What makes a business idea good? Have you ever thought you had a great idea for a business but didn't do anything about it, only to find out that, a short while later, someone else did? How do you know if you'll be able to make the business work?
If you think you want to start your own business you have to first eliminate any doubts you may have about yourself and your abilities. That means that you have to first identify your own strengths and decide if you're the type of person who can build a business and make it a success. Once you have determined that, then you need a good -- no, make that a great -- idea for a business.
In this article, we'll show you what to look for in your own skillset to help determine if you are indeed an entrepreneur. Then we'll cover the steps you need to take to help you identify the type of business you should start. We're not listing page after page of business ideas, but we do include some good links to sites that do. Let's start with some basic business skills...
Do you have what it takes?
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):
- Financial management and accounting - If you don't have the skills now, you either need to take the time to learn, or have someone else you can depend on to handle this side of the business for you.
- Marketing - You have to be able to sell yourself or your business. If people don't know about you then you won't get any business, and if you don't have any business then, technically, you aren't really in business. So, marketing is a very important part of your skillset. Fortunately, it is also an easy skill to farm out to experts.
- Management skills - You must have the management skills and organizational skills to wear the many hats you'll have to don in order to run your business. If you have no management experience at least start reading management books of all types that would apply to your business.
- Determination, enthusiasm, energy - No one ever said being your own boss was easy! In fact, you'll probably work harder than ever -- you'll just get to reap more of the benefits. You have to have the energy to make your business succeed. If you have any doubts then maybe you should rethink the idea. If you read the success stories behind many businesses, you'll see the recurring theme that the business owner had no doubts that he or she would succeed, or that the thought of failing never entered their minds.
Identifying your talents
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...
- What do you like to do?
- What do you have experience doing?
- What do you think you are good at?
- What does everyone else think you are good at?
- Do you have special education in the area(s) you are interested in?
- Do you have the right mindset to run your own business? (i.e. Do you have expectations of challenge, hard work, long hours, and little money to begin with?)
- Are you willing to put in 60 hour weeks to make your business work?
- Are you resourceful?
- Are you a high-energy person?
- Are you a dreamer or more down-to-earth?
- Can you bounce back from criticism and rejection? (More than just a few times?)
Finding business ideas that fit your talents
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:
- Manufactured products that you build and sell yourself
- Distributed products or services that you buy wholesale and then resell at a higher price
- Services that you provide
For those three business types, there are typically four possible strategies. The strategies you might use include:
- Inventing a completely new product for a completely new market
- Inventing a completely new product for an existing market
- Improving on an existing product and selling it to the existing market
- Selling an existing product to a completely new market
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.
Evaluating 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:
- Is there a market for your idea?
- Does the market have money?
- Is there a lot of competition?
- Can you come up with the funds it will take to get the business started?
- Do you know how to market and sell the produce/service?
- Can you easily get the product or service to your customers?
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.
Other deciding factors
There are few more things to consider when thinking about starting your own business. They include:
- Your own level of commitment - Consider the extent or length to which you would go to make your business work (i.e. travel, commuting, relocating, etc.)
- Your family's support and approval of your idea - Having the support of your family is very important to the success of your business, as well as the stress levels you endure in working to making it happen. Make sure you have the support you'll need both emotionally and from a work-load standpoint.
- Zoning restrictions for the location you are looking at - Make sure you know the restrictions on the types of businesses that can occupy a space (particularly if you are operating your business out of your home.) Your town planning office or City Hall can provide that information.
- Your willingness to seek outside help if you need it - Don't hesitate to get professional help for your business. There are many resources that can provide you with great ideas and information that can help manage more efficiently and perhaps even find that "edge."
- The compatibility of the business with your life style - If you're a night person and hate mornings then you probably don't want to open a doughnut shop. Make sure your business idea fits the schedule you work best in.
- The level of personal satisfaction you will get from the business - Sometimes you really have to think about what you would enjoy rather than what you can make the most money at. Remember, you only go around this big merry-go-round once!
- Self-Evaluation Worksheet for Starting Your Own Business (Microsoft Word document)
- Business Idea Evaluation Worksheet (Microsoft Word document)