How to come up with business ideas

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Generating new business ideas can be a fun or daunting exercise depending on who you ask. There are an infinite number of ideas out there to experiment. Some people get obsessed with their own business ideas and are able to come up with new ones on the spot. Others, are experts at ripping-off or offering a slightly different take on other people’s ideas. There’s no right or wrong way. This article will review a few of the more common ways of coming up with business ideas. For more information on using these techniques, checkout my ebook One Foot Out: Engineering an exit from your employer to start your own business.

Problem-solution

One of the most common techniques is based on problem-solution ideation. For this, you first take an inventory of your own problems or those of other individuals or businesses. It would be more beneficial to think of these with respect to an industry (e.g. travel) or use case (e.g. booking flights). Then, educate yourself about the problem and its impacts, its ability to be partially or fully resolved with a solution. Also, you can find out about the total addressable market and commercial viability of such a solution by researching the industry and learning about existing businesses trying to solve the same problem.

Try not to get bogged down with problems where the reach of the service won’t exceed beyond a very small and hard to target niche. Although these can be profitable, they can be tricky to test. You should develop business ideas where you can fairly quickly and easily find a number of potential customers. Your goal should be to progress to the prototype testing phase as soon as possible and not get stuck in an extended debate with yourself or others on the merits of just the idea.

Unbundling and bundling

Bundling and unbundling refers to a methodology for business model formation as stated by Jim Barksdale, former CEO of Netscape. Unbundling refers to the act of taking an offering and splitting it into several offerings, which can be used as part of a new offering. An example of unbundling is how Airbnb created its core service based on the flat or house share listings that had been traditionally marketed on classified websites such as craigslist.

In contrast, bundling is the act of taking individual offerings and combining them to form one offering. An example of bundling is Google and its suite of software offerings such as Sheets, Drive and Docs, along with several others. Google combines these into a single subscription offering known as ‘Google Workspace’.

Looking at any existing business with substantial revenue provides a starting point for picking apart offerings ripe for bundling or unbundling.

Companies House, the repository managed by the UK government, contains a trove of financial information. This information includes Profit & Loss and Balance Sheets on thousands of companies. You can dig out details about the costs, revenue, profit and other financial health metrics for many large companies. This information provides insight into what types of businesses could serve as inspiration for a profitable new venture. Also, you can benchmark numerous industry peers and learn about what factors determine revenue and profitability. Can you spot an industry or business that is ripe for disruption and provide greater value to consumers?

Copying business ideas

Methodologies like the ones discussed above should not be relied upon exclusively. Many entrepreneurs get ideas simply by looking at what others are doing and copying them in some way, with distinguishable elements of differentiation. There’s nothing wrong with a little monkey-see, monkey-do when it comes to emulating a successful business. Just make sure to respect copyright as well as any trademarks or patents or course. The tech and business media glorify and correlate creativity and business success. However, the vast majority of viable businesses are in unsexy competitive industries where creativity and investor interest may be low yet customer demand is high.

Other Tips

Here’s a list of things to keep in mind during your idea generating exercises:

Not getting sucked into an angle

There’s a lot of media coverage on technology entrepreneurs, particularly ecommerce. Given the rapid development and scalability of web businesses, it is obvious that entrepreneurs would want to focus on building products for online users or customers. However, this can mean that many offline opportunities are now less competitive with attention is weighted to those online. Local businesses, such as those in a professional trade like plumbing, electricians, or building as well as manufacturing businesses are overlooked as they have lost their lustre over the years to sexier tech alternatives. During your idea generating exercises, try to allow yourself to consider starting a business for offline products or services. You can still use technology as an enabler to outperform your competitors and provide a better customer experience, even if your core offering has nothing to do with technology.

Focus on a existing market where there is customer demand

Ideas should aim to develop a product or service that provides better value, quality, or features when compared to existing offerings. The easiest way to get some traction is to offer a product or service where there is existing demand. This seems counter-intuitive. Yet, finding your first customer may not be an easy task if what you’re offering is so novel that it’s hard to comprehend a relevant consumer use case. So, consider starting your business by selling what’s already being sold in the market. Then, as you start gaining customers, you can adapt your product or service according to consumer needs and what you initially envisioned for the business.

Websites to use for getting new business ideas

Look at failed start-ups and finding ways of salvaging elements of what worked. These websites provide regularly updated lists of failed start-ups along with an analysis on the reasons for failure.

You can look at domain brokers to understand the value of businesses currently being sold. How can you build a business based on a similar product or service?

Read technology or business publications to understand where investors are putting their money in early-stage companies. Thus, it’s never too late to enter the market as a competitor so long as you feel your offering will be stronger than incumbents or marketed to a different customer. Here are a few options to spin up the wheels in your head.

Read quality news publications that analyse problems around the world. These can help seed ideas for solving global, country or other people’s problems.

You can listen to podcasts where new ideas are regularly introduced and discussed. There are hundreds to choose from. There is no right or wrong way to digest info during your morning drive, walk or exercise.

Wrap up

Finding that great idea may take days, weeks, months or even years. When you do finally settle on something, keep at until you’ve exhausted trying out different ways of making it work. Don’t be afraid of moving onto something else either. Ideas are all around and finding your next one could be just right around the corner.