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Great Business Ideas - Fact and Fiction

Great business ideas are not difficult to think of. Here are some facts, and a couple of myths debunked.

There is a huge amount of information in books and on the internet about how to think of a good business idea. Some of this consists of the same old rehashed myths, whilst others do actually teach you something useful.

In this post I have tried to bring together some of the good advice, and debunked a couple of wrong ideas that may be holding you back from starting your own business.

Value

Lets started with a fact. All successful businesses work by adding value, and all great business ideas are based on giving the customer better value than the competition.

You may be planning on manufacturing a product, for sale through wholesalers. You take raw materials, at a cost, and either work yourself or employ others to build the product. You have added value to the original materials and can legitimately add a profit margin to your total costs when you sell your product.

Look at a taxi driver. She pays a weekly lease to the owner of the car and gets bookings in return. The customer has the convenience of being collected at a time to suit him, without the expense of running the car himself. The taxi driver has added value, and the amount she charges reflects that.

Don't confuse "value" with "cheap", after all a Porsche owner surely considers the car to be excellent value for money, yet it certainly is not cheap.

When you are trying to think of some great business ideas you should always ask yourself the question "How am I adding value?".

You should also ask yourself "How much value am I adding?". This is because the more value you add, and the better value you are perceived to be by your customers, the better your chance of success.

Scalability

Here's another fact. Your degree of success is related to the impact you have. This is normally measured in terms of potential customers.

If your ambition is for a small business that will support your family, you don't need to worry too much about this. A local garage can survive quite nicely on a few hundred customers per year, and the owner may be able to sell the business as a going concern and retire in comfort. But he will never be truly rich.

To get rich you need a business that can expand, and the way a business expands is by finding new customers. This is known as "scalability"

If your goal is to be really rich, try to think of an idea with the potential to reach thousands or even millions of customers.

Solve a Problem

Some great business ideas come about when a problem needs to be solved.

Problem:an elderly relative finds it difficult to open a jar
Solution:an electric jar opener
Problem:you keep losing your car keys
Solution:a key ring that beeps when you whistle

These are not original, but you get my drift.

Other problems are much more difficult to solve. Whoever finds a green replacement for fossil fuels, that performs as well, and is not too expensive, will make a massive fortune.

Unique Selling Proposition (USP)

Books will tell you that to be successful you need to provide something unique, to differentiate yourself from the opposition. A lot of banks even expect this before lending money.

This is codswallop. There are millions of successful businesses on this planet. Do you really think they are all unique?

Duncan Bannatyne, one of the dragons in the BBC series "Dragons' Den" has built up a multi-million pound fortune without coming up with a unique idea. His success has come about by copying existing successful businesses, but doing it a little bit better.

Why reinvent the wheel when it works very well already? Yes, you could invent a rubber tread (let's call it a "tyre"). That would be original, and might be a good business idea, but you don't have to be a genius inventor to start a business.

Just manufacture and sell wheels. You may want to charge a bit less, or a bit more (for higher quality), or give better customer service, or market it in a different way. But provided there is demand for your product you don't actually have to do anything different from the competition.

The pressure to come up with a USP is what prevents a lot of people from starting in business. What is more important is to take an idea and properly plan how you will implement it. In the process you will discover whether or not it is a winner.

Protection

Here is another myth. People are afraid of starting a business with an idea that is easily copied.

If you have something you can patent, or you own the copyright on a fantastic piece of design, then good for you. Go ahead and market it in the knowledge that your competition cannot steal your idea.

For the rest of us (and that is by far the majority of new businesses) this sort of protection is not an option. The myth that you must own a patent on your product prevents thousands of people from pursuing their dreams.

I'll give you an example of a successful business that could be easily copied, yet continues to grow from year to year.

There are thousands of travel websites with varying degree of quality, yet i-escape.com has carved out a profitable niche within this huge market. They specialize in boutique hotels, and personally visit and review all locations and hotels featured on their site. They make their money by providing the facility to book through the website, and take a commission on each sale.

Could this be copied? Of course! Has it been copied? Quite possibly! Does it matter? No, not at all!

The travel industry is big enough for several businesses like this. The lack of protection did not prevent the founders from starting the business, and it should not prevent you from pursuing your idea, as long as you are passionate about it.

Which brings us onto the next thing.

Passion

I remember reading a quote somewhere about the importance of passion in business.

Try to start a business in which you are both knowledgeable and passionate. There will be times when things get a bit tough. If you really enjoy what you are doing, it makes it easier to get through these difficult patches, and to survive long enough for the business to continue to grow and make you a lot of money.

Exit Plan

Why are you looking for great business ideas?

Are you looking for a business that will see you through until retirement, or do you see yourself as a serial entrepreneur starting a business, then selling it after a few years, before doing the same thing again (or retiring early on the proceeds)?

If the latter, you need an exit plan.

It is not essential to consider the exit plan when thinking of business ideas, but it may help to decide between two or more potential ideas. For example, one idea is for a letting agency specializing in luxury properties, while a second is for you to hire yourself out as a consultant to property companies.

Clearly the exit plan for the first idea is to sell the business on, whereas the second idea relies entirely on your own skills and the business ceases to exist when you retire.

Both ideas have their merits, but thinking about this now may save regrets later.

Summary

So what are the features of great business ideas? Well they don't all abide by the rules I have just described. In fact only the first, "value" is essential. But if it is also scalable, something you are passionate about, and likely to generate a decent return, then what are you waiting for?

There is one last thing for me to say, and it is arguably the most important. Most businesses have more than one founder, and most ideas are the result of discussion between several people. Don't keep your ideas to yourself. By talking to others you will undoubtedly improve upon your idea, and you may find a business partner in the process.