How To Find A Good Business Idea?

Finding business ideas and generating business are some of the most stimulating, rewarding, challenging and fun things a person can do and not only is entrepreneurship very beneficial for oneself but it is also the very foundation that wealth and prosperity rests on. Yet the process of finding and developing business ideas that works for a specific person is a sometimes complex and demanding process that can be hard to understand and cope with.

Below I will share some of my thoughts and experiences about how to find a good business idea, how to approach business ideas, how to analyze them and some common mistakes aspiring entrepreneurs often make.

Market Disruption

Disrupting an existing market has so far proven to be one of the best paths to success and fortune. By changing the value proposition for an entire market the opportunity to amass a great fortune is enormous.

By disrupting a market your business should provide solutions that are groundbreaking and address the challenges faced by customers in a totally new way, a way that will disrupt the ways of the market and have a major impact on the current actors on that market.

Finding out which industry is the most ready to be disrupted is a challenge that aspiring entrepreneurs struggle with all the time. After all, finding a business idea that disrupts the market will make you superrich. 

Many of the Internet giants have achieved success by building new online businesses that are very disruptive and place information and services previously time consuming to find or use right at our fingertips. The old argument that everything interesting has already been created has been proven wrong time after time. Suggestions for new online businesses therefore always include anything that disrupts the supply chain and make goods and services cheaper to deliver and consume, Amazon is an excellent example of such a venture.

Global Scope – Market Size

The size of the market you address is something investors will pay a lot of attention to. The potential market size is what determines the potential of your business idea and the potential number of customers? Needless to say is that the more customers you can reach the better it is.

Further, it is not easy to build processes and organizations that have a capacity to be truly global, which increase the potential of your business – if you manage to overcome the many hurdles that stand in the way for a truly global organization. Different countries have different regulations, cultural and wealth differences and you must adapt to these differences to be successful.

Production Of Scale

Scaling a business basically means that the more units you produce the cheaper the production of the last unit produced will be. This means that businesses that produce many units at an ever lower marginal cost have a much greater chance of building value for its customers – by being able to lower the sales price – and for its investors by providing a larger and larger profit for each unit produced.

Scale economics is a chief challenge to businesses in the service industry. Surely they can create support systems, knowledge databases and centres of excellence to lower the production cost but it only goes so far. Factories can build larger and larger production lines and increase their purchasing power to reach large scaling capacity but they also face fixed costs that are hard to scale; research and development being one, capital costs another.

The current leaders in production of scale are the Internet based companies. Adding one more user presents an extremely low cost – the servers – which mean that Internet based companies can expand fast without suffering from the investment needs in production, which historically has challenged businesses. Add to that the opportunity to go global without hampering regulations - but for government censorship in a few authoritarian countries - and you have a near perfect economy of scale. These factors put together are the reasons so many of the richest persons today own Internet based companies.

Examples Of Fortunes Created Through Market Disruption And Scalability

Uber – pushing market prices and lower distribution costs on a static market

Facebook – increasing the social reach for people

Standard Oil – lowering production cost of distilled oil products and distribution through efficient operations and cross-state borders effectively challenging a legal structure of a large country 

Ford Motor – the well known moving assembly line and control of the supply chain

IKEA – eliminating the assembly cost by pushing it to the customers and thus creating an enormous price advantage

Dell Computers – production on demand

Spotify – streaming of music instead of large file downloads and CDs.

AirBNB – increasing supply by making private renting of privately held accommodation easier accessible

The list could be expanded by many more examples. One thing they have in common is that they changed the logistics of a market, a product or a service while at the same time taking advantage of economics of scale. We can say with certainty that the new wave of entrepreneurship will only continue to grow in strength.

Start A Franchise Instead Of Developing Your Own Idea

If you find it hard to come up with a business idea of your own or want to lower the risk when you start a business you might want to consider a franchise. There are many benefits of owning a franchise instead of operating your own business.

Some of the benefits to owning a franchise compared with a regular start-up typically are:

o   Proven business model

o   History of success to build on

o   Recognised brand

o   Business System

o   Knowledge

o   Experience

o   Expertise

How much it cost to start a franchise varies greatly, many franchises have very high starting fees and require large up-front investments but there are many low cost franchises too. Many small franchises are possible to have as a side business and they can make as much as $1,000 to 2,000 per month once they are up and running.

One of the best things with starting a franchise is that you can find extensive material about them and from the material you can decide what are the best franchises to own depending on your interest. There are enormous amounts of websites dedicated to listing and reviewing franchises and they are all very easy to find.

My own company, Fryday, operates as a low fee event franchise – fees range from $20 to $100 per month - where the franchisee has the exclusive rights to his or her city and manage Fryday’s events there.

Where Can You Find Good Business Ideas?

Cases where people came up with a unique business idea all by themselves are extremely rare if they exist at all. If you think about it most businesses are working with services and products that existed before but are done better and more efficient now or they solve the same or a similar challenge for clients. You might object and say that airplanes, cell phones and computers were total novelties when they came around but actually they were furthering needs that humans had throughout history: Transportation, communication and calculation. The new ways of solving these challenges were just better.

The question of where you can find a good business idea has been asked as long as humans have been doing business, the answers how to get that idea have been many and some has produced great results while others have been less successful. First you can hit the Internet and search for “good business ideas”. This is of course an obvious answer to a complicated question but nevertheless a good way to go about it.

Second, you can look for company statistics and try to find companies that are growing fast, are working in new ways, and are extremely good at marketing, sales or other core parts of any business.

Third, look up success stories and try to find out how those companies started and what was their initial advantage. Companies that are already huge are looked upon with aw but how did they really take off? Did they take off by themselves or did they get help from government regulations, monopolies or other “cheats”. If you can identify companies that took off in a way you identify as possible for you to address that is a great comfort.

Fourth, the simplest way to find a good business idea is to copy somebody else’s business and do it better.

Fifth, travel to foreign countries and look at the society there. What do they buy? How do they live? What is important for people there in terms of comfort and status? Can any of these observations be translated into business in your home country?

Sixth, find companies in your own market that are doing good or bad. What might be the reasons these companies are doing good or bad? Can you do it better?

How To Analyze The Business Idea?

When you have some good business ideas you need to analyze them to see if they fit you and your market.

What are the actual challenges faced by people and companies where you are located? Can you provide certain goods or services cheaper? Will the business ideas you have add something entirely new to the market? Is there are craving for luxury goods? Are people actually willing to pay more for goods and services they already have because they are better or more comfortable? Can you produce something in your home country and be competitive on a foreign market due to quality or price? Are you looking for a way to make you rich or to have a nice lifestyle and being in control over your life?

How much do you have to spend to produce the new product or service? Do you need a business partner? How will you find a good business partner? Will it take forever to develop the product and cost more than you can possibly afford or get investors for? Are you willing to live like a Spartan for years while bootstrapping your company? Are you bringing something onto the market that will require enormous marketing to change the behaviours and feelings amongst your presumptive customers? Some things that work well in one country can be a total disaster in another market as people might not have the spending power, knowledge or there is a lack of infrastructure. It is hard to sell sand in Sahara so to say.

Finally and often forgotten when looking at business ideas: How do you really earn money from this business? You are not creating a business for charity after all but should be able to make a living from it, pay employees and deliver profit to the owners. Starting a company is rather easy, developing the product or service harder, finding clients much harder and making a profit from this complicated system of organization, product development, marketing and sales is by far the hardest part. Every single detail has to be in place and it has to be in place every day for a long time.

It is great fun to be in business and it is a great feeling to dream about success. Waking up on a Monday morning and spend your week trying to solve what appears to be unsolvable problems while at the same time being haunted by grumpy employees and customers is, on the other hand, something that can drain anybody.

But with the right spirit and a long-term perspective the dream of freedom, riches, recognition and a brilliant lifestyle make it totally worth going for. And that dream comes closer and closer for every Monday morning you go to work with a big smile and the confidence that you will make it because that’s just the way it is. 

Finding A Business Idea That Works With Little Or No Investment.

There are many ways to build a small fortune in a secure way and it is most often achieved by addressing a local market and improving something there, adding a product or service not yet present and – most important – working all those long hours that are required to enter and succeed on that market.

Maybe this is not so groundbreaking but it is a sure way to get small-time rich if you are willing to put in the hours. Most businesses are actually built this way and in time some of them become really successful.

Here is a short list of some business ideas for a person with limited capital:

Do what others do, just do it better

Copy business concepts from other markets

Import and sell new products

Improve sourcing to get better prices

Use exiting tools to reach a much larger market

Reorganise local markets

Use new technology to improve existing businesses

Improve service levels in existing businesses

Bootstrapping

What can you do if you have a great and unique idea but not the money to implement it?

First you should rest assured that you are not the only one who has faced this challenge. Many of the great businesses around today have been built from scraps and there is even a theory behind it called bootstrapping, and it has many advantages.

Bootstrapping means starting a business without external help or capital. Such start-ups fund the development of their company through internal cash flow and are cautious with their expenses. Many successful companies started with bootstrapping, examples include Apple, Microsoft and Dell.

Control

Bootstrapped start-ups grow by reinvesting its own profits, this financing approach allows owners to maintain control of their business and the value created belongs to them alone.

Efficient

Working with your own resources means that super-efficiency is necessary. You become more aware of the costs involved in the day-to-day running of the business and will operate your company on a ‘lean’ business model, become resourceful and develop a versatile skill set – all attributes of a successful business and a successful entrepreneur.

Effective

The founders of a bootstrapped company are their own bosses and are responsible for all crucial decisions in operating and growing the company. This can ensure that the business is moving in the right direction without any investor influence and investors and other external parties might have very short-term priorities that are not always good for the long-term prosperity of the company.

Focus

The fact that raising external finance – a task that can be very stressful and time-consuming - is not an issue for bootstrapped companies means they can concentrate on the core tasks of the business such as sales and product development, thereby increasing the likelihood of creating a profitable business.

Solid

Building the financial foundations of a business on your own is a huge attraction to future investors. Investors, such as banks and ventures companies are much more confident funding businesses that have a solid foundation and the total commitment from their owners. Bootstrapped companies run a 50-50 chance of going bankrupt during their first five years but once they pass that threshold they are likely to thrive for many years going forward.

Common Mistakes When Starting A Business

There are many critical factors required for a company's to succeed, things that start-ups have to get right from the very beginning.

To become a successful entrepreneur a person has to have many character traits that are not common among the general population and he must also be able to withstand some of the feelings and behaviours that are generally what society consider signs of success. Here is a link to an article that addresses some typical mistakes that can ruin your business if you are unlucky or not careful.

Risk Aversion

If you are afraid to put yourself in front of your potential clients by bringing your goods to the market you have already failed and if you need investors but are afraid they will reject you it will hamper your business’ growth and development.  If you are risk averse you should probably avoid running a business altogether.

Prestige

If you have to show off and express your success through luxuries and other symbols of status it will cost you resources you could have and probably should have invested in meeting the needs of your clients and this can cause your business to fail. Vanity is a deadly sin and it can break your business.

Pride

If you feel you are too important to deal with and work with the simpler tasks of your business operation and therefore hire people to do this work for you it will consume resources you could have and should have used to build the foundation of your business. You will also miss out on important knowledge about your business, which increase the likelihood of you making mistakes and these mistakes can cost you clients, effectiveness and efficiency.

Lack Of Focus

Entrepreneurs, who cannot decide on what to focus on but have side jobs, continuously start new projects and launch new products and services despite not yet making money on any of them will likely burn the capital they have before having operational profits and therefore they might risk bankruptcy due to a very bad cash flow. Doing everything half good is exactly the same as doing nothing really good at all.

Lack Of Endurance

It takes an enormous effort and usually much longer time than initially expected to build a successful business. The stories about immediate success that have become urban legends are based on cases so rare that there is a greater chance of becoming rich by buying a lottery ticket. Entrepreneurs who are unwilling or unable to work hard for a long time even when it feels like the business is about to go under are not likely to become successful but rather likely to lose speed and succumb due to inactivity.

Wrong Partner

Having a partner in a business can be a beautiful thing and make it possible to realise your dream much faster and better than you would have hoped for but there are also pit-falls.

What are the things you should look for in a potential business partner? Make a solid background check before you go into a partnership. There might be things there that you are not aware of with the potential partner. Does the person really have the knowledge he state he has, has the person had any entanglements with the law or with previous business partners? Does he or she have the same ambition and work ethic as you have?

Would you invest in a company without a proper due diligence? Probably not, so why take in a partner without looking into that persons past? Banks, investors, suppliers and clients might run for cover if they discover that your business partner has a questionable background. You need to find out before anybody else does or your mistake can cost you dearly and even ruin your business.

My Own Experience

Coming from a background where most relatives were running small businesses I have had businessmen role models from early childhood and while being a graduate student I decided to become a businessman myself. Throughout my rather rocky career as a businessman and entrepreneur I have had many opportunities to rethink that early decision as I have suffered from too much work and too little success on many occasions but each time, even during the roughest of times, I have not changed my mind but instead pushed ahead with whatever project I was working on.

My stretch of start-ups include an entrepreneurship school where I was not an owner but still the full time entrepreneur who did all the start-up work – and we had nice funding from one of the richest persons in Sweden, the owner of H&M. That was a very good experience as I could see first hand how being well-financed lead to enormous waste of resources, infighting among management while consultant vultures flocked around us and got easy business and sent us enormous bills. Then I moved on to start an e-learning business, a mini market chain, and an event ticket company – Ticket2.com. The ticket business focused on concerts, theatre and – foremost  - on European football so I travelled extensively across Europe and built a supply network for tickets while spending all my time when in the office in Stockholm working on online marketing and management.

The great recession of 2008 lead to a 50 percent decrease of turnover in one single month – October 2008 – as cutting spending on event tickets was among the first things people did when the economy slumped. I had to cut spending, move to a cheaper office and fire all my staff, but thanks to having contract flexibility on most fronts I managed to stop the bleeding and stabilise the business even if on less than half the size than before the recession started. Being rather worked out and close to burned out I decided I needed a break to recharge so I left the ticket business to my partners, resigned as CEO, left Sweden and travelled for four months before ending up in Ukraine where I decided to settle. For the record, the Ticket2 is still operating and profitable.

Once in Ukraine I hooked up with Swedish and Dutch expats and started an employer branding company where I invested most of the money I had available after selling my house in Sweden and my shares in the ticket business. The employer branding company turned into a disaster within a year and was finally scuttled in 2011. The Ukrainian market was simply not ready for it despite our assumption that something that worked so well in Sweden would be easy to launch there.

Short of cash and headed for a new burnout I started a seminar-style training company where I gave classes based on my key competences in online marketing and professional networking. This business – Coffeenar – did okay and paid my bills and was very easy to run. The company still exists but has not been active for a few years.

So far all the businesses I started had been launched after considerable thinking, planning and market research. Budgets were put in place, teams of partners and employees carefully selected and the sales processes were very professional. Apart from the employer branding company – were I lost tons of money and liquidated the business – all the businesses I started had produced profits and had had good growth but had not taken off in the way all entrepreneurs dream of but I could sell them making small profits.  

While struggling with the employer branding company and trying to build a professional network of in Kiev, Ukraine, I became frustrated there were no easy to access networking events in Kiev that were not packed with only expats. I kept asking were normal Ukrainian business professionals met but got no answers. In April of 2010 I therefore decided to start my own networking event and called it Fryday – yes Fryday with a Y which is a slang twist translated from a Swedish expression describing an occasion where you party and show off. This was a pure hobby project even though I hoped to make useful business connections as a side effect of it. At the first event on April 23^rd 2010 17 guests showed up, in May there were 35, in June 50 and it kept going on like that. In October a man contacted me and wanted to be an event sponsor. Not being sure how to deal with a sponsorship I asked him to pay for the first 50 drinks and gave him a square by the entrance were he could promote his company. In November I was contacted by the five-star InterContinental in Kiev who wanted to host our event – 250 guests showed up – and in January of 2011 we went to Ukraine’s number one nightclub and had 400 guests.

At this point many of the Fryday members were convinced I produced the events to make money and when I told them I didn’t they just nodded and smiled like they didn’t believe me at all. During the spring of 2011 the idea of making a business out of the Fryday events nested with me so eventually I started asking the venues for a kickback of 20 percent. This business model produced some income but lead to constant arguments about how much the bar turnover actually was at the events. Then I started charging venues a fixed sum of money for each guest entering, based on the assumption each guest had a certain value for the venue, this model lead to similar arguments after almost every event. Finally I decided to charge the guests instead and taking control of the entrance, this model works and gives us control of the event income. 

Later in 2011 a friend’s wife who had nothing to do after the husband got a job in Almaty, Kazakhstan, contacted me. She wanted to launch Fryday there and she did so with success. In 2012 other persons who wanted to launch Fryday in their cities contacted me but again I had no idea how I should manage these new communities and how I could make money from them.

Eventually I settled on an event franchise model were Fryday’s Representatives in various cities and countries pay a monthly fee for the exclusive rights to their city or cities – some have more than one.

Fryday is now a low cost franchise producing professional networking events in more than 20 cities and countries in Europe, North America, Africa and Asia and slowly but surely it grows and is today making a small profit.

In 2013 the Maidan revolution started in Kiev and in March 2014 Russia invaded Ukraine. This caused an enormous challenge for my business as business activity in Ukraine went to a standstill and we lost the Russian market altogether as we were based in Ukraine, the enemy country.

But despite the tremendous turmoil I kept on working while suffering the emotional onslaught and almost suffering a total breakdown.

But here I am today, half a successful entrepreneur, working long hours on trying to expand the franchise through online marketing and word of mouth while at the same time building a web system to support the business. I am now happier than I have ever been, I am in better shape than I have ever been and I am – as always – totally convinced that great success is around the next corner.  

What is weird for me is that I started so many well-planned businesses that all required a lot of work to prove the business models and then I start a hobby project where others contacted me and proved the business model for me before I understood what it was myself.

A friend joked with me once when he heard about Fryday becoming a small success and said that even blind chickens will eventually find seed, and he was right. After 20 years of being a hard working entrepreneur who has been close to total break down and bankruptcy several times while seeing his friends from business school pursuing great careers I stumble on a business case that works by accident. Nobody who knew me – myself included – when I was young would have ever predicted I would work with event management and becoming rather good at it too.

The lessons learned from all these years are many. First and foremost is to never give up, never give up and - never give up. If you have a dream to become a successful entrepreneur you will become one. That’s just the way it is. All the hardships, failures and general confusions will only make you a better entrepreneur and increase your chances of success.

The second lesson is to be active at all times and hit the market as hard as you can chasing clients and business. I have met many people calling themselves entrepreneurs but in reality they are stuck in the business-planning phase and lack the guts to launch their product or service, approach clients and get the business. These people have cost me a lot of time as I took them seriously when they suggested business partnerships and other common activities.

I am spoiled with having great support from family and my small group of friends, and I also got an excellent education in business for free. Everything else I built with sweat, tears, creativity and scraps for money.

To conclude my advice is that you look for any opportunity you can and then pursue that opportunity relentlessly. Focusing too much on the perfect business idea or getting venture capital will only slow you down. If you get the snowball rolling you will eventually understand what your business plan is and the venture capitalists will call you.

Get to it and just do it!

Anders Östlund

Founder of Fryday, An International Network Of Professionals

Did you enjoy this article? There are plenty of more useful articles on how to succeed in business at Fryday’s Business Blog.

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For blogging, partnerships or other questions you can contact us at info@fryday.net.

Fryday is organizing several types of networking events and provide social and professional networking in cities across the world.

Fryday is a very low cost franchise with presence in cities and countries across the world. Read more about Fryday’s low fee event franchise or contact us at franchise@fryday.net for more information.