, get feedback, and keep iterating. With grit and flexibility, you can eventually launch a successful business.
References:
https://www.entrepreneur.com/article/247574
https://hbr.org/2018/01/the-right-way-to-come-up-with-new-business-ideas
https://articles.bplans.com/coming-up-with-a-business-idea/
https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan
