What makes a good business idea?
We learn some entrepreneurial secrets from Learn Smarta Content Creator, Rebecca Baty
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?
Well, the first question is easily answered. If you share any of the top 12 traits you’ll find in every entrepreneur, you can be pretty sure you have the personality type that’ll make owning your own business a piece of cake. Checked them all off? Ok, now it’s time for your business idea to take shape.
This is slightly trickier. But luckily for us, we’ve got an ace up our sleeves – in the form of Learn Smarta Content Creator, Rebecca Baty.
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.
WHAT MAKES A GOOD BUSINESS IDEA?
Not all great business ideas turn out to be viable business opportunities, so how do you assess if a new business idea has what it takes to flourish?
There’s certainly no official ‘ideas for small business’ test.
But start by asking if your small business idea stands up to the following questions before you go any further:
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.
What are your Unique Selling Points [USPs]?
Don’t forget, you’re more likely to get your great business idea off the ground if it has a sound set of USPs.
This differentiates you from competitors and makes your product more desirable. Competitor research can help you understand the market you’re about to enter into a little better.
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
IS MY BUSINESS IDEA VIABLE?
You need to be realistic. There’s nothing wrong with being imaginative and brainstorming. But your business will only work if your product is technologically possible and manufacturing costs are feasible. You’ll also need to think about any potential overhead costs, such as the number of staff you’ll need, if you require premises… etc.
Unless you have lots of your own money to pour in, you need a business that can operate cheaply to begin with and which doesn’t require dozens of staff members. Or you’ll need to think about business finance and options for funding a new business.
It’s a good idea to write a business plan to help you think through the logistics of what you’re considering.
Things to remember:
- Be realistic about what you can achieve with what you’ve got
- Low starting costs and fewer staff are more likely to work
- Business finance options can give you start up money, but you’ll need a business plan
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
HAS MY BUSINESS IDEA GOT ROOM FOR GROWTH?
There are four main strategies to achieve business growth: market penetration, product development, market expansion, diversification.
Put simply, that means:
- Sell more to existing customers
- Start selling to new customers
- Develop new products
New technology provides enhanced opportunities to do this by automating processes and reaching people around the world. It’s best if plans for growth correspond with how the market you’re working in looks set to develop over the next few years.
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
Feeling inspired? If this has given your budding business brain plenty of food for thought, why not register your interest for the Learn Smarta course on the Smarta website, or find out more on their Facebook page or Instagram
Due to the incredible (but not unbelievable) popularity of the course, they’ve already opened registration for the next cohort of Learn Smarta inductees, who will start on Monday 12th July. We’d suggest registering your interest nice and early, as spaces are bound to fill up fast!