Are you looking for tips on how to come up with a business idea? Definitely, in this article, you will discover how to get started simply.
A business idea is an ideal business opportunity that provides the possibility of a return on investment, for a business starter.
Usually, such business opportunities are analyzed based on customer requirements and however, lead to the provision of a service or product which creates or adds value for its buyer or end-user.
The following are some of the innovative business opportunities for creative minds:
- Agricultural business ideas
- Art and craft business ideas
- Automotive business ideas
- Beauty business ideas
- Construction business ideas
- Educational business ideas
- Entertainment business ideas
- Health care business ideas
- Food business ideas
- Import and export business ideas
- Internet and online business ideas
- Manufacturing business ideas
- Real Estate business ideas
- Transportation business ideas
- Fashion business ideas
Moreover, several ideas come through different avenues but it is your work as an entrepreneur to locate the ideal opportunities, which will offer these ideas. And more importantly, you should have the ability and capacity to evaluate the ideas and select the one that will help you attain your predetermined objectives.
However, business ideas could come through internal and external sources and it is your job to explore these opportunities to realize your dream.
Meanwhile, businesses are not selected based on their surface value, but detailed information must be gathered to determine whether you have the human and material capability to turn them into profitable opportunities.
In this article, we will show you how to come up with a business idea, And also, ways of assessing them through SWOT analysis and market survey, to develop small ventures of your dream to attain the entrepreneurial objectives.
How To Come Up With A Business Idea
The presence of numerous business ideas in any given environment ushers favorable challenges for their processing. On the other hand, the problem with the environment is not the dearth of business opportunity, but their saturation which makes it very challenging to pick the ideal one that one can compete favorably.
It should be stated here that as the opportunity comes to you, so does it stare on the face of those with a business mindset. And therefore, your ability to know how to process them will go a long way for your chosen business.
Below are things to consider when choosing a business idea:
1. Investment Need Recognition
No one runs a successful business operation without developing the taste for it. Therefore, you should have the motive, drive, intention, or zeal to run a recognized venture. This is the first process of exploiting business ideas.
Investment-need recognition will provide you with the direction on what kind of business you should put forward to your stab. And also, it must be clear to you as the investor the kind of business to run and what you stand to gain if successful.
2. Personality Endorsement Determination
At this point, a personal capability analysis should be done to know whether you still possess the personal, professional, and entrepreneurial competence to run the said business. In other words, it is enough to conceive sound business ideas but it must be complemented by appropriate competence that will drive that idea into a successful conclusion.
Also, you must consider things like values, attitude, competitive strength, etc. Perhaps, it is a necessity to conduct enterprise or company profile analysis, which will unveil the readiness to run the business concerning capability and value assessment.
3. Environmental and Industrial Scrutiny
No business exists in the atmosphere. However, there must be an environment where it will be situated. Recourse to this imposes the need to study the environment to determine whether it will support the prospective business, or whether it will be hostile to it.
These are called environmental forces analyses covering the actual and the potential pressure arising from it. Hence, the environmental variables are germane to the organization’s activities and performance.
Your knowledge of the environment is dependent on environmental scanning, forecasting, adaptation to organizational variations in the business environment.
4. Business Opportunity Scrutiny
Having scanned the environment and the industry, the next point of call is business idea analysis. You have to take this aspect very seriously. This stage requires that you evaluate the business idea based on what is available to you and those that are grossly missing.
You should consider human competence, material availability, market presence for the products and services, financial requirements, technical support, etc. But if the result of these analyses is positive, the implication is that such an idea is feasible and can be turned into a product to yield returns.
This can be likened to the feasibility study, which will reveal to you how good or terrible your ideas are, concerning project realizations.
5. Business Idea Selection
The result of the previous stage will determine what will happen at this level of business idea exploitation. Meanwhile, it is generally referred to as the business decision stage whereby the criteria set for determining which idea or opportunities are established decisions to be taken on agreed criteria or standards.
Quantitative or qualitative factors or both can inform the decision that will be taken. In general, if the result of the business idea scrutiny is positive, it guarantees that the business is worth investing in, and that becomes the decision unless others indicated negative.
6. Idea Implementation
Nothing happens until the idea is implemented. That is to say that, the business is built based on the body of thoughts and reflections about the nature and structure of the business as developed by you.
This is the stage where dreams are turned into reality, and it involves the assignment of responsibility and allocation of resources so that objectives can be accomplished.
The business plan will be very relevant at this last stage because it indicates who should do what, when, how and with what resources is pursuant of the business goals.
Identifying A Business Idea Using A SWOT Analysis
The environment in which enterprises exist can be seen in terms of opportunities and threats operating in the external environment in conjunction with the strengths and weaknesses existing in the internal environment. This is known as “SWOT”.
The identification of business opportunities requires environmental scanning. Subsequently, the environment is a source of information to you as an entrepreneur and also a source of material resources for your business. This is because you must be ready to offer what the environment wants. And also, you need what the environment can provide.
Environmental analysis is a management tool you should use to avoid strategic surprise and ensuring your firm’s long-term health and success.
Environmental uncertainty is a threat and refers to the combination of the degree of complexity and the degree of change in your external environment.
Environmental scanning is the monitoring, evaluating, and disseminating of information from the external environment to the people within the firm. It also helps you discover business ideas and opportunities lying in the external environment.
Above all, the following is how to scan the environment while coming up with a business idea:
1. External societal environment
2. External task or immediate environment
3. Internal environment
1. External Societal Environment
The factors to be scanned in the external environment are as follows:
i. Economic Environmental Factors: These include changes in competition, demand and supply, lifestyle, prices, consumer spending, and national income, etc.
ii. Technological Environmental Factors: A change in technology, such as equipment, innovation machinery, new processing methods, inventions, discoveries, technology, and raw material can affect the environment.
iii. Political and Legal Environmental Factors: Examples are changes in legislation and government, election, war, etc.
iv. Social Environmental Factor: These include impacts of educational institutions, knowledge, and skills, public opinion, changes in social attitudes, changes in the value system, the people’s way of life; mode of dressing, in fact, beliefs and traditions, etc.
v. Demographic Environmental Factors: It includes changes in population, rural and urban migration, etc.
Vi. Ecological Environment Factors: These are pollution, erosion, noise and ozone layer depletion, etc.
2. External Task Or Immediate Environment
The factors in the immediate/task environment are the threat of new entrants, the bargaining power of buyers, the threat of substitute products or services, the threat of strike actions by trade unions, the bargaining power of suppliers, rivalry among firms. However, the task environment includes:
i. Government: They regulates business activities and the organizations are expected to respect and obey those laws made by the government.
ii. Shareholder: Shareholders invest their money in business firms as a provider of finance. Therefore, the firms in turn provide returns to shareholders in the form of profits, dividends, growth, and stability.
iii. Employees: The employees need increases in wage/salary, better working conditions, and participatory decision-making from business firms, which in turn demands the services and loyalty of employees.
iv. Consumers: They buy products and services from the business organization, which in turn receives their income through consumer purchases.
v. Community: No business can function properly without society’s approval and the community cannot develop without business firms.
vi. Competitors/Suppliers: Competitors and suppliers must have respect for conditions of purchase or sales agreement, fair competition, and respect for copyright and patents.
You must interact, monitor, and be sensitive to the happenings in this environment, to succeed.
3. Internal Environment
The internal environment is the first layer of the environment. They are those factors that are internal to your business as an entrepreneur. This is to say that, they are within the organization itself.
Similarly, they are those strengths and weaknesses your business possess. The internal environment includes:
i. Structure: The structure is a way an organization is organized in terms of communication, authority relationship, and workflow; whether the simple structure, functional, divisional, etc.
Then, what is the chain of command? If the structure is compatible with the business of the organization, it is, therefore, a strength, but if not, it is a weakness and will hinder the achievement of the organization.
ii. The Culture: This is the pattern of beliefs, expectations, and acceptable norms of behavior and shared values among the organization members. Culture is also transmitted from one generation of employees to the next.
iii. Resources: They are the assets, which you use in the production of your goods and services. In the same vein, they are the financial, physical, human, technological, and organizational resources of your business. Also, they are the 4Ms, which eventually means; money, material, machines, and men. If these assets are unique and very superior, then, it is known as strength. Otherwise, it is a weakness.
The possession of valuable, unique, and superior resources will help you as an entrepreneur to achieve distinctive competence. However, the distinctive competencies of your business arise from two complementary sources. Which are its resources and its capabilities.
Distinctive competence has three major characteristics; which are:
i. It is hard for competitors to imitate.
ii. It increases perceived customer benefits.
iii. It provides potential access to a wide variety of markets.
Exploiting Business Ideas And Opportunities
You should use strategic factors in the form of the SWOT technique to analyze and exploit any of your chosen business opportunities.
1. Strength is an inherent capacity that a firm can use to gain a strategic advantage. Hence, a very good example of strength is unique and superior R&D (Research & Development) skills which are used for new product development, so that the entrepreneur’s organization can gain a competitive advantage.
2. Weakness is also an inherent limitation or setback which creates strategic disadvantages. For example, a weakness over-dependence on a single product line, which is dangerous in times of crisis.
3. Opportunities are usually presented by favorable conditions, which are usually caused as a result of changes in the external environment. However, you must respond to changes quickly to exploit the opportunities in the external environment.
4. Threats: These are unfavorable conditions that may arise from development in the external environment and are likely to negatively affect your business operation.
For instance, the introduction of radically new products by competitors, political unrest, religious riots, changing economic and social conditions, the threat of strike action by trade unions and other government agencies.
Conduct A Market Survey
It is very important to conduct a market survey since you have discovered a business idea for a startup. To clarify, it is not enough to produce goods and services for the public, but you should determine whether customers are willing to buy the goods and services on regular basics.
Thereby, considering the price of the products, to guarantee a level of profit, survival, and growth.
The process of conducting a market survey includes the following:
1. Define the objectives of the market survey and also analyze the kind of information needed.
2. Work out the details of the survey, by identifying the different sources of information, the time and cost involvement for the survey, the method of gathering information. And most importantly, developing a plan of action.
3. Select samples and decide the type of contacts and visits that will be made.
4. Prepare questionnaires and plans for surveys and interviews.
5. Then collect and analyze your data.
6. Finally, prepare a report of findings.
However, if you follow the processes discussed, you can successfully come up with a good business idea.