If you’ve decided to start a business, but you’re wondering what business idea is best for you then keep reading because, in this post, I will walk you through the process to choose the best business idea.
Before we look at how to choose the best business idea, let’s quickly look at the different types of businesses that you can start.
For the sake of simplicity, I will classify them into two broad categories, which are
- Service-based businesses and
- Product-based businesses
So what is the difference?
A product-based business is a business that sells physical products to customers.
These products could be goods your business manufactures itself or goods that your business purchases from a supplier and then resell to customers. Product-based businesses include clothing stores, electronics retailers, and grocery stores.
A service-based business provides a service to its customers, rather than a physical product. Examples include consulting, accounting, graphic design, coaching, cleaning, home repairs and salons.
One key difference between product-based businesses and service-based businesses is that product-based businesses typically generate revenue by selling tangible items, while service-based businesses generate revenue through the sale of intangible services.
Another difference is that product-based businesses often have inventory and supply chain management considerations, while service-based businesses may not.
There are also digital products which you kind sort of classify under product-based business, but these dont follow the definition of a product-based business because the product is in a digital form. So an example is if you sell an e-book or an online course.
There are some business types that sort of fall in between and we’ll call them hybrid businesses.
There are also hybrid businesses that are both product and service based….eg, Netflix or Spotify, where the product is digital but you have to keep paying a regular subscription to access it.
But to keep it simple let’s just stay with our initial definition of product and service-based businesses.
After classifying the different types of businesses, let’s now look at 4 approaches to choosing the right business idea.
1. Identify a problem or missed opportunity
Problems are all around us. Look for problems in your community or industry that you can solve with a product or service. For example one of the first businesses I started was an electronics retail company called Invent Electronics, and this is how the idea came about.
I studied electronic engineering in university and as part of our courses, we had to design and build electronics projects, but it was very difficult to find electronic components to buy so I saw that as an opportunity and built an online store where anyone could order components for their project.
Look around you and see if you can identify problems that you may be able to solve and make a list of list of them that you can look at later.
2. Evaluate your interest or passions
If you are interested in or passionate about something, that may be an area in which you should start a business.
One of the things I am passionate about is agriculture and I’d always wanted to start an agric business one day so one time, I went to my mother’s village and realized that there was a lot of farmland so I got some and started a cassava farm which is going great.
Look at what you’re passionate about something, and explore business ideas in that area.
3. Look at your skills
What are you good at? Are you great at building websites? Doing graphic design, or photography? Cooking? Sewing?
These are all skills you can turn into a business because people may be willing to pay for your skills.
Again, make a list of skills you have and research what business opportunities are available for them.
4. Get inspiration
Another way to find the right business idea is to get inspiration from what other people are doing. If there’s a business out there that you love and that inspires you and you think it aligns with both your interest and passions, you can consider starting something similar.
I believe if you adopt any of these approaches, you’ll be able to choose the best business idea and by now you have a list of ideas you are considering.
One of the things you need to do is to figure out if there’s demand for that idea because you may be passionate about something or have a certain skill but if no one is willing to pay you for it, you don’t have a good business idea.
One of the ways to evaluate whether there might be demand for an idea is to speak with other people, most especially the kind of people you will be targeting with your idea because your idea is always going to sound great in your head.
They may be able to give you some more objective advice which will help you filter out your ideas and select the most viable ones. So look through your ideas and rank them in order of priority to implement.
This post is part of my Business Essentials series, which is a whole course for people looking to launch their businesses. You can join my community to be alerted each time a post is made.
So now what ideas are you currently considering? Share them in the comment section below.
Take care and catch you later.