Starting your own business can be a rewarding way to build wealth and fill the needs for others with a product or service. It’s a calling that requires grit, wit, and perseverance. But one of the biggest challenges of starting your own business is coming up with an idea that not only makes sense for you but also is sustainable and profitable.
You may already have an idea in mind, but before you jump into it, it’s best to double-check that your idea has what it takes to generate sales and satisfy your career goals. If you think you’re ready to be your own boss, here are some tips on choosing a viable business idea.
Identify what drives you
Exploring your own passions and skill set is a great start to finding a potential business idea. Ask yourself what gives you satisfaction and what kinds of problems you enjoy solving. To help decide if your business idea is the right fit, ask yourself:
Is this something I can do that others can’t? Is it something I do better than others? Answering these questions may help highlight the strengths you have that can make you and your potential business idea stand out.
What am I passionate about? Can I picture doing this every day? Maybe you want to help the environment or just make everyday tasks a little easier for people. Whatever it is, you need to be sure it’s something that motivates you.
Do I have experience or knowledge about this business opportunity? The more informed you are about your idea, the easier it may be for you to turn it into a business.
“Ideally, you’ll find the perfect intersection between your interests, expertise, and what the market is demanding,” says Dr. Dennis Kimbro, a business professor and best-selling author. Once you’ve identified what sparks your passion and the skills you have to offer, then it’s time to find out who is willing to pay for your product or service.
Find your market
To avoid launching your idea in a market with limited opportunities, conduct market research. This data-grounded approach may help you determine if your business idea will actually be successful.
Start by thinking about the type of person you envision purchasing your product or needing your service. Your idea of who your target customer should be may change after conducting market research, so remember this step is about understanding your customer base. Grounded on this understanding, consider ways to adjust your business to better serve the needs of this segment.
The purpose of market research is to find out how your business can best meet the needs of its target market. To get a baseline understanding of your potential customers, you can use:
Surveys: SurveyMonkey and Hubspot offer free templates to help you get started. SurveyMonkey allows users to select demographics. This way you know exactly what audience is answering your survey questions.
Focus groups: FocusGroupIt lets you organize and conduct your own focus groups through social media.
Existing research on your target market: S. Census Bureau data can help give you a basic look at the audiences you could serve. The U.S. Small Business Administration (SBA) also recommends these free data sources:
Business Data and Statistics provided by the SBA
Small Business Statistics provided by the SBA
The American FactFinder and other tools provided by the U.S. Census Bureau
Economic indicators available at the U.S. Bureau of Economic Analysis
Competitor research: Knowing your competition is just as important as knowing your customer. Research the product or services you plan to offer online to find your competition, where they are located, and how they are marketing themselves. And while most people view Yelp as a helpful tool for customers to leave feedback, it can actually be useful for entrepreneurs as well. Look at Yelp reviews to learn what customers say about the strengths and weaknesses of other companies.
Based on your research, come up with answers to questions like:
What can I offer that people want, and how much will they pay for it?
Who are my ideal customers, and what problems do they have that I could potentially solve?
How will I reach these customers, and what will it cost?
Can I successfully compete with existing businesses in this space?
Opening a business can be exciting and challenging all at once, but preparation can help reduce some of the risks associated with starting new ventures. Take the time you need to research and plan ahead — it could pay off in the long run.
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