What makes a good business idea?

With the abundance of incredible startups and local independent businesses here in the North East, it’s hard not to become inspired.

Doing what you love, working your own schedule, being your own boss and making a difference in your local community… what’s not to love? And the inspiring local entrepreneurs here in the region make it look just as easy as all that. But starting up your own business is undoubtedly a risk. How do you know if you’ve got what it takes to be a business owner? And – perhaps more importantly – how do you know that your business idea not only has the ingenuity to break into the competitive market, but the legs to keep your brand thriving and sustainable?

Sure, you remember Learn Smarta – the qualification-standard course that takes you right through the basics of starting up your own business. Learn Smarta promises to help you have all the skills you could ever need to be a top-class business owner at your fingertips. Plus, it gives you the opportunity to take advice and confidence from real business experts, as well as join a community of like-minded entrepreneurs with whom you can share experiences and support. Pretty cool, right?

We caught up with Rebecca to find out what makes a really great business idea… and what doesn’t.

Is there a market for my business idea?

Thorough market research is an absolute must for new business ideas. If there’s not enough demand for your product, your business will never take off. Plus, it’s really important to understand your customer before trying to sell to them.

How many of your products would you need to sell in order to make a living?

If you only make a small profit margin on your product, you’ll need to sell a high quantity – which means you’ll need a much greater demand. Growing markets are going to appeal more to investors and provide better business opportunities.

Does your business idea make life easier or solve a problem?

Every product serves a purpose – successful businesses are rarely built on novelty value.

It could save people time, make a much-used process easier or provide them with a new luxury. It’s crucial to be clear about how your product helps people, solves a specific problem or fills a gap in the market. Again, market research will help.

Things to remember:

• It is important to do thorough market research
• Smaller profit margin requires greater demand
• Growing markets are preferable
• Know what purpose your product serves

CAN MY BUSINESS IDEA MAKE MONEY?

Work out how you’d make your product and how much you’d sell your product and/or service for. You need enough profit left over to sustain a business.

Factor in employees’ salaries, expenses, administration costs, labour, transport and material costs. The smaller your profit margin, the more demand you need to make up for it. Talk to manufacturers to find out about costs.

Things to remember:

• Work out all costs
•  Compare with the estimated sale price
• Smaller profit margin needs higher demand

Operating in an expanding sector is a much better guarantee for growth potential.

Avoid markets based on trends – you don’t want your idea to become passé after a year or two.

Things to remember:

• Make a note of expanding sectors, more products and potential locations
• Look at how your market will develop
• Growing markets preferable
•  Avoid trends