In coming up with a business idea, it helps to start by taking stock of all of the things you’re good at, have an expertise in, or enjoy doing regularly. Take some time to write a list out of all these things and their derivatives. This might take you a little while, so open a new notepad file on your phone and jot down any ideas you have while you go about your regular day.
Having completed a list of things that you are good at, have an expertise in, or enjoy doing, you will now have an excellent brainstorming base for a business idea. The beauty of the internet is you don’t need to be all things to all people; pick a niche and specialize in it, and with a global audience you may well be able to build a good, defensible business model.
Try to find the convergence of a field you enjoy and something you can make money doing.
You may have a passion for Mongolian throat singing (yes, that’s a thing!), but is there a chance of making money from doing this full-time? (Or part-time to begin with). Can you see a clear way to get paid from what you enjoy, and will you have the passion to continue on with this industry years after you start the business?
You need passion for the business, but also remember it has to work financially. All passion and no financial rewards is not a winning formula (the starving artists out there might back me up). On the other side of the coin, all financial rewards and no passion for the business may make it tough to carry on in the inevitably challenging times you’ll face as a start up.
Think laterally and vertically
Let’s say you enjoy fitness and working out, so your first thought is to start a gym. But that happens to be a highly competitive industry, with considerable start-up costs, and a range of other barriers against starting as a small business. So instead of starting a gym, how about a complementary business to the sports industry? Here are a few ideas:
- Develop a line of sports supplements and become a supplier to gyms and sports clubs in your area as a wholesaler, as well as retailing globally through your own Shopify online store.
- Enjoy writing? You could start a WordPress blog about your favourite workout routines and build a following, selling advertising space online, and making affiliate commissions for referring your readers to other complementary businesses.
- Create a fitness “How-To” product such as a video or e-book with a new way of demonstrating fitness techniques to a specific audience. Find a niche like “pilates for kite-boarders” and away you go!
The brainstorming phase can take some time, but once you get going and open your mind up to new possibilities, you’ll quickly put together a short-list of potential business ideas. A couple of ideas to help you in your brainstorming sessions:
- What do you wish existed already that doesn’t? Could you make it happen?
- What frustrates you?
- What opportunities do you see in your industry?
- What do you do offline regularly, that you could bring online?
- Google it! Get online and do a number of searches around your favourite topics and see if this throws up any new ideas.
- What’s working in other markets? Is there something making waves in Silicon Valley that hasn’t been tried in your market yet?
Can I make money with this idea?
So you’ve got your business ideas short-list together. It’s now time to rank these in terms of how profitable they can be, and how much time and capital is needed to get to a break-even point.
It’s also very important that you focus at this stage on your core business revenue stream; what specifically is it that will bring in the money? This is what you must focus on developing first. Do you see your business having multiple revenue streams and several ways of making money? Sure it might. But for now, focus on your single best revenue stream and build your business around this. The other ideas can come later, once your primary revenue source is in place and getting you into profit.
How much will each of your customers be worth?
You have determined your business idea to be viable, and you believe there is a large enough market out there. It’s now time to think about your pricing and how much each customer is going to be worth to you in terms of revenue over a full year.
Try to avoid business models where your customers are single-purchasers; you will spend money and effort to attract your customers, so it will be better if they are repeat purchasers and therefore have a higher worth to you over a 1 year period and beyond. This will also be an important metric to show future potential sources of funding down the track.
As a rule of thumb, try to aim for customers that will be worth US$50-$200 or more in revenue to you on an annual basis. This ensures you won’t be serving the very bottom of the market (which tends to become commoditised), and will allow you to allocate some reasonable marketing budget to Cost Per Click customer acquisition strategies.
What is your elevator pitch?
Can you explain your business model in the 25 seconds it takes to meet someone in an elevator and discuss what you do? If not, it may be a sign that you need to go back and refine exactly what your business is about, and your key benefits to your customers.
As an example elevator pitch: “Pilates for kite-surfers is an instructional video and guidebook helping kite-surfers build core strength and achieve fantastic results in their sport”.
Name it and claim it!
If you’ve got this far and you’re happy with the model, market, and how you’ll position the business, then it’s time to claim a business name. You may want to check online to see if your name is available with a .com extension. Try to get the .com as opposed to the .net or .org etc. If you’re working specifically in a country as a local business, it will also be helpful to check if your local domain is available, for example: http://www.yourbusiness.com.sg for a local Singapore business instead of (or in addition to) the .com domain. If you can get it, always try to get the .com domain name anyway, as you may want to use it later and not pay handsomely for it. As an example, www.VacationRentals.com reportedly sold for US$35m, certainly an expensive piece of online real estate!
So you’ve brainstormed, filtered out all the bad ideas, and now you have an elevator pitch and business name. Congratulations! On the other hand, you may well have gone through this process and filtered out ALL of your ideas. Don’t be discouraged, you’ve just saved yourself a lot of hard work and money, and your eventual choice of business model will be better because of this process. Go on back to the brainstorming section and repeat the process – there are literally thousands of business models out there waiting to be explored and taken advantage of, and the more you review the better your chances of success!