Editor’s note: This article was first published in August 2013, and describes Wavii as recently bought by Google, an acquisition that took place in 2013.
There are simple answers, such as “pick a trending field” or “look for a market that hasn’t been tapped yet”. Or, contradictory as it may sound, “carve out a niche in a market that has been around for more than 20 years.”
Perhaps the most common answer is “find your passion and turn it into a business,” but the truth is that great business ideas don’t usually come about that way.
Dan Lewis, one of the partners at Wavii (a startup recently bought by Google), explains how business ideas really come about and the problems that come with them.
See also: Looking for business ideas? Here are 41 to get you started
3 ways business ideas come about
1. The spontaneous idea
This is the idea that hits you in the shower, while driving or while doodling in a meeting. It can also come up out of the blue in a conversation with friends: one of those moments when the light bulb goes on. Suddenly the dots connect. You get so excited that you half expect Albert Einstein to call and congratulate you. And since you’ve never seen a business like it, you assume nobody else has thought of it. For a moment you can almost see euro signs in your eyes.
So you head to your computer, look up information on the project and discover that several people have already thought of it. In fact, there are already companies offering your innovative, original service. Then you think you could do it better, and after mulling it over for a few days you start to find some problems. You talk to friends you trust and they point out things you hadn’t counted on at first.
See also: The business lessons these entrepreneurs would give their younger selves
For example: nobody would pay for it, there’s hardly any market, or the companies already doing it are about to close because it isn’t a profitable business. For one reason or another, you don’t see yourself able to give shape to the idea. You can’t picture how you would succeed. Little by little you start procrastinating, and your dream slowly fades. Maybe it’s better that way.
2. The insider business idea
Maybe you’ve spent the last 10 years at a company that offers a product or service, and you’ve noticed some flaws in the company that leave its customers less than fully satisfied. The product could be better; you have a formula for lowering prices and improving the service.
Let’s say the company pays outside vendors or subcontracts certain jobs, and nobody seems happy with the results.
You tell your boss, but at that moment he either has other priorities or simply doesn’t listen. Then you see the business opportunity very clearly and decide to start that business on your own.
At some point you follow the steps to start a business with no money, working on your idea part time on the side. You have the contacts (suppliers and customers) and you have the solution to problems the industry isn’t solving. In other words, you’re well informed about the sector and perfectly positioned. Great companies have been born this way.
It’s called the insider idea because it usually has a high success rate, since it grows out of a clear solution to a problem in a sector we know inside out.
3. The deliberate idea
In this case you don’t start with a business idea but with the desire to create your own company and become a business owner. What you lack is the idea, and you have to go looking for it. In the previous cases the idea arrived unannounced, without being sought; when we’re the ones who go looking for it, the mental effort is much harder and the rules of the game change.
Many of the most basic answers can be found in a previous article, How do I know which business is right for me?, which essentially covered four points:
- What you love (what you’re passionate about).
- What you’re very good at.
- What the world needs.
- What people will pay you for.
We could add a few more questions. For example, we should think about what our real motivation or personal goal is, and whether it’s worth setting out on the hard road of entrepreneurship. Once you have the answer, the business could be:
- A fun business or one based on a hobby, such as making bracelets or scarves to sell online, decorating sneakers, painting pictures or printing custom slogans and photos on shirts. And make no mistake: micro-businesses can be very profitable.
- A business based on some aspect of our lifestyle, which we could start part time but wouldn’t mind seeing become full time.
- A full-time startup launched with the idea of selling it later (an increasingly difficult plan whose chances of success drop considerably).
- A business started from home with the aim of turning it into a large company.
It’s a good idea to write ideas down as they come so you can discard some later, and to look around you to spot people’s problems or needs. Richard Branson even says that he has found many of his ideas while on vacation in other parts of the world.
Once we have several ideas, we put them to the acid test with a few questions to evaluate them. At this stage, the advice Stephen Key gave on going from idea to business in just 11 steps is well worth following. And to check whether your project has a viable market, you can read our 7 steps to define your market.
Recommended: 40 of the most profitable business ideas of recent years
Featured image: victorgrigas, CC BY-SA 3.0, via Wikimedia Commons.
