How to generate a business idea (All you need to know)
There are many people who turn on the light bulb and come up with the business idea that seems perfect.
However, ignorance about how to make it happen or the fear of failure slows them down on their way to transforming that idea into a prosperous business. Thus, a comprehensive guide on how to generate a business idea becomes inevitable.
At some point in our lives we want to start our own business, an idea comes to mind and the process of “shaping it” begins.
However, sometimes we “sabotage” the idea and discard it, either due to ignorance of how to organize and translate our idea or fear of failure.
Have you dreamed of not working for anyone, owning your time? Or perhaps, you want to help others, implement a new technology or simply contribute to society.
Well, any entrepreneurial action or beginning of a project goes through an idea, through the generation of a concept, a manifesto, etc.
That is why it is important to know what a business idea is and how it can be developed, for this I invite you to continue reading the article…
What is a business idea?
A business idea is the provision of the service or the generation of a product that can be offered in a specific market, from which dividends and benefits can be obtained.
A business idea entails having a value proposition and a commercial positioning vision.
How to generate a business idea
A business idea, a brilliant and even innovative idea begins simply as a representation in the imagination of the future entrepreneur.
Just having an idea is not enough. In order to develop a business you must plan, research and then work very hard to materialize your idea.
Generating a business idea is a complex process, but it can be done successfully with order, information and a lot of common sense.
What to do when you have a business idea?
First you must validate the business idea, for which you can ask yourself the following questions:
• What exactly are we going to sell?
• Who is going to buy it?
• Why are they going to buy it?
• How are we going to make money?
Research the needs of your audience . If you already know that your business idea covers a need, do more research on that need in the market. The idea is that you can refine your business idea and be more efficient.
Steps in selecting a business idea
Developing your business idea can be like following a cooking recipe, in what way? A recipe has steps that one must follow to be able to make it, in the same way it happens with a business.
You need to know and consider some aspects before creating a business.
1. Don’t look for hundreds of ideas. Try to define the sectors in which you want to start.
Recommended read : Simple business ideas for teens and young entrepreneurs
2. Don’t hold on to ideas. Quickly discard any that don’t hold up.
3. Undertake in sectors that you know . Even if they are fashionable, have help or tell you that they have a huge future, try to avoid niches for which you do not have a minimum of training.
4. Thoroughly and objectively analyze the idea. Submit it to negative scenarios and validate it with family, friends, and experts in the field.
5. Share the idea and don’t hide it. Ideas are enriched by teaching them, and if you think they can copy it, think that it will happen anyway. Someday you will have to make it public.
6. Adapt it to changes. Make it evolve and do not just develop the idea as you had initially thought it because the market is continually changing.
7. Solve something. Try to find a solution to something that bothers you, perhaps there is your business idea. It’s been said and rightly so that, “the best way to be a millionaire is to solve the problem of one million users.”
8. Choose an idea that allows you to take advantage of your competitive advantages. Think about the aspects in which you excel or stand out from others, everything will be much easier.
9. Be original. Look for something that others do not offer and that you think might be well received in the market. It doesn’t have to be a totally new product or service, it can be an adaptation of something that already exists.
10. Think ahead. Project yourself in time, anticipate the changes that are coming and ask yourself what are the products or services that could be in high demand in the future by consumers.
Criteria of a viable business idea
Once you have done the process of verifying in what type of environment your idea would develop, what type of skills you can have and the possibility of competing in that market, it is clear that the idea so that you can go to the process of seeing if it is viable or not formally, it must have minimum requirements.
I leave you with a list of 10 minimum criteria so that you can make a checklist and know if it is worth continuing with this idea or looking for another that allows you to access the formal step of validating the business idea.
• Does my idea solve problems for the potential customers I want to address?
• Let’s see, my idea, do the closest people like it and do they consider it to have potential?
• Do I have the ability and knowledge to implement this possible business idea?
• The resources that I would need to invest in an approximate way, can I have them?
• Do I have to have a partner to develop my possible business idea? Do I have one or could I have one?
• If there is something similar, could I exceed or improve what exists given my knowledge and strengths?
• There is nothing like it. Can I Create, something different?
• My idea is innovative, does it create value for society?
• I have competition , could I sell at a lower price, without losing profitability?
• With competition , could I instead of lowering costs, transform what exists and give a different vision to my product / service that can generate a more economical, improved and different proposal to be able to compete?
Characteristics of a good business idea
• Added value and differential value . A good idea must have an added value that helps the customer choose our product over the competition.
Although most businesses have added value, what is really important is to have a differential value, something that helps us differentiate ourselves from competitors.
• Satisfy a need . A good idea has to satisfy a need or a desire. Most of the needs are already covered, but can the new product / service make it better? It is there where we must work our business idea.
• Profitability . A lot of great ideas crash because they came too early, are too high a price, or their competitors were giants.
At the end of the day, the objective of a business is to obtain benefits and a good idea should give them at least in the medium and long term.
How to get funding for a business idea
You have already proven that your business idea is profitable, now you may need financing . Some of the alternatives to start an idea when you do not have enough capital are:
• Partners: They can be family members or friends who receive a share in the profits of the business in exchange for contributing work or financial or material resources.
• Banks and development banks: This is one of the most classic alternatives. It is necessary to be very clear about the most attractive aspects of the business idea to be able to sell it to these entities, since they will be more inclined to lend more the more possibilities of success the business has and the greater guarantees exist of being able to repay the loans.
Banks offer different financing modalities and each entity has different products.
• Venture Capital: Private investors seeking to support innovative and profitable projects. It is a good alternative when you do not have capital, but it has the same problem as the bank: you have to provide serious guarantees that the business will work.
• Venture Capital Companies. They are companies that enter the capital stock of the company as a shareholder for a certain time also providing advice and accompanying the business until it takes off.
• Crowdfunding :A relatively new financing modality, in which small amounts are received from a large group of people who support the business idea.
In addition to these alternatives, there are others such as:
• Business Incubator : This is an organization designed to ensure the success of a business idea and help it in its gestation phase.
It works through a series of resources and business services that can include physical space rental, capitalization, coaching (advice), networking (access to a network of contacts).
Business incubators are generally sponsored, supported, and operated by private companies, government entities, or universities.
Its main purpose is to help create and grow young companies by providing them with the necessary support in technical and financial services.
• Business accelerator: The role of these entities is to offer entrepreneurs resources, knowledge and support through work programs with mentors ( mentoring , veteran entrepreneurs who advise throughout the creation process), to accelerate business growth .
Another of its characteristics is to provide entrepreneurs with private investor contacts who can assess their project.
The last step of acceleration programs is to present the ‘accelerated’ businesses in investment forums so that they have the possibility of obtaining the financing they need.
That is, the incubator helps when the company is created, while the accelerator helps it grow.
• Contests: In these contests, entrepreneurs present their business ideas for a jury to decide which is the most innovative or interesting. They provide visibility to the media and, therefore, to the mass public.
In addition, they also include monetary awards that help the growth of the project and offer mentoring and advisory programs. So it is also a more than interesting alternative to finance the business idea. What you need to know on how to generate a business idea.
At first your business idea may seem absurd or crazy, that you are afraid of failure, but that does not mean it is bad.
You just have to organize your ideas and start writing, knowing that at the beginning you will have certain obstacles to solve as you develop your plans. Thus, the invaluable need for this guide on how to generate a business idea.
When you start to write your business model, it will undergo considerable changes because as you develop it you will find some gaps or mistakes that must be corrected at the moment so that your idea, even if it is viable, becomes a winning business model.
It is advisable to see how some products / services similar to the one you want to launch on the market have been developed and have evolved , you can even serve as a collaborator with other entrepreneurs and thus fine-tune your idea.
The key is not to despair, ask for help when necessary and for this you can use networking .
I hope this article on how to generate a business idea is useful for you.