How Business Ideas Work

There are some basic skills that you, as a potential business owner, should have. If you don't have them then you need to at least have a friend or family member who does or be willing to pay an outside service or consultant to do these things for you. These skills include (but certainly aren't limited to):

For some, coming up with the business idea is the easy part. They simply turn a hobby, or something else that they love doing, into a business. In some cases, this works great. In other cases, it doesn't work so great. Why the difference? Because you can't just try on the pants when you want to buy the whole suit. In other words, there are a lot of different things to consider when you're trying to come up with an idea for a business that will fit you.

Those people that have made a go of it by converting their hobby into a business were lucky in that there was a market for their business in the first place. It doesn't matter how skilled you are and how much you love building those miniature replicas of Star Wars™ Millennium Falcons inside authentic 1940's 6-ounce Coca-Cola™ bottles, if there aren't people who want to buy them (i.e. a market) then you're not going to be able to support yourself doing it. It will still be a "hobby."

It still makes sense, however, to start a business that is based on things you know and are good at. You just can't stop there. It is also possible to start a business based on something you know nothing about. In this case, however, you probably should try and learn as much as you can before you get in too deeply. Or, consider buying a franchise that offers training, or an existing business from someone you can pump for information. You can also try working in the industry for a few months to pick up information. You may be surprised at how much you can learn even in low level positions.

Where are your strengths

Finding your strengths will involve more than just naming off the things you know you are good at. Sometimes your own mental images of yourself aren't really as on-target as you might hope. So, in addition to some self-study, you'll also need to ask your friends, family, or current co-workers to tell you what they see as your strengths. If they consistently say you're a real "people" person then you might want to explore businesses that will make use of that quality. If they consistently say you're strength is in problem solving then maybe some type of consulting would be the best route to go.

Here are some questions to consider in this time of self- and peer-based evaluation...

Use our Self-Evaluation Worksheet found on the Tools page of this article or simply write down your answers to the above questions.

If you answered the questions on the previous page, or completed the Self-Evaluation Worksheet from our Tools section, then you should at least have an idea of the direction you should take.

The Internet is full of web sites that list page after page of business ideas. We don't list those ideas here, but have provided links to some sites that do on our Links page. What we want to do is help you discover and evaluate the ideas that appeal to you and best fit you as an individual.

Any list of business ideas you find will basically boil down to three types of businesses. Those business types are:

For those three business types, there are typically four possible strategies. The strategies you might use include:

Coming up with an idea for any of these areas requires some observation skills and creative thought. Start with the things you know about and enjoy and look for ways to make improvements, or sell them to new people. Be observant everywhere you go. Look at how existing businesses operate and make note of the problems you see. Can you come up with a way to eliminate those problems? Can you see a way to improve the service, product or marketability of it? Do you see trends in the market such as larger retired populations? Are there special products or services that that increasing market will need?

Brainstorm with friends, write everything down, and study your list often. Make notes as you think of them. Ideas multiply into lots of new ideas. Evaluate these ideas based on what you like and what you know about. Once you've narrowed the list down to the finalists, read on to find out how to evaluate those ideas.

Now is the time for a little market research, investigative study, and general digesting.

A view from above

Begin with a bird's eye view of each idea. Remember what we said initially about not just trying on the pants if you want to buy the whole suit? Well, now's the time to try on the whole ensemble. Here is what you have to look at:

What is the best way to get it started?

You have the general idea of the marketability of the idea, but what is the best way to get the business started? Can you begin as a part-time home business, or does it require more manpower and space? Is a franchise possible or can you buy an existing business?

What is the income possibility for the idea?

Can you estimate the amount of income you can expect from each business idea? In order to do this, you have to have a good idea of the level of demand for the product or service, as well as a good feel for what the competition is charging. You also have to realistically estimate your production capabilities.

Are there additional needs and costs related to the idea?

Do you know enough about the type of business or will there be a significant learning curve? How much time and money will be devoted to learning about the business? Can you afford to take that time? If you are starting the business as a part-time side business from home you may have the luxury of trying some different businesses. If you're quitting your day job and are looking to replace that income then you need to make sure you do all of the homework to make the best decision possible.

Use our Business Idea Assessment Worksheet. It will take you through the steps we've just outlined and help you make that final decision.

There are few more things to consider when thinking about starting your own business. They include:

­