What makes a business idea good?

It can be a process to come up with an original, new business idea. Finding an idea that solves a societal need can be further challenging. In this article, I’ll share a few simple approaches and tips.

These are strategies and points I’ve found to be important. They are focus areas I’ve discovered over the years. My goal is to empower you to discover unique and valuable new business ideas. The topics discussed are general. They aren’t specific to any niche industry or sector. I’ve designed the structure of this article to resonate with a variety of entrepreneurs from all walks of life. 

Some initial things to think about

I’ll preface my points by saying that you can always be inspired by trendy businesses in various sectors. This means that you might be thinking of launching a business based on what’s “hot” or “trendy” at any given time. These companies are typically not scalable and they err much more in the category of a lifestyle business. You may hit a ceiling on raising capital to expand. 

In essence, when you’re doing a trendy business, your vision is already following what people have done. It almost always more generic and trend-driven, and it’s not quite in the category of disruptive or original. A prime example of this was the recent goldrushes into AI, blockchain, crypto, etc (you get the idea).

I want to also be clear. You will likely find a middle ground. Developing a completely new business idea that nobody has tried at all is probably not realistic. Someone, somewhere in the world has probably made attempts at what you’re looking to do or solve for. This holds true quite often. Even if a quick Google search doesn’t come up with proof that it’s been explored. 

There was Couchsurfing before there was Airbnb. There were taxis before Lyft and Uber. The list goes on. Sometimes being the first to market trying to solve an issue can be very costly. The people who come after you are able to learn from your expensive mistakes quickly. The victor may be the second, third, or fourth person or company who tries to solve a problem. They come in with a new business idea and end up hitting the nail on the head and succeeding.

Basically, you don’t necessarily want to be the first or the last. You do want to time things right and pick an important sector and market to focus on. One that you’re uniquely positioned to provide a solution to.

1. Look at what’s around you

Spend some time and attention on traveling to discover problems. Be out there in the world. Have conversations with others about what they are struggling with. Are there things that they want but don’t currently have? Find the broken things that you can fix. Uncover solutions you can provide people or companies. Solutions that they are willing to pay for.

  • What’s the customer pain that you’ve observed? Sometimes the best new business ideas have been staring you right in the face. They’ve been there the entire time.
  • What about people who you don’t yet know. Are people in other sectors you might not be familiar with struggling? What are their pain points? Can you solve something for them?
  • What are some basic problems you can solve for? What opportunities do you see to support people in their lives? Can your solutions be based on what they want or need?
  • What do you think will create value? What can you deliver?
  • Do you have any experiences during your day where you see opportunities for things to be fixed?
  • Could something work better?
  • Could you transform how things are done completely?

2. Generating value

Value can take the form of generating revenue for someone. Can you help someone make money that they wouldn’t’ have otherwise had? Value can also mean that you’re delivering fun. Can you deliver delight or new experiences for people?

Saving people time or resources is also a great place to look for ideas. It’s not just about what you want. It’s about what a group of people wants in society. What are people willing to pay for?

This is a true test of whether something is valuable for someone. Look at their actions and their willingness to put their money where their mouth is. Up until that point, and you ask them to pay for something, it’s only words. Someone paying for something is a true commitment to real action. It signals that they truly find value in what you’re offering.

  • Is there a way you can help other people make money? Can this be through your app, platform, or other means?
  • Can you save people time or resources?
  • What really matters to people? It’s so much easier to just go out there and ask. Most people make the mistake of continually guessing what people want. They try to cater to them from a conceptual standpoint.
  • How can you gain an understanding of what people want or need?
  • Are you asking people what’s important to them?

3. Issues you can uniquely solve

Sometimes, solving issues can be simple and easy. You might have worked for a corporation. Your department may have struggled with an aspect of the business. Your prior work experience at your last company may inform your new business idea. You could have unique insights that lead you to develop a solution that can apply to your former employer and several other corporations.

In another scenario, you might have had a traumatic experience earlier in life. Through this experience, you were able to overcome it. That might have led you to discover a solution in the process. This solution is something that may inspire your new business idea.

All types of experiences can help to inspire new business ideas. You might have been the best at a particular sport. Now you want to offer ways to help others become the best in their field at the sports they care about. Where you went to school or what you studied could be valuable. You may be able to apply your experiences to other individuals or industries.

  • What is your background or experience so far in life?
  • Where did you go to school or where have you lived?
  • What did you study or where have you worked?
  • Were you able to overcome a major issue yourself?
  • Are there unique insights into problems that others aren’t aware of?
  • Do you have an advantage in your ability to execute?
  • Can you take on a new business idea based on your special insights?
  • Do you have a special background? This might be in engineering, design, finance, or operations?

4. Basic human motivators

Observe what motivates society. If you aren’t sure, you can always ask what’s important. At the end of the day, it all comes down to people. People have basic human habits, desires, and motivators.

Things like money, happiness, joy, fun, or indulgence are often reasons why someone might choose to spend on something. It is certainly why they take specific actions. Think about how people enjoy helping others. Some people are motivated by having a positive impact on the world. Others are motivated by not having regrets. You might be compelled by fear of missing out. Many people crave a high level of stability in their lives. 

Some individuals seek power or a specific career journey or timeline for success. They might consider notoriety or recognition as the most important in life. For others, it comes down to being supported in their passion or the desire to be the best. Some want to be relevant or prove others wrong. 

Many people place a high value on being able to say they are “right” about something. This could be a political stance or around an idea they have. Looking at some other motivators – we have fear as in potential issues of health for example. There’s also the desire to maintain social definitions of beauty or status.

  • What compels people to do something?
  • Why do people take action?
  • Why do they pay for something?
  • What are people already doing?
  • Is there an opportunity to provide more of something?
  • Can you make something easier?
  • Is there a way to deliver a better experience?

5. Big financial opportunities

There are plenty of annoying things out there that someone should solve. That said, they aren’t necessarily the best thing for a business to solve for. The pain points might be not intense enough or society has decided that it’s not a high priority. 

You may find something really cool or interesting to work on. Then you start to dig in and can’t find a good financial opportunity. One of the main formulas for a solid new business idea is an opportunity to generate revenue. You have to make a profit. Without that, the new business idea isn’t going to be sustainable. Otherwise, it will have to rely on charitable contributions. This would put the entity into the category of a non-profit. This is fine if that’s the route you want to take. Understand then, you would be relying on donations.

There’s a ton of research and resources that can be found online for finding various stats on all types of markets. Furthermore, you can drill down on specific purchase flows and opportunities to capture transactions. The question “how much are you willing to pay for this?”, can often give you a good indicator of the financial opportunity. Make something, show people and see if they are willing to put money on the line.

  • Are there enough people out there willing to pay for what you’re offering?
  • Do they have money?
  • Are they willing to pay for it?
  • Is the market size large enough?
  • Is the problem annoying enough that they will pay for it to be solved?
  • Are people already spending in the space you’re going after?
  • Is the market you’re going after on the up and up?
  • Does your idea have defensibility?
  • Are people leaning in when you start talking about what you’re offering?

6. Ranking crowdedness

Typically if a market is crowded, you may be able to get customers quickly. You can start selling right away. The con is that there may be a ceiling on the market share you’re able to capture. You may have a lot of trouble standing out. 

I’m talking about doing something that is more “trendy.” An area or market where a lot of people are starting businesses around. It’s true that you can get you up and running quickly. Scaling however can be problematic. Another issue is getting the attention of respectable investors. This may prove to be very challenging. 

The top investors are typically looking to invest in big ideas. They want to see ideas that are linked to massive and clear goals. They tend to want to go for the big market opportunities. Their objective is to win on a grand scale. Companies focusing on a crowded market will have trouble growing. Crowdedness of a market comes down to how much you can stand out. It’s also about how big the company can potentially grow. Finally, it’s important how rapidly scaling can happen.

  • Is the category saturated?
  • Are there a lot of competitors?
  • Will you be able to stand out?
  • Can you surpass the leaders currently in the space?

7. Disruptive and profitable

There’s a quote out there that says something like – people who are pioneers, don’t usually get rewarded well. It’s often the second or third competitor entering the market who wins. Their innovation reaps the benefits. They are able to learn from the costly mistakes that a pioneer makes. That second or third competitor rapidly improves. They solve for what went wrong that the first innovator spends time and money on.

It’s not always the case and it’s most often true. It’s never too early to start generating revenue and profit for a new business idea. Don’t keep putting off profitability and say that you’ll do it later. Many companies say they will be profitable in their next funding round. They build that into the company culture. Instead, it’s much better to generate profit early on. Foster the mentality and habit of profitability in the early stages. 

  • Can you start making money today?
  • Are you doing something that’s really progressive?
  • Are you just making something cool or interesting without consideration to revenue?
  • Is what you’re making captivating and able to generate revenue?
  • Is it strongly connected to what society wants here and now?
  • Is it too forward thinking and conceptual?
  • What’s the opportunity you’re thinking about solving?
  • How will you capture market share?
  • What are some of the methods you can use to achieve adoption of your business or offering?

8. Adamant repeat customers

Here’s a great test of whether you’ve struck a chord with an audience. This is a great way to know that you’ve found something they like that can also be expanded. Get your first small group of passionate, repeat customers. This can look like at least 8 customers who you have a relationship with. They’ve done business with you and they have told others. They can provide both a positive and negative feedback loop. There is honesty and skin in the game present with these initial customers.

These are people who will actually care to give you valuable insights. They can help you form your idea, offering, and solution. They love what you’re building. You sense and see through their actions that they proactively want to support it. Building this connection with your customers is important. You want to create a situation where they return to use the service or offering. If they come back continually, this is a sign of a solid new business idea. It likely has a good structure and can be scaled.

  • Will people be able to come back again to interact with your new business idea?
  • Are people really passionate about using your product, idea or service?
  • Are they automatically sharing it with people in their network?
  • Can you find a small group of people who really care about what you’re building?
  • Are you trying to appeal to everyone all the time instead of going after specific needs and problems to solve?
  • Are you looking to conquer massive markets?
  • Are your customers saying why hasn’t someone already made this?

9. Building a bulletproof model

Thinking about the business model and how the company will end up with a profit early on is important. It’s a valuable habit to develop and a strong muscle to flex when talking with potential investors. You can always show people your idea for a service or offering and a/b test different pricing offerings. You can pitch them different features. It may be important to talk about all of the benefits of what you’ve created to get feedback.

The reaction you ideally want is one where someone says, yes I’ll purchase this. Or they might say – wow, why hasn’t this been created before? I can’t believe someone didn’t think of it. Can I put a deposit down or sign up now?

  • Can you apply successful business models to new industries?
  • What are some of the fundamental ways to make money?
  • Who are the influencers?
  • Who’s in charge of spending?
  • What are the economics of the idea?
  • Can you bring it to market in a way that’s financially sustainable?

10. What really matters

You can always find someone in the world who’s interested in the things that you’re interested in. At the same time, it’s not just about what you want to do. You’re trying to build a company, right? You’ll probably find that if you only do what you’re interested in, your project or company may stay as a hobby. It won’t develop into a scalable new business idea or organization. You want to strive for mass adoption. Your business should really mean something to a large part of society. 

For something to be financially viable, it’s important to find a group of people who are willing to pay for what you’re offering. The amount they pay must be more than your expenses. This is crucial to create a profitable company. Getting what people on a fundamental level is essential. You must understand their needs and what motivates them. This is one of the keys to success. 

Start asking others around you or in your target demographic what they want. Through this process, you can respond with real solutions. When you start providing value, you’ll find people will lean into your ideas. They will start sharing them with others. Otherwise, you’re just another person or entity vying for their attention. It has to matter to them. If it doesn’t connect and resonate, they will continue tuning out to your marketing, story or pitch.

  • Have you asked potential customers what’s important to them?
  • Have you created a mock of something for your potential customers to test and interact with?
  • Is your idea addressing the fundamental matters of importance and interest to people?
  • Will it just remain a hobby because you are focusing on your individual interests versus the interests of a group of people?
  • Have people started talking about and sharing what you’re working on with others
  • Is it remarkable?

Conclusion

You likely now have some ideas of things to explore. Testing things out and taking the action is where the magic happens. You can sit at home all day, dreaming of various ideas. It’s all conceptual until you put something out there in the world for people to try. Let them break it or applaud it. The most import thing is that they use it so you can figure out what works and what doesn’t. 

By putting things out there in the world, you’re getting them in the hands of your users. You’ll discover new features and benefits that weren’t possible by just sitting at the drawing board. You’ll be able to understand what matters to people. 

Often times the things you think that might make an incredible difference, turn out to not be relevant at all. Your end user might have something completely different in mind that’s important to them. You won’t know until you put your ideas out there. Start talking, making, gathering feedback and improving. 

Business ideas and projects evolve over time and don’t happen overnight. It’s an iterative process of trial and error. Let user feedback guide you and address the things that are important to groups of people and society.

– Matt Grigsby

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