There could be various reasons why one would think of starting a business, like wanting to be your own boss, earning profits higher than a fixed salary, or more. The bottom line is that having a startup could be a great opportunity for aspiring entrepreneurs.
Now the question that arises is how to get a good idea for your startup. There are so many existing startups, with new ones coming up every week, that it’s important to crack the best startup business idea that you can.
Sometimes your startup business idea could come out of your passion, or sometimes from calculated research. However, it’s not enough to simply come up with an idea. Whether it is ideal for starting a business or not is what you will need to figure out.
7 Ways to Come up With a Startup Business Idea
Here are a few methods to find a good idea for your startup if you want to become a business owner:
1. Choose your industry
This is one of the most important elements to consider before starting a business. By picking an industry, you can find a niche that you want to deal in, and that will help you narrow down the potential business ideas to a great extent.
Also, if you are experienced in clothing but end up working in events just because it seemed like a good idea, it might not be the best decision. While choosing your industry, you can pick on an area of your interest and where your skill sets could be best put to use.
2. Change your outlook
A good idea could be just sitting around you waiting to be noticed. Sometimes an eye for detail can do the whole job for you.
As a business owner, you would want to solve a problem for your potential customers. Change your outlook and observe your surroundings; you could simply find a problem that exists and all you need to do is think of how you can solve it with your startup.
3. Make time for reflection
Changing your outlook is just the first half; the other half is about relating what you observe with your experiences. With sustained reflection, you can sculpt the identified gaps according to your priorities.
The blend of your changed outlook and sustained reflection gives birth to a great vision for a startup that will later convert into a business idea.
4. Be the change you wish to bring
Steve Jobs felt the need for a good interactive design when workstations were a niche. He brought personal computing to people’s doorsteps topped with great human design when design in computer technology didn’t even exist.
If there are any shortcomings that bother you, why wait for a chance to come. Take up the initiative, and find a solution for it yourself, instead of hoping someone else will.
5. Build a digital model that replaces material presence
Almost everything that was sold in a brick-and-mortar shop earlier, can now be sold digitally. By having a digital business model, you can increase the accessibility of the customer manifold.
Since digital dependency has increased so much over the years, it opens up the possibility of a lot of opportunities that were earlier in hindsight. By just adding the digital element to a business model that is present in the physical surroundings, you can boost its value.
6. Replicate a foreign model
Explore the global market and identify any business model that exists in a foreign country but not yours. It’s not necessary that your country would have exploited all possible business models, and there’s no harm in replicating what you find elsewhere.
Every market is different and each consumer is unique; it’s possible that a business idea from one country could not be a good idea for another. However, if you analyze different such ideas, you could find out which one could work well in your country’s market.
7. Communicate as much as you can
The idea just doesn’t come on its own always. And how much ever you try and break your head over it, you might not be able to crack it like that.
However, sometimes while just chatting with your friend or colleague on a topic, something just sparks in your mind and gives birth to a great startup business idea. Have meaningful conversations with people as much as possible and you never know, when you crack the idea for your business model.
4 Steps to Evaluate Your Startup Business Idea
The next step in the journey is to evaluate your startup idea. You would need a direction to evaluate the profitability and long-term viability prospects of your startup idea to convert it into a successful business.
Evaluation of your startup idea is necessary to identify whether it is a good idea that is worth your time and investment. It will also help in attracting and convincing investors to put money into your business.
Before you start the process of evaluating your startup idea, it is important to identify the underlying assumptions of your business model and then test them on the parameters of an ongoing problem faced by the customers and existing or available solutions.
Lean Canvas is a great tool for budding entrepreneurs to evaluate their startups. It’s a single-page business model that helps in deconstructing your startup ideas into its main assumptions.
The elements of this template are:
- Key metrics
- Unique value proposition
- Unfair advantage
- Customer segments
- Cost structure
- Revenue streams
Based on these elements, we’ve created a stepwise guideline for you to follow to evaluate your startup business idea:
1. Assess the problem
When you assess a problem, you can identify its characteristics and intensity that set the base for creating a startup to find practical and innovative solutions.
Build customer segments to ascertain the targeted customers your startup will be focusing on and assess the following aspects of their problems:
- Customer’s acceptance
For instance, booking a cab through long and tedious calls was a huge hassle for daily commuters. Startups like Uber identified the characteristics and severity of the problems, to come up with a unique business model.
Invest some time in learning about your potential customers and gather necessary information on their needs. Observations are the optimal ways of understanding the problems and identifying whether you are onto a feasible idea.
2. Offer the solution
Your startup business idea is going to be nothing but a solution to the problem. It must have the ability and motivation to solve a specific problem and should also create a desire in the minds of the customers to get the problem solved.
The success of your startup idea depends on the acceptance of your customers which is a daunting task as it involves altering their habits and influencing them to switch over to making use of the solution that your startup offers. You will succeed in engaging and retaining them only if your idea effectively fulfills their needs and demands.
Continuing the previous example, Uber received a spontaneous acceptance from commuters, as the solution was making the process much easier for them. And as a result, it turned out to be a great startup idea.
3. Justify the idea
Once you have found the solution, you will need to justify it to yourself, your team, and your investors with proper insights and explanations, as to why it will deliver successful results.
Tell your investors that the startup could gain a huge competitive advantage in the market due to the following factors:
- Atypical expertise of the founders (founder advantage)
- Distinctive exclusivity of your solution (10X product)
- Perfect timing of entering into the market
- Organic growth through word-of-mouth
- Strong network effects of your business in the marketplace
Investors should feel excited to see the roadmap of your startup and should have complete faith or threshold belief in the proficiency and competence of your team and the growth prospects of your startup idea.
An ideal way is to present the idea in a clear and precise manner, comprehensively define the problem and the consequent solution that your startup will offer, and ask for their comments/suggestions. To summarize, justify the credence and optimism of your startup idea to gain the confidence of the stakeholders.
4. Profitability index
However great your solution to an existent problem is, it all comes down to how much profit you can earn through your startup. You will need to run rough calculations on the assumptions of cost and revenue figures to find out the estimated profits your startup would generate and when.
By doing that you would be able to measure the profitability index of your startup business idea. Even the investors always look for this before making their decision about investing in a fresh business model.
7 Ways to Test & Validate Your Startup Business Idea
Once you have evaluated your startup business idea, it’s time to test and validate it. Most startups fail not much longer than they are started, and you wouldn’t want that fate for yours.
In most cases, the lack of product-market fit is what leads to startup failures. To make sure that it’s not the case with your idea and even more, you need idea validation.
Idea validation is simply the process by which you test your startup business idea to determine its viability. Through this process, you can evaluate whether there is an actual need for your product in the market and if customers would be willing to pay for it.
Here are 7 steps that will help you in testing and validating your startup business idea:
1. Define the Problem
Every startup wants to solve a problem, but it’s important for you to define what the problem is. Write down your problem statement and keep it short and clear, so that it is understandable by anyone you read it to.
2. Scale of your Problem
Now that you have defined the problem, determine its scale. The best business model is when you solve a problem of immense pain for your potential customer with it.
However great your product is, if it solves the problem for a very small fraction of the people, it might not be such a good idea.
3. Customer Profile
The next step in the process of your idea validation is to create your customer profile. Every customer is different, and you need to determine what your ideal customer is like.
The more detailed your customer profile, the better. This information will help in forming the basis for many crucial elements of your product, like the design, acquisition costs, and marketing strategies.
4. Market Research & Competitive Analysis
Even if you identified a major problem, and came up with a good idea to solve it, it’s possible that there’s already another startup working towards solving it. You need to study your market, find out if there are any competitors, and if yes, what is lacking in their solutions.
It’s okay to have competitors, as it portrays that the problem is big enough to require a solution. Research these competitors on sites like Angelist and Crunchbase, and look up customer reviews on their products on sites like Amazon.
You will either find out that there exist great solutions to the problem and you can drop the idea without even spending a penny. Or you will find the loopholes in the competition which you can target and address with your startup.
One of the best ways to validate your idea is to directly get to know the people you are planning it for how much they need it. Ask them how big the problem is for them, how they solve it if they are happy with the existing solutions, and if your potential solution is something they would spend money on.
Reach out to your smartest contacts float surveys to collect their feedback. If there are investors in your network, check with them if they’d be willing to invest in your product.
6. Unique Selling Point
For people to buy your product, you need to make sure that it is unique in its own way. It is all the more important if you have a lot of competitors in the market.
It’s easier to have a USP when you’re launching a completely fresh idea. However, if there are similar products out there, try to include a special attribute that no other existing product has.
7. Customer Validation
Customer Validation refers to customers testing your product in the real environment. Since you would have cleared all the previous stages by now, it’s time to build a prototype and get it tested by a few real customers, and make any necessary changes as per their feedback.
Why you need a prototype:
- To engage with the client:
The prototype helps engage the client as they can see the end design instead of just having to rely on their imagination.
- Gain clarity:
Without a well-defined plan, you are very likely to make rookie mistakes which in reality will have a significant impact on the success of the startup idea. A prototype not only helps you to define the actual plan but also defines a definite and gradual action plan.
- Identify red flags:
Prototyping your idea helps you get a head start on almost every red flag before they become a serious threat to your idea’s sustenance. Any potential problems that are discovered in its nascent stage can have solutions crafted for them accordingly.
- The flexibility of analyzing different variations:
By building a prototype for your startup idea, you can gain an extra edge over your own ideas and your competitor’s ideas. Once you have your product or idea take an actual form and shape, you can analyze its strengths and weaknesses and how to optimize it for better results.
- Optimize costs and launch faster:
From understanding where the app needs maintenance to which bugs need to be fixed to unraveling 3D modeling issues to file size optimization, launching a prototype cuts the fluff and allows you to get started quickly. In reality, a prototype is not an extra cost but it helps to reduce expenses.
- Prototypes awaken the creative you:
Prototyping is the most fun-filled stage in the whole process. Since this stage is for trial and error, you are allowed to be creative and even bend some rules.
- Valuable feedback:
Prototypes help you score feedback from customers, clients, stakeholders, and all other people involved. Feedback allows you to better your idea and have a well-prepared launch.
- Better planning:
A prototype for a startup idea gives you a detailed insight into the level of work required in implementing the actual project. You can include it as part of your business plan or investor pitch deck for giving better context to your stakeholders. But what prototyping most certainly helps with is to plan and allocate the time and budget for a successful launch of the idea.
- Trust and brand confidence:
Prototyping helps bridge the gap and allows your brand to build a personal relationship with investors and consumers alike. A prototype helps them gauge your potential growth and hence builds loyalty and trust.
6 Ways to Protect Your Startup Business Idea
It’s amazing that you were able to crack a good idea for your startup, evaluate, test, and even validate it. But what if it gets stolen before you launch it and someone else becomes a business owner with your idea.
You need to know how to protect your startup business idea, and here are 6 ways to do it:
1. Discuss only what’s necessary and focus on processes
Many times, a good idea can be stolen from within the company or team itself. Make sure that your discussions and meetings include only the necessary details and not the complete layout.
However, for the execution to be carried out properly, you will need to share important ideas with your team. As ultimately, it’s the employees, co-founders, and investors are the ones who are going to execute your processes.
Having a good idea for starting a business is one thing, and executing it is another. Bad execution can fail a great idea, and even a mediocre or already existing idea from the market could outshine if executed well.
2. Get your legal documents in place
It’s important to get certain written documents about your startup business idea that include non-compete and non-disclosure clauses with your investors, co-founders, and employees. Discuss your idea with your lawyer to know what parameters would be required to be legally protected.
It’s important for you to save your idea, proprietary data, or knowledge to be sold outside by your co-founders or employees. Since intellectual property law is a slightly complicated and evolving subject, you need to learn all about it and its elements like copyrights, patents, trademarks, or trade secrets.
Copyrights are for any original creation, and even if an employee creates a special code for your company, its copyright will belong to your employee and not the company if not handled correctly.
Patents are used to protect any innovations, including both software or physical objects. Usually, patents last for around 20 years.
Trademarks consist of any words or phrases, designs, logo, or taglines that are involved in the branding of a company, and these can be renewed indefinitely.
- Trade secrets:
Trade secrets are ideas that give any company a competitive edge over its competitors, like a formula, process, or even data. For instance, the recipe for Coca-cola would fall under their trade secrets.
Having a lawyer on board while starting a business would be helpful in creating trust instead of inviting suspicion in the long run. By ensuring that the important terms are properly spelled out in black and white, you can add to the trust and make the foundation of the startup stronger.
3. Research your people
Human resources play one of the most pivotal roles in starting a business and developing its culture. You need to research all the people you are going to work with, be it your investors, co-founders, or employees.
Find out if there are any criminal records or complaints on the public record of the people you are going to take onboard. You need to know if there is any bad blood between any of your investors or co-founders, or if there were any red flags raised in their previous employment.
By simply working with the right people, half the battle is won, and you can ensure that by running detailed background checks before hiring employees. Because of that, all your intentions and efforts simply synchronize to work towards the betterment of the company and not in any other direction.
4. Choose ideas that are not easy to replicate
Even though there are legal means to protect your idea from being stolen, it’s always advisable to work with ideas that are inherently more difficult to copy. This could be at least adopted on some level such as the proprietary software, execution processes, skills, or assets.
If your idea is difficult to copy, it would even increase that overall lead time. You would have the first-mover advantage that way, as your competitors will need much more time to copy an idea that is tough to replicate.
5. Focus on building your brand
When you have a good idea and you decide to work on it, it’s important to focus on building your brand. If your brand positioning matches your unique selling point (USP), and you have already established it with your idea, it would be impossible for anyone else to steal your authentic idea.
You can also create a buzz about your product even before its launch with the right promotion techniques. Once the audience is exposed to your idea, and start associating your brand with it even if they don’t have the actual product yet, others won’t be able to steal and use it for starting a business.
6. Use network effects to your advantage
By adding network effects to your product, the value of it increases in the eyes of every new user on your network, since more and more customers benefit from it. It also leads to a word-of-mouth marketing strategy or that eventually leads potential customers to you.
As a result, network effects aid in enhancing customer loyalty, customer acquisition, and make your idea much more difficult to steal because users would not want to leave their comfort zone or search for a different product.
Coming with a startup business idea is the first step in becoming a small business owner. And if you sift through it, half the work is done since you are already out of your comfort zone.
However, the idea may sound interesting on paper but not be viable in practice. Startup founders must evaluate their ideas against the vision, characteristics, and objectives of their business model before taking the first step forward.
It is equally important to validate your idea with your potential customers. And once all that is done, protect it well until you finally launch it.
It’s your idea, and your hard work and no one has the right to steal from it. So make sure that you use this startup business idea in starting a business, and become a great business owner in the time to come.