In the new series of articles “Instructions for starting a business”, you will learn step-by-step how to found a company, what you have to consider and how you can avoid mistakes at the start of your entrepreneurial career.
further articles in the series:
Step 1 – Find a business idea (current)
Step 2 – The founding team
Step 3 – Validate a business idea
Step 4 – the business model
In most cases, finding a good business idea is the first step towards self-employment. But what is actually a good idea and how do I find it? Can a successful company develop from every good idea? Or is a good idea not enough?
Characteristics of a good business idea
“I would love to start a company, but I don’t have a good business idea.” Whether from colleagues, friends, family members or from yourself – everyone has probably heard or made such a statement. Many people believe that you have to reinvent the wheel or discover a unique innovation in order to create the basis for a successful company. But that is a mistake!
A good business idea essentially only consists of three essential components:
- She solves a problem
- There is a market for it
- It is economically viable in the long term
If an idea fulfills these essential characteristics, the basic requirements are fulfilled and it is definitely worthwhile to deepen and further develop the idea (more on that in a moment).
If an idea does not meet any of these points, or only fulfills one of these points, it may be a good idea, but not a business idea. Here are a few examples:
If you have a solution, but there is no market for your solution (because maybe only you have the problem) – nobody needs your solution and you will not be able to sell it. But even if you have a great solution to a real problem on the market: if you only make losses, you will eventually go bankrupt and your idea will therefore not be economical.
So much for the theory. In practice, however, there is seldom an idea that anyone else has never had, which means that there will be competition in the market. (Caution: if a market has no competition, this is usually an indication that one or more of the characteristics are not fulfilled). So in the next step you have to deal with how you differentiate yourself from the competition.
USP – the unique selling point
In most cases, an idea alone is not enough. You have to deal with the idea, develop it and continuously improve it and find something that clearly differentiates your idea from the competition. This unique selling point, this unique sales advantage is called USP (unique selling proposition) and it can be found through different approaches.
A USP could be, for example, that you solve the problem better, cheaper or differently than the competition and thereby gain a competitive advantage. Or you are the first to introduce a product into a new market and thus have a head start, the so-called first mover advantage.
Regardless of which options you use, every good business idea needs a clear USP that can be easily formulated and that everyone understands. Without a USP you simply have no chance against the competition.
Find the business idea
A good business idea should meet certain characteristics and needs a USP. So the question arises of how to find a good business idea. I would like to give you a few suggestions for this:
- Be attentive
Anyone who walks through the world with open eyes and ears and observes things carefully will find hundreds of inspiration for good ideas every day. On the way to work, while shopping, on vacation or during a conversation. Again and again you can find problems in everyday life and use these problems to come up with solutions.
- Write down problems and ideas
It can also be helpful, for example, to quickly write down these problems in the situation in order to think about them more intensively at a later point in time. I try to write down as many problems and ideas as possible in an “idea book”. A lot comes together over time and you can pursue the most promising ideas.
For example, I decided to found my startup Flaterio. I experienced the problem of the tedious search for an apartment myself, wrote it down in a book of ideas and even created a brainstorming word file about it. After a few months I came across the note again and then pursued the idea. In addition to the idea for Flaterio, there are currently 16 other business ideas in my notebook.
- Get inspiration from other startups
Existing startups are another way of finding exciting business ideas. For example, you can get inspiration from American or Asian products / ideas and then implement them in Europe or look for a different area of application for the same business model.
- Own interests
You can also look around for business ideas in the area of your own interests. Since you are already an expert in these subject areas, you are even more aware of the problems and you have a particularly strong incentive to find a solution.
These are just a few of the ways in which you can find a good business idea and if you are specifically looking for business opportunities, sooner or later you will definitely discover them.
Finding a good business idea is the first, but also one of the most important steps on the way to starting a business. A good idea alone is rarely enough and has to be developed into a business idea with a clear USP. I hope I was able to give you some food for thought with the article and help you come up with ideas!
In the next article of the “Instructions for founding a company” you will learn why the founding team is particularly important, how to find suitable co-founders and what you should consider when founding a company on your own.