What Constitutes a Good Business Idea?

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There are a lot of good business ideas out there, but there are none that offer a guarantee of success or a road map to riches. Whether a business startup idea could be considered good or great depends on a lot of variables. Here are a few of them:

  1. Demand for the product or service: Do you have reason to believe that there is a strong and ongoing demand for the product or service you’re thinking about offering? Feedback from one or two people (or a “hunch”) is usually not enough of a reason to forge ahead with an idea for a new business.
  2. Competitive factors: If there are already several dominant and well established competitors in your market — whether local, regional, national, or global — ask yourself if you genuinely believe that you have a realistic chance of penetrating that market and gaining a sufficient market share? If there IS stiff competition in the marketplace, then it’s especially important that you offer your customers unique benefits and distinct advantages. Developing a marketing plan* and a unique selling proposition (USP) is one of the first and most important steps to entering a competitive business environment. To put it bluntly but accurately, you have two choices in the business world: “Differentiate or Die!” A marketing book of that title, written by Jack Trout and Steve Rivkin, elaborates on how and why it’s essential to stand out from the crowd to survive in “an era of killer competition”.
  3. Budgetary factors: Although this would not apply to starting a business with no money (and there aren’t a lot of good business ideas that fall under that category), most business startups require (at the very least) a computer, an Internet connection, a phone line (preferably a dedicated one), a supply of business cards, and a couple hundred dollars for miscellaneous marketing and other business expenses. Small business survival depends on a lot of factors, including having enough money to fuel your business growth while meeting your living expenses and financial obligations. Assuming you meet the requirements for a business loan, such as creditworthiness and relevant business experience, financing can often be obtained from financial institutions, the U.S. Small Business Administration, crowdfunding websites, and/or family, friends, or other investors. Writing a business plan is often the first step to securing financing and creating a realistic, goal-oriented business strategy.
  4. Do you have the right stuff? Everyone and their brother talks about starting their own business some day, being their own boss, and escaping the rat race, but only a small percentage of those people have the initiative, the practical experience, the organizational skills, the tenacity, the entrepreneurial mindset, the salesmanship abilities, and other qualities necessary for small business success. Before starting your own business, it’s highly recommended that you have that candid conversation with yourself, as well as with people whose opinions you value.

So there are no quick and easy answers to the questions “What business should I start?” and “What is the best business to start?” It all depends on what you’re good at, what you have a passion for, your tolerance for risk, your financial resources, whether there’s a sufficient demand for your product, service, or idea — and, or course, the positioning of the stars (only  kidding about that last one!)

Whatever type of business idea you decide to pursue, remember to get expert advice on tax planning, choosing a business structure, business insurance, meeting legal requirements, and so on. When starting a business, one of the most authoritative websites to visit for is the U.S. Small Business Administration. As I mentioned, the SBA is also a potential source of small business loans. Free small business advice and entrepreneurial mentor programs are also available from SCORE.

Best of luck in all your small business pursuits!

BTW… If you’d like to download a step-by-step guide to starting a specific business, I’ve posted links to several small business startup guides* at my website Marketing Survival Kit.

–Joel
Business blogger, freelance writer, marketing strategist
Feel free to post a comment on this blog or  email me if you have any questions.

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*Disclaimer: My business ideas blog and small business marketing website feature links to websites, digital products, and services for which I am a compensated affiliate. Although there are a few exceptions, I do not currently endorse specific products or services.

2 thoughts on “What Constitutes a Good Business Idea?

  1. Thanks for sharing, Joel. Demand for the product or service reminds me of the reality check. The fact that you think people need a product or service is not sufficient enough for a startup. A market survey should be done as it would aid the final decision.

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