Updated: April 28, 2020
How do you come up with a good business idea? How do you know what type of business venture would be profitable today?
In this post, we’ll take a quick look at 8 idea-generation techniques that I often use whenever I’m on a “business idea hunt“.
I hope these eight strategies can help you discover that “big idea” – that profitable business, which will make millions for you someday.
1. Get a notebook and write down whatever comes to your mind.
I’m sure business ideas often pop into your head while you’re in the shower, or while driving or waiting in line. The next time that happens, write it down.
Don’t filter or censor them, no matter how silly that business idea sounds. Some of them are “rough coal” that can later reveal a diamond when polished.
For example, do you think it’s a good business idea to sell rocks as pets? Yup, take a piece of rock, and sell them to people as something they can treat as pets. Silly right?
But here’s a fact… Gary Dahl did just that with “Pet Rocks” and he earned millions from it. The idea isn’t so silly now, right?
2. Look at businesses that failed.
Businesses fail for different reasons – wrong location, weak marketing strategies, bad timing, mismanagement and many others. Find a business that closed down, and see if you can correct their mistakes and make it profitable.
There was a coffee shop at the commercial complex in our subdivision, which eventually closed after a few months because of poor sales. A year later, a new coffee shop opened in the same location, which remains open until today. What happened?
The first coffee shop targeted young urban professionals – the “Starbucks crowd”. Meanwhile, the second one targeted students and designed the place to be a tambayan – a change in its target market was all it needed to become profitable.
3. Read lifestyle and business magazines, both online and offline.
Are you hoping to catch the first wave of a business trend? Chances are you will stumble upon it in lifestyle and business articles. No, you will not read about it there – the business idea will come to you while you’re reading.
When news about the rise of the local BPO industry was read by a friend several years back, he thought that English skills education would be a good business idea. So he put up a language school, which now serves as the primary training center for several call center companies.
Newspapers and magazines usually write about the current business landscape. You, as an entrepreneur, should be able to look beyond the horizon, and visualize what will be out there. This is how you become a business pioneer.
4. Innovate on quality, service or price.
A product or service can either be the best, fastest or the cheapest – but it’s almost impossible to be all three. So choose a product, and find an iteration that doesn’t exist yet.
Let’s say you want to put up a pasta business in your area. Currently, there’s a Jollibee nearby where people can buy affordable spaghetti (fast and cheap).
Meanwhile, there’s also an Italian restaurant around the corner that’s popular for their great-tasting pasta, that’s served in minutes (good and fast).
Fortunately, there’s no business that offers the third type, good and cheap.
Now, how about doing a home-based pasta delivery business? It can be the best (because it’s your homemade recipe), and the cheapest (because you have no rental costs) in the area.
You’ll be surprised at how many people would be willing to wait just to have your delicious and affordable pasta. Of course, improving your delivery time would certainly help, but it’s not as important as being the best-tasting and most affordable spaghetti in your area.
5. Or just do it better, faster or cheaper.
Your neighbor beat you to the home-based pasta delivery business, so you decided to just put up a burger joint.
This time, see which among the three qualities can you use as competitive edge. In short, ask yourself if you can eventually be the best, the fastest or the cheapest.
Pick two qualities and see who your competition will be. If you decide to be the fastest and the cheapest, then you’re going after the burger market of the nearby Jollibee, which means you only need to match their product quality, but improve on your convenience or price to be able to beat the fastfood giant.
Put up your burger joint adjacent to theirs, then put a sign that says “Your food is served in 30 seconds or you get 5% discount” – people will surely flock to your business, especially when they see long lines inside Jollibee.
6. Pick a spending market and solve one of their problems.
Entrepreneurs are problem solvers. If you offer a good solution, then people will most likely spend to have it. The key here is to pick a demographic that has purchasing power, and discover what their most painful problems are.
One of the highest costs when traveling is hotel accommodation. Not everyone can be a backpacker and stay in budget inns, especially if you’re going on vacation with your family. Meanwhile, households can always do with some extra income.
So why not help these households rent out their spare rooms (or houses) to travellers, at rates lower than hotel prices? And this was what AirBnB did, a website that started in 2008, which has grown to become a 10 billion-dollar company today.
7. Complement a successful business.
Smartphones and tablets are a billion-dollar industry. Do you know what else is a billion-dollar industry that won’t exist if these devices were not invented?
The tech accessories market! Yes, the makers of cellphone casings, screen protectors, charging adaptors and many more.
But more than these little accessories, you’ll also see major companies adapting their products to accommodate this market. That’s why there are now music speakers with iPhone docks, or bags with dedicated pockets for laptops and tablets.
Pick a product or service that’s making lots of money, and see what complementary business you can offer to its customers. It can be as simple as improving their experience, or solving a problem that arises from having that product.
8. Spend more time with thinkers.
To rephrase a popular saying… small minds talk about people, average minds talk about events, but great minds talk about ideas.
So if you’d like to have the great mind of an entrepreneur, then stop gossiping about celebrities, or talking about the latest scandal, and spend more time brainstorming business ideas with other like-minded people.
No, you don’t have to change your set of friends (but you can if you want to). You can easily start by participating in an online forum, attending an event, or joining an organization to network and meet these thinkers, who are always ready to exchange thoughts and business ideas with you.
How about you? Any other tips on how to find profitable business ideas? Please share them in the comments section below.
And don’t forget to subscribe to Ready To Be Rich because we’ll be talking more about business in the coming weeks, and you don’t want to miss these articles.