Good Business Ideas

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I’m always being asked for “good business ideas”, which I find odd, after all who wants a bad business idea? The question then is how do you know if you have a good business idea?

One possible answer is offered in this presentation by Greville Commins, one of the mentors for SETsquared, which claims that a good idea for a new business is:

• Something new and innovative.
• Where the innovation is protected and has a USP.
• The market has untapped potential for sales or the product intercepts a new market vector.
• You have a route to market.
• The competition are not ready, able, unaware, non-existent or the barrier to entry is high.
• Potential to make a (realistic) return on investment in reasonable time-scales.
• Have the resources and skills to develop the product.

Where innovation can be in the form of:

• Product –A wholly new product, solving a particular problem or providing a new benefit.
• Business model – A new way of doing business, financial arrangements, franchises.
• Position – A different market positioning, branding, marketing strategy, sector focus, target customer.
• Process – Different manufacturing process, channel to market, packaging, operating model.

I see two problems with this list. Firstly in my opinion there is too much emphasis on offering something innovative whilst there isn’t enough emphasis on the customer. An innovation, a USP and skills are all irrelevant if there isn’t a) demand for the product, from customers ready, willing and able to pay for it and b) a way for you to reach those customers. Sure some businesses do create entirely new markets, but the reality is they are few and far between and more often than not it’s the fast followers that succeed, not the first mover (i.e. Google was a fast follower).

Secondly, I don’t agree that the innovation needs to be protected, because realistically it’s very hard to protect a business idea or business model, and whilst patents and trademarks can be used to protect some of your intellectual property (brand and processes) without a large budget you’re unlikely to be able to adequately develop and protect them. Instead, if the innovation is key to the business, I’d argue that your best protection is a process of continuous innovation.

Taking into account those two points it’s a good list to help you decided whether or not you have a good business idea. However, I’d still suggest you ask yourself do good business ideas really matter?

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• 1

  I’ll counter this explanation of what a good business idea is with a few thoughts of my own that go a bit against the grain of this thread.

  Don’t look for new, novel, innovative solutions. Look for tried and tested, easy, simple business opportunities where you can see a constant demand (ideally a non-discretionary purchase marketplace) but can provide a better, cheaper, different service.

  Look for opportunities that don’t have huge start-up costs and where any capital investment can be later recouped should you fail. Try to operate the business, whilst supplementing your income from a part-time, full-time job. (I know that may be tough, but no point burning all your bridges). Don’t spend a penny you don’t have to.

  Look to the power of the internet and whether there is an online demand for your service that you can capitalise on by becoming a devoted, self-taught expert on designing your own website and optimising it for the three key facets of Google. 80% of local searches are online and there is the potential to carve a comfortable on-line niche that you can supplement with more traditional off-line marketing strategies.

  Don’t believe the myth that price is a poor place to compete. It can if correctly applied be a great place to compete and a great way of building a customer base, building your confidence and identifying the real potential of your idea. Low-price options stimulate interest and there is an adage that they’ll find you under a river if your price is cheap enough. Look at the price levels your chosen sector is currently charging. If they are exhorbitantly high, that smacks of opportunity, particularly in recession.

  Be totally realistic about the revenues you hope to achieve and adjust your price accordingly. Sometimes, the mere fact that you are doing a job can mean that you are exposing a new customer to great service and with that may come more jobs and more testimonials.

  Believe once more in the power of Google and try and capitalise whilst they are still developing their local offering and not charging for local ads.

  Look into developing a network of contacts locally and socially online. The powere of the online recommendation is going to grow over the next few years. Join Twitter and watch a few of the old hands use it for their own good.

  Whilst on Twitter, track a few politicians and local party activists. These lads and lasses are unbelievable in terms of their commitment to their “business” and a source of inspiration in times of despair. If they can get that excited about politics, surely you can get excited about your own business!

  Go the extra yard for any customer you work for, make your pricing obviously different, be that price or the way you charge for work and believe that that customer will give you more work and will recommend you. Make sure you get testimonials from your customers and do such a great job that they shout your name from the top of the towers, you will if you are good get recommendations five times removed from your original enquiry. I even got a customer who overheard someone else talking about my service at the bank and asked them for my number…. Totally random.

  Look for the difficult, messy, impossible jobs and do them well and enjoy doing them, you can develop a great reputation.

  Adrian Cameron on November 25th, 2009
• 2

  Adrian,

  You don’t go against the grain at all you seem to be agreeing with what I’ve said on this post and many more.

  John on November 25th, 2009