10 steps to finding a successful startup idea
One of the first and most important steps to founding your own startup is looking for an idea to build your business on. Here are 10 steps that demonstrate how to find not only any business idea, but rather a good one.
Step 1: Define clear goals
What even makes for a good startup idea? The exciting part is that the answer to this question is by no means the same for all founders. To understand whether a certain idea matches your personal vision and preferences, you have to figure out your objectives first. To this end, you should ask yourself the following questions:
- Do I want my startup to be a hobby-like business (e.g. selling some self-designed pieces of jewelry on Etsy)?
- Should it be a part-time business that might, over time, turn into a full-time business (e.g. a blog about car accessories)?
- Do I want it to be a full-time business aiming at an exit after 3–5 years and seeking venture capital (e.g. a marketplace for renting out private cars)
- Should it be a large, cash-flow positive business (e.g. import and reselling of foreign furniture)?
As you can see from the examples, business ideas can vary greatly. There is no right or wrong choice. Instead, the idea has to fit the respective founder.
Step 2: Consider your strengths
A good starting point for looking for a suitable business idea is considering your own hobbies and interests. It increases the probability of success if you are genuinely interested in the topic and if you already possess some deeper knowledge and capabilities in the area. With said background, you are more likely to build a truly relevant solution to a given problem.
Step 3: Use creative techniques
Coming up with a business idea is a largely creative process. Just as in other areas, you can make use of creative techniques that help stimulate your thought process. It is beyond the scope of this article to explain any technique in detail. Inform yourself about different approaches to creativity and find the one that sounds most appealing to you. I, personally, prefer techniques that are meant for teams instead of individuals. As we are going to see in the following, having input from external sources is an important aspect of the search for ideas.
Step 4: Think like a founder
To become a founder, you should get used to thinking like a founder. This means to keep an open mind in your day-to-day life in order to realize opportunities for business ideas. This implies that you should observe how things are currently done and reflect on what’s missing or how it could be improved — ideally, every minute of every day. You can set out to start jotting down every idea that comes to your mind. The more sources of inspiration you become aware of, the more potential business ideas you are going to spot in your surroundings.
Step 5: Talk to people
It follows from step 4 that talking to the people around you can be a very worthwhile exercise, too. My advice would be to not ask the other person: “Which product or service would you like to have?”. For the majority of people, this question is hard to answer. Rather, ask: “What was a memorable problem that you’ve encountered recently?”. Deriving a solution to this problem is then the task of the future entrepreneur.
Step 6: Clearly define the problem and solution
If the last steps have left you with a list of potential business ideas, you should try to outline the problem and your solution in two to three sentences each. This is very important to distinguish a good idea from a mediocre one. A good idea solves a clearly defined problem. In addition, the description of the solution should preferably include a unique feature that makes the idea special. Being aware of this from the very beginning is also helpful because it is one of the first questions that every investor asks.
Step 7: Ask for feedback
As early on in the process as possible, you should ask potential clients from the relevant target group for their feedback on the idea. The most important part here is to identify people that actually belong to your target audience. Your family members and friends are often not part of this group and can, therefore, not provide relevant insights. In addition, studies have shown that there is a so called “interviewer bias” at play when asking family or friends for their opinion: Because they are closely related to you, they are likely to rate your idea more favorably than a stranger would. However, you shouldn’t be afraid of criticism! On the contrary: Skeptical opinions can save you from making mistakes before you have invested a ton of time and money and can help you to strengthen the focus of your idea.
Step 8: Be aware of stumbling blocks
There are some hard facts that determine whether you have found a suitable business idea for yourself. An important example is technical knowledge that is needed to successfully execute an idea. Sourcing knowledge and expertise externally makes the realization of a business idea markedly more expensive and complex — you should consider this very carefully. In addition, laws and regulations need to be considered. You want to avoid having worked hard at realizing an idea, only to learn that it cannot be introduced to the market because of legal obstacles. This implies that if an idea seems theoretically sound, you should still ask yourself whether the execution is feasible and whether you are the right person or are part of the right team to do so.
Step 9: Start marketing early
I would recommend considering options for marketing your product or service already during the ideation phase. This might come as a surprise to you. Yet, attracting customers is so crucial for a company’s success that it is never too early to start thinking about it. Some even go as far as to suggest actually running marketing campaigns even before having implemented the idea to test the level of interest of potential customers. Depending on the idea, this advice might make sense. Of course, there has to be a budget for doing this.
Step 10: Define a profitable business model
Last but not least, you should have a clear vision on how to make money with your idea. There is no doubt that it would be great to sell your company for a couple of billion dollars after a short period of time without having made a dollar in revenue. There are certainly stories like this, but they are far from being the norm. Having a clear concept for a profitable business model makes it a lot easier to convince investors, as well.
To sum it up…
Unfortunately, there is no clear-cut recipe for finding a “good” business idea. This article should, rather, provide you with some suggestions that might be helpful on your hunt for the perfect idea. One of the most important aspects is to look for an idea that fits you or the founding team. If you are well aware of your strengths and weaknesses and consider these during the search process, you will increase the likelihood of success tremendously.