When it comes to picking business ideas, most aspiring small business owners run into one of two problems: either they have too many ideas to choose from, or they feel like they have no ideas at all. These two problems often stump people at the earliest stages. If they can't find the right idea, how will they get started?
This is why new entrepreneurs should be strategic about how they get their business ideas. There are often three stages involved: brainstorming, narrowing down, and testing. This guide will show you how to go through these stages to emerge with the right business idea for you.
How to Generate a Ton of Business Ideas
If you're the type of entrepreneur who tends to have too many ideas, then you can skip this part—though it's still valuable to do some additional brainstorming in case there are possible opportunities or ideas that you may have missed. This is the stage for uninhibited ideation, editing your ideas will come later in the process.
Step 1. Fly Your KITE
One way to approach brainstorming your business ideas is to do a bit of self-exploration. You can use the acronym "KITE" to make sure that you delve into every aspect of your history and personality. Here's what it stands for:
- Knowledge. What do you have knowledge in? This could be a field or industry that you know a lot about based on your educational background or just because you've done a lot of personal research on the subject. Consider all the courses, seminars, and workshops you've attended. What topics or subjects did you gain in-depth knowledge about as a result?
- Interests. This is where your enthusiasm comes in. What topics, fields, or subjects are you extremely interested in? What do you like reading or learning about during your spare time? These are the subjects, products, industries, and topics that you typically won't stop talking about, regardless of how bored or uninterested your friends and family may seem. More importantly, your interests include things like hobbies, passion projects, and other activities you pursue during your free time.
- Talents. Think about the skills, insights, or outputs that other people praise you for. Consider any compliments paid by your colleagues, supervisors, friends, and family. Pay attention to the times when they've said things like, "You're really good at this" or "I knew this would be something you can help with". Also, think back on any opportunities they might have thrown your way. Have they ever asked you—or better yet, offered to pay you—to draw, cook, bake, or perform any other task?
- Experiences. Finally, it's important to revisit your educational and professional experience, including any volunteer work you do or any organizations you've joined. Which industries, skills, or subjects do you have the most training in? What are you currently paid to do? What do your credentials say about your expertise? Reviewing your complete CV or resume can give you some business ideas to work with.
When you build this list, you might just come up with general topics or subjects rather than specific business ideas with a product or service in mind. If this is the case, list out some products or services you can offer under each topic so that you'll have something more concrete to work with later.
For example, if "crafts" is among your interests, underneath it you can list ideas like: creating holiday ornaments, jewelry making, and creating wedding favors. Or, if you listed "graphic design for advertising" in your experiences, you can list ideas like: freelance graphic design, graphic design agency, or designing and selling post cards and posters.
As you explore all these areas, note that you don't have to be so precise. There's no need to think about the individual products or services you'll provide at this stage. Even listing fields or industries will be helpful enough—you can get specific later. After all, if your problem is that you don't have enough ideas, maybe focusing on minute details could be blocking you from seeing the other opportunities that are right in front of you.
Here are a few questions you can explore to come up with business ideas as well:
Step 2. Explore Your Environment
Apart from exploring themselves internally, aspiring entrepreneurs should also consider external forces or the business environment that surrounds them. Here are some questions you can ask that can help you think about the conditions you're working with:
- What businesses are doing well in your area or field? Think about both your physical area, the community where you live and work, and the most recent industries you've worked in.
- Look closely at these successful businesses. What common characteristics (business size, market, industry, etc.) do they have?
- Again, considering the most recent industries and fields you've worked in, what trends or changes are you seeing? What special skills can you offer that will adapt to those changes?
- What businesses are your peers—such as your friends, family, and colleagues—building? Which of these businesses have been successful?
- The next time you go out, look at the storefronts that tend to attract a lot of customers and have no trouble getting walk-ins. What are they offering? What makes them stand out from surrounding businesses?
By looking for ideas both internally and externally, you're likely to come up with an exhaustive list of possible businesses. Now, the challenge is in narrowing the list down to find the few you can explore deeper.
Narrowing it Down
Given the above exercise, you'll have a long list of possible business ideas. Your new challenge is to turn this long list into just a shortlist of 2 to 5 ideas that you'll be working with in the near future.
Step 3. Eliminate the Uninteresting
First, eliminate the duds by crossing out every idea on your list that doesn't interest you in the slightest. After all, if you're bored at the thought of a particular business idea just by reading it on a sheet of paper, what are the odds that you'll be able to follow through on the idea for days, weeks, and months? If you get no emotional response from reading an idea, cross it out.
Step 4. Re-evaluate Your Remaining Ideas
For every idea that remains on your list, ask yourself the following questions:
- Is this idea close to your areas of knowledge and expertise? The more experience you already have with your business idea, the better positioned you'll be to make it successful and manage competition. Sure, it's possible that you can start a business in a field or industry that you know nothing about, but you'd need a knowledgeable partner to work with.
- Are there people/businesses who want or need this idea to exist? Does it help make another person or business' life better or easier? If you can imagine specific groups or demographics of people or businesses who might be interested in your product or service idea, then this is a good sign that you'll have customers.
- Is there competition? Can you think about a handful of small businesses or solo entrepreneurs that provide similar products or service? Some entrepreneurs shy away from business ideas that have been done before. But when a business idea has been executed successfully before, it means that there's a healthy customer base supporting it. Competition is actually a good sign.
- Will executing on this idea for the first three months be too costly? If the answer is "yes", then delete the idea or defer it for another time. For example, launching your own airline might sound like a lot of fun, especially if you're an experienced aviator, but unless you have a fortune lying around to bankroll your operation throughout your early struggles, this isn't a viable idea to start with. The same goes with most ideas that have to do with building or inventing your high-tech hardware or software that you can't bootstrap on your own.
Once you've pared your list down, you'll hopefully have 2 to 5 viable business ideas that you can start with.
What About "The Perfect Idea"?
At this point, you might be wondering about "The Perfect Idea," which is the one idea that will make everything click and that somehow manages to intersect both your passions and profitability. But finding this idea isn't simple. It often takes years for an entrepreneur to set up a sustainable business, as well as make incremental changes to that business over time and adapt to changing market conditions.
Fleshing Out Your Idea
Once you have your shortlist of 2 to 5 business ideas, it's time to test them if they'll be profitable and a good fit for what you're trying to accomplish. Plus, it will also help to flesh them out as you get closer to executing your business idea.
Step 5. Test Your Business Ideas
One crucial step most entrepreneurs miss is to test how viable their business idea is. Without testing, you run the risk of investing time, money, and effort on an idea that might not make it in the long run. To test your idea, you can do the following:
- Interview potential customers. Look for people in your network who fit the profile of a possible customer. Ask them if they buy from businesses that are similar to the one you're thinking about starting. If they say yes, you can ask additional questions such as how often they buy, why or how they chose the company that they do business with, and how much they typically spend. If they say no, ask them why not. Of course, it helps to be upfront from the beginning that you are doing research. People are often helpful if they understand your intentions.
- Start with a simple, inexpensive sales test. Another way to test your idea is to try and get an actual sale first. This could be through pre-sales, where you sell the product upfront, with a discounted rate, before you even make or acquire it. You could also offer a limited run of your product or service, with only a limited amount of units available or sold only to a handful of customers. You can do this through social media and other online marketplaces. If no one bites despite any marketing or promotion you do, then perhaps the idea isn't viable.
For a list of additional ways to testing your business ideas, you can check out this detailed guide and video on idea validation strategies:
- PlanningIdea Validation Strategies to Help You Build Your BusinessAshley Bennett
- Products5 Steps of Idea Validation in The Real WorldOmar Zenhom
Step 6. Write Your Business Plans
Validating your business ideas will help you get some real-world experience in implementing them. Hopefully, this means that you've found at least one viable business idea to start exploring more deeply. You'll then be ready to prepare your business plan.
At the very least, a good business plan contains the following details:
- Products and Services. What products and services will you provide? What are the price points? How often are customers going to pay for the products and services — is it as needed, monthly, or annually or just once in a lifetime?
- Target Market. Be very specific about the demographics of your target customers. What's their age range? Gender? Occupation? What are their primary problems that you're helping them solve? If you're targeting other businesses, what's the size of the business? What's their industry? By knowing the details of your target market, the easier it is for you to make business decisions that align with their needs and wants.
- Marketing and Sales Plan. Of course, it's difficult to keep a business running if you have no plan for reaching out to your target customers and convincing them to buy. This is where your target market's demographics come in handy. By knowing everything you can about them, you'll know exactly where and how to reach them.
- Mission and Vision Statements. It's easy to think that mission and vision statements are a relic of the past, that they are not important or useful in the context of modern small businesses. The truth is a solid statement of beliefs and values can help you focus on what motivates you as well as the general direction the business is headed. If you need help crafting a solid statement, here's a useful guide:
As you progress with your business, your plan will change over time, so it's best to keep things fluid by coming back to your plan once a month to adapt it to your changing needs. Here's an article that shows you how to do this step by step:
Remember that it's the content of the business plan that matters. Don't spend too much time creating the design on your own. Instead, it might help to use our ready-made, high-quality Business Plan Templates on GraphicRiver, such as this comprehensive professional business plan template.
Step 7. Craft Your Business Pitch
Aside from a business plan, you also need to create a more condensed pitch for your business. This is a simple 1 to 3 sentence definition of what your business does.
This is important because you won't often have the time or space to explain your business to interested parties. You need to learn how to present your offer in as short a time as possible. This guide demonstrates how to explain what you do and what makes your business different, along with some useful examples:
Turn Your Business Ideas to Reality
Once your ideas are all fleshed out in the form of your business plan and pitch, there's only one stage left: Execution. While bringing your business ideas to life comes with its own set of challenges, you'll be starting on the right foot if you did all your preparatory leg work right—by having a strategy for generating solid business ideas and testing them before you take the leap. Learn more about what is the next step to take to start your own business: