How To Come Up With A Business Idea29 Oct 2020
You’d like to start a business but you don’t know what form it will take or whether it will prove successful. You just have this feeling that you’d like to be successful on your own merits, frustrated at work perhaps, or finding you’re out of a job because of the pandemic.
Either way, you can’t wait to get started. All you need is the big idea, one that could take you where the famous ‘garage entrepreneurs’ have found themselves — Apple, Facebook, Google, Microsoft. Here we’ll give some pointers on how to come up with a business idea, plus what you’ll need to do to get your idea off the ground.
When it comes to business ideas, preparation matters
At first sight, it sounds like the big idea is a moment in time, a flash of inspiration, the Eureka moment. Not necessarily. It’s more about preparation, searching and refinement. Think of it like sport or exams – athletes spend years training for that peak medal-winning performance. They don’t just turn up and win.
It’s the same with exams. A-graders might just stroll into exam centres and breeze through the papers, but they can do that because they’ve spent time studying and practicing for the big day. And that’s how the great business ideas come to reality – thorough preparation.
Time for research
You’ve probably got a broad framework for the type of business you want to be in. Something based around your skills or your expertise, or an area where you think you could make a difference to customers, perhaps through a poor personal experience with a product or service.
That’s a great starting point. It’s only a vague notion of a product or service, but now you can start thinking and learning more about it. Who would buy this product and why? Where do they buy it? What do they like or dislike about the existing products on the market? What would they really like from a product that just isn’t available?
Now is the time to do some simple research, a lot of it on the Internet. Comparison websites can give some useful insights into how different manufacturers’ offerings compare. The ranking system on comparison websites can help you identify the features that industry experts feel are most important.
Get customer insight
Even more useful are the comments from customers themselves. You can find those on review sites like Trustpilot or on retailers’ sites. Some manufacturers might post customer feedback on their websites. There are also forums where members ask other members questions about products and services or post their own opinions. Social media sites like Facebook also carry comments from customers.
Now you’re getting deeper insight into what your potential customers like or hate about existing products and that can be valuable in shaping your business idea. How could you make a difference to those customers by developing a product that matches their wish list or overcomes their frustrations?
Are they looking for better quality? Would they prefer to get the product in different pack sizes? Are they looking for a simpler product that is more affordable? Do they wish the product had a few more features that they would find really useful? Would they prefer to buy it online rather than search for a local retailer, or would they rather buy from a store where they can see and inspect the product?
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Refine your list of business ideas
When you’ve carried out that simple research, you’ll find you’ve got a list of possibilities for your business idea or business ideas – maybe a long list – but it’s no longer a question of waiting for inspiration. You’re now customer focused – what are people looking for and what can you do to meet their demands?
By comparing customer wish lists with your knowledge of what existing suppliers provide you can start to spot gaps that you have the opportunity to fill. But, first a reality check — lots of great ideas, but will they make a business? Ultimately, you need to come up with a successful business idea, not just a business idea.
So, it’s time for a personal review. What can you bring to your potential business? Maybe you’re an expert on this type of product, or you’ve had relevant sales or marketing experience so you understand the market. Will you need to hire other people with skills or knowledge that you don’t have?
If you’re going to supply a product, have you got product development or manufacturing skills? If not, you could consider using contract manufacturers or licensing an existing product customised to your own specifications.
You need to think about distribution. If you’re planning to sell from a website, how will you deliver orders and what sort of delivery options could you offer? If you’re thinking about selling through retailers, how will you convince them to stock your product and how will you
Then, funding. Will the business need significant investment to get off the ground or is it a low-cost start-up opportunity? Either way you will need to access funding; so are you confident you can convince lenders or investors to back your business idea?
Finally, is this a business idea with legs — can it grow or is it just a short-term, one-off opportunity? Unless you’re just filling in between jobs or wanting to earn some extra cash, you should be thinking longer term.
Raise your profile
You’re moving towards business reality now. The next step is to evaluate all those business ideas and bring the long list down to a few strong contenders. What’s the level of risk for each idea? Has one idea got outstanding plus factors from the customer’s perspective and is it sufficiently different from any existing product to give you a sustainable competitive advantage?
Before you take the plunge, there’s one more important step – make yourself known. Right now, nobody knows you, so it’s time to raise your profile. Social media is a great place to start. Find a page or forum where people are discussing a competitor’s product and add your own comments to the discussion. By making regular postings, you could soon be seen as an expert, people will recognise you and could start asking what you have to offer. distribute the products to them
To meet potential enquiries, set up a simple website landing page where you show information about your product or business idea. You may not have a live product at this stage, although a prototype would be useful, but the level of response can help you decide whether your product is generating interest. Demonstrating your product or business idea at local trade shows or talking to retailers can also help gauge interest and take the decision to go ahead with the business.
Ready to go? How to turn your business idea into a successful small business
Setting up your business and preparing to launch your product is outside the scope of this article, but there are a few essentials that you’ll need to consider and take care of before you start trading.
All of your thoughts and refinements should go into a business plan. It will keep you in line and convince investors that you have a viable business. At Accounts and Legal we are experienced at crafting winning business plans which can help business owners or budding entrepreneurs raise external investment. Our experienced business consultants and in-house legal and marketing consultants can also assist with key non-financial aspects of a well-rounded business plan, as well as updating or editing existing business plans. As part of the business plan package, we can also prepare a cash flow statement and balance sheet.
You’ll need a name for the business and you’ll have to register the name, first checking that nobody else is using it. If you think you’ve got a unique product that needs protection against copying, think about trademarking it or even patenting it.
You’ll need supplies – materials and components – to make your product, so you’ll need to find suppliers and agree contracts with them. If you’re planning to hire people or go into partnership with others, it’s time to think about the legal structure of your business, as well as employment legislation. Learn more on the key points of legislation that affect employers in a business environment or how UK employment law is changing.
You’ll need to register your business with HMRC and be prepared for the inevitable taxes that will follow. And, it’s a wise move to take out business insurance. Of course, you’ll need to apply for finance, not just for start-up, but for ongoing costs until revenue is flowing regularly.
There are probably dozens of other small tasks that go into setting up and starting a new business, but focus first on the tasks that we have just described. They are the critical ones!
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If you feel that this part of the journey from the great idea can be overwhelming, you’ll find that professional help and support is available for businesses like the one you’re planning.
Here at Accounts and Legal, we’ve helped many new businesses make a firm start and we’re always delighted to follow their progress and support them as they grow. Please feel free to contact us to talk to one of our specialist small business advisers, or click the link to get an instant accountancy quote!