Finding Your Business Idea

Properly developing your business idea (understanding what your business wants to offer, who it will target, is there enough demand and can it be profitable) is probably the most important step in starting any business.

Overview: Business Idea:

Far too many entrepreneurs have wasted an inordinate amount of time and money in starting businesses just to find out that their offerings or business models were unsustainable.

Further, many business owners start their business to offer products or services that the business owner themselves want or would like to see in the market place or business owners, after getting started, begin to chase new markets or try to expanded product lines when they don't have the demand for those new offerings and just end up confusing themselves on what type of business they are in - and, if they are confused, so are their customers - confused customers spend their money elsewhere.

While finding and developing your business idea is only one step on the road to business success, it is a very vital step. Make the wrong decision here and you may find yourself wasting both time and money.

But, do know this - many, many successful business owners have taken the wrong path - sometime over and over again - before finding the perfect business for them.

So, even though taking the wrong step can be costly - taking no step can be even worse.

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Finding A Business Idea:

Business ideas are everywhere. But in finding a successful business idea, one might only have to look into their own life.

In order for someone to purchase your products or services, that product or service has to meet a need. When people understand that they have a need for something that is not being fulfilled by current products or services or are being under-fulfilled, they start looking for products and services to meet those needs. This is called demand.

Demand is what drives businesses. If people have demand for your products and services to meet their needs and they feel that your offerings provide the best solutions at the most optimized price for them - then they will buy your products or services. If they want to buy your products and services - they will pay you money - hence you have a business.

Think about the automobile. The basic need that an automobile meets is transporting a person from point "A" to point "B". However, people can also go from A to B via a motorcycle, a bicycle, a horse, by foot etc, etc, etc.

So then, what is really the need? Automobile companies, through research, realized that the need was not just getting from point A to point B but it was getting there with the least amount of physical exertion (like a bicycle or by foot) and doing so in a timely matter - like getting to point B in five minutes instead of an hour.

As time went by, automakers saw that people also needed to travel longer distances - thus adapted their vehicles to accommodate that need.

Finding a solution to a need really began to show itself off when these auto companies realized (through research and customer interaction) that not only did the person want to get from point A to point B but that they wanted to take large amounts of stuff with them.

Early automobiles did not have trunks per say - many were just flip around extra seating (rumble seats) to carry additional people. But, when individuals wanted to carry stuff instead of people, a new need arose and these companies met that need by creating trucks and the like - with more cargo space (enclosed or open), with strong motors to pull the weight as well as stronger frames to handle the conditions.

Each one of these types of automobiles came out of an identifiable need.

Just image if the automakers were only making cars they wanted - we might not have trucks, vans, hybrids or economy cars.

Therefore, to see what needs are out there - what needs are either not being met or that are not being met fully - you could look into your own life. What issues do you have problems with? What pains are you feeling in your life or those immediately around you that are not being met?

Example: It is widely understood that Twitter was started out of a need by members of a small group of employees at the podcasting company Odeo. These employees want to be able to quickly and easily communicate with each other. These employees identified a need and sought a way to satisfy that need.

Again, in time, these same employees realized that they were not the only ones with this particular need and broaden the application into the business it is today.

But, it all started with a need.

A second method of identifying a business idea is to look to those around you. You could easily get out in your community and just simply watch people. Watch to see how people interact with the world around them and the products and services they purchase each and everyday.

Do you see people struggling with umbrellas during strong wind and storms - can you develop something that can improve or fix that situation? What about long lines at the fast food drive through?

What about how people use - complain or complement - the products or services offered by the company you current work for or have worked for in the past.

We see new email applications or process management applications enter the market each and everyday simply because of someone who worked with current applications found that they did not work in every way that they should or when the vendor came into your office and found your processes antiquated and could be improved.

Or, what about the advent of mortgage brokers? Banks and other home loan providers were seeing their costs in origination and servicing loans skyrocket in comparison to the income received from those loan products - not to mention the costs of marketing their services across their regions or across the nation.

In steps mortgage brokers - they market to consumers in their local areas. They handle all the initial processing, customer interaction, and so forth. The incur the cost of blind leads or unqualified customers. Then, if they send a fundable deal to the lender and it closes - only then do they get paid.

Thus, these lenders - faced with higher costs and pressure to increase profits now only incur costs directly associated with a closed loan facility - matching costs with its offsetting income.

Lastly, you could just simply do research. Research needs in geographical areas, population groups or within industries.

Examples: Does your local area have an aging population in need of adult day care centers or additional Medicare providers? As more families member are forced in the work force - does this create additional needs for child raising or child care, for home cleaning products and services or for quicker home meal, take out or full restaurants services. Are more and more animal lovers in need of better animal tracking, training or cleaning products and services? Does the new and growing crowd funding industry need better platforms that overcome limitations for non for profit companies? The possibilities are endless.

In addition, you could easily research other products and services to see if they have limitations or are not fully meeting consumer's needs. Here you can get out in online forums or on product / company discussion boards and see what issues these users are having. Try to find out if current products or services are lacking or if certain component of those products are causing added problems (think about batteries and battery life in cell phones, computers or other portable devices given that our population is getting more and more mobile each and everyday.

But, know this: Your idea should not be something that just you want. While you should think the product or service you want to offer is something you want to buy, for it to truly be a viable, long-term business - many others have to want to purchase it as well - they have to have a need for it which in turn creates the demand for you to offer it.

Also know that during your research and understanding of needs, some consumers may not understand that they have a need - even though they actually do.

In the 1960s when IBM was developing computers, they truly believed that very few people would be in need of computers. They thought that they could only sell a few super large computers each year and thus build their initial computer business around that idea. Further, their idea was supported by solid and extensive research into this potential market. It is believed that either how IBM was presenting the computer or the fact that potential computer purchasers just saw the concept as so foreign that they just did not understand the benefits of a personal computer - and thus, did not recognize a need for one.

But, with a bit of innovation and some savvy entrepreneurs entering the market, they soon educated the consumer on the benefits personal computing further initiation the need for these systems.

Thus, while all of us might not realize we have needs, our actions or our interactions with the world around could show different. Whoever knew that we needed smartphones or iPads before they were introduced? But, could we now image our lives without them?

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Feasibility:

Before you kick off your idea, you should further determine if it is feasible as a business.

While you may have already determined that there is a need for a product or service, you now need to determine how much of a need.

For example, you might determine that your local area has an aging population and there is some need of an adult day care facility. But, in conducting your feasibility, might also determine that only 1 in 10 seniors would use such a service - not enough to cover your costs.

Or, that while you have enough people in need, these potential users could not afford to pay the month fees to not only cover your costs but to provide a reasonable profit (might be one of the reasons that there are not more adult day care facilities in your area).

Much better to find that out now then to wait until after you have wasted huge amounts of money and time starting this business.

So the questions you should seek answers to are:

Is there demand for what you want to offer and how much demand is there? First you have to understand if others will buy your product then attempt to understand how many of them there are.

At what level are these potential customers willing to pay to have this need met? If the price is too high, they may just live with their unfilled or under-filled need. This concept - termed utility - is simply understanding that there are trade-offs between getting needs met and spending money (money that could used to met more pressing needs). Thus, you have to understand if your potential target market is willing (and at what level) to spend on your products and services to meet their needs. Personally, I would like to a live in butler to handle many of my daily - non-business - chores. But, in paying for a butler - I would have to give up other items that I also want and need - namely paying my mortgage or buying food.

Lastly, can your provide that product or service within those guidelines. Let's say that you have demand for a 1,000 units each month but in order to run your business, to cover your overhead, payroll, cost of production, distribution, etc - you need to sell 2,000 units a month.

Or, let's say you have plenty of demand for your products but your potential customers are only willing to pay $50 for your product. However in your feasibility study, you determine that it will cost you more than $50 to make each product - now that is a losing endeavor from the beginning.

Or, that there is demand for you product on the West Coast and you live on the East Coast. And, while your potential customers are willing to pay the price you need to receive, the logistics and costs of shipping your products to them across the country are just to prohibited. While this could be easily corrected - moving your company to the West Coast - if you did not conduct your feasibility, you might not have known this until it was too late or too costly to move your operations.

Ways to conduct a feasibility study:

While there are many ways to get your questions answered, here are few of the most popular.

• Talk to people in your community. Attending networking events and ask people if they would be willing to buy your perceived product or service or just what they think about the idea. Not only can you learn if they are willing to pay for it, but they might give you additional ideas about it which can help you improve it or even take your idea in a new direction.
• Conduct online, by phone, by mail or in person surveys - asking questions about people's perceived needs and if your business idea can meet those needs.
• Conduct formal studies (paying another group to conduct the study) in which they offer focus groups, product reviews and feed back.

The idea here is to get out into your potential customers and see if they would be willing to pay for a product that meets their needs. Thus, you actually have to get out there with them.

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