Why does your business idea matter?
Every successful business starts with an idea. I have heard many people talk about business ideas. They tell me “I had this idea for a business.” They share their idea for a business with me full of excitement.
I admit. I love to think about possible business ideas too. It is fun, to think about possibilities for a new business, a new product, a new service, or a new solution to an old problem.
Brainstorming about potential business ideas is one of the most fun aspects of starting a business.
Business ideas are important because they will have an impact on everything.
As you start thinking about business ideas consider what is important to you. Do you want to start a social business? Do you want to start a location independent business?
Make a list of what matters to you the most. Your business idea will determine how much motivation you will have to succeed. If your business idea aligns with what matters to you the most, you will greatly increase your potential for success.
How does your idea impact everything else?
Your business idea will influence the name of your business. Your idea will determine if you are starting a service business or a product business. Some business ideas require a physical location. Other ideas can help you start a location independent business. Some businesses limit you to a certain geography. For example, if you are a handyman, your business is limited to an area that is within a reasonable driving distance. But, if you have an idea for a SaaS (Software As A Service) business, you can run it as a location independent business.
Your business idea will have an impact on the legal entity of your business. If you want to start a side business, you might be OK with a sole proprietorship. But, if you want to start a business that requires investors you are going to have to form a corporation.
Barriers to entry.
Some business ideas have more competition than others. The lower the barriers to entry the more competition. If you want to become a real estate agent, you can expect a lot of competition. To sell real estate, you have to be 18 years of age or older and pass a written exam. The low barrier to entry explains why we have 193,000 active real estate agents in the state of California as I write this book. Because of the huge competition, most real estate agents fail.
A high barrier to entry business such as a CPA (Certified Public Accountant) practice will have a lot less competition. The reality is that it is a lot more difficult to become a CPA than a real estate agent. To become a CPA you first have to earn an accounting degree. You have to be employed as an accountant. In addition, you also have to pass the CPA exam which consists of four separate exams. If you start today, it will take you about 8 years to become a CPA. The high barriers to entry will help you in the long run to build a successful business.
As you decide on a business consider barriers to entry. A low barrier to entry doesn’t mean that your business idea will fail. To use the above example of a real estate agent, there are some wildly successful real estate agents. There are also many CPAs who fail to build a successful CPA practice. The point here is to always consider the barriers to entry before you settle on a business idea.
Examples of low barriers to entry business ideas:
- Pet sitter
- Wedding photographer
- IT service
- Web designer
- Real estate agent
- Window cleaning
- Home cleaning
- Property management
Examples of high barriers to entry business ideas:
- Restaurant or Bar
- Auto repair
- Grocery store
- Reserve Study Consulting
- E-commerce fulfillment center
- Government contractor
- Retail apparel store
- Tour operator
- Coin operated laundry
- Dry cleaner
Your business idea will also have an effect on the amount of time you have to put into the business. Many aspiring entrepreneurs prefer to start a part-time business, as a safer entry into entrepreneurship. Service businesses make great part-time businesses. You could become a wedding photographer and build a successful part-time business. But, if you want to start a restaurant, you are going to have to make a full-time commitment. If you can’t quit your job and want to get started in the restaurant business, you could start a catering business. Then, as you build up your business you might be able to transition into a full-blown restaurant.
Example part time business ideas:
- Blogging – Do you want to start making money as a blogger? Click here to find out how to start a blog.
- Personal training
- Dog sitter/Dog walker
- Transportation – Uber, Lyft
- Child care
- Selling on Amazon, Ebay, Craigslist
- Real estate sales
- Cleaning service
- Computer repair
- Party planning
The great thing about business ideas is that you have a lot of options.