Guide #11: How to come up with the best startup ideas
Not all good ideas are good businesses
Sometimes the biggest challenge with starting a business is actually coming up with the business idea itself. In today’s guide, we’re going to dive into just that.
After all, the right idea can be half the battle.
For some people, the ideas come easy. For others, they don’t know where to get started.
There are many reasons for this. For example:
They don’t know which ideas are worth pursuing
They don’t know how to choose an idea that is well suited to them
They struggle to understand if there is a big enough market
These questions can cause analysis paralysis and result in never launching anything. In this post, I’ll share some simple actionable to tips to help you identify the best ideas and get started quickly.
The way that we do this is to observe the world and see where ideas popup. But before we do that, we need to craft a pair of “idea goggles” that we can use to filter out the golden eggs from the rubbish.
As a starting point, I would recommend familiarizing yourself with the business models that work for a Tiny Empire and also the tips on optimizing your business for your own skillsets and preferences as these will give you ideas of the types of businesses you might like to run.
Once you’ve done that, go through these steps:
Step 1: Sell painkillers, not vitamins
You’re looking for ideas that are sellable, and you want that selling process to be as easy as possible. So you need to look for ideas that are causing people genuine pain in some way as they are more likely to pay for this.
Take physical pain as an example. We would be happy to pay almost limitless amounts of money to get rid of extreme pain, whereas we would only pay a few $ for vitamins. Painkillers are essential. Vitamins are “nice to haves”. In an economic downturn, “nice to haves” are first to go.
Now I’m just using physical pain as an example. In the business world, this “pain” is usually something that is costing time, money or frustration. Here are a few examples:
Tasks that are taking staff a long time to complete (costs the business money as well as staff annoyance)
High software costs (eats into profits)
Difficult sales process (slows down revenue and makes it less predictable)
Hard to find talent (slows company growth)
These are all high-level examples but are areas where businesses might experience pain.
Look for ideas that help resolve a real pain point.
Step 2: Find an idea that works for you
One of the big blockers for many people starting businesses is that they want to make sure they start a business that is right for them. This is definitely a very valid point as choosing the right business helps ensure you have a better chance of success in the long term. However you don’t want to overthink this, as sometimes just getting started with something is more important than choosing the “perfect” business. The truth is, you don’t need to run your business forever. It’s perfectly fine to start something and then shut it down or sell it if it’s not working out for you. By actually trying ideas, you learn more about what types of businesses you enjoy and which you don’t, as well as learning more business skills and making money. The most important thing is to just get started.
But to give you the best chance of starting a business you love running the first time around, look at your unique skills, work preferences and life preferences and see how ideas fit in with those.
Finally, think about if you would be able to run this idea on your own or if the idea would require hiring staff as the business grows. If you want to hire staff, that’s fine and you can add that as part of your strategy. But if you’re looking to build a 1-person lifestyle business, you want to ensure that you don’t choose a business that is going to scale out of your control. Things you might need to think about here are:
Day-day activities of a business. Make an estimate of how long each task will take. Can you do it alone?
Does the time involvement grow with the business? e.g. do more customers = more work?
Running costs
Logistics of growth. e.g. do you need to invest in more systems, tools or hardware
The point here is to think about the logistics of running the business, both now AND in the long term.
Step 3: Can it make money?
Not all good ideas are good businesses.
To address whether your idea is a good business, you need to think about the business model, and more importantly the revenue model. Think about:
The exact way you would make money
The running costs
Your income goal
How many customers you would need to reach your income goal
Once you’ve got these figures, try to understand how big the market is and how many potential customers you would need to reach in order to reach your revenue target. Be realistic. If you’re doing outbound sales campaigns, a realistic conversion rate is going to be less than 1% initially. That means to get 100 customers, you would need to contact 10,000 companies. Are there that many companies in the industry you’re targeting? Then what if those customers cancel? Are there any more?
Work backwards from these figures and see if the market opportunity is there.
Think about every aspect of the revenue. The risks and potential rewards.
Step 4: Put those idea goggles on and start looking at the world
The best ideas don’t just appear out of thin air. They come from observation. With the previous 3 steps in mind, start looking at what’s happening around you and see where opportunities exist. Here are some useful sources for finding ideas:
Reading newspapers (yup, they’re still useful)
Reading industry-specific websites
Social media comments
Reading Reddit comments
Read Quora questions and comments
Communities
Podcasts
Write down any ideas in a list as you find them. Apply the first 3 steps to each idea and find a business that’s right for you.
Tip: Don’t create your own business model. Take examples of existing business in other sectors and apply it to your own sector. Take the low hanging fruit and do what’s already working for others.
In short
Coming up with ideas is a polarizing task. It’s the easy part for some people, and the hardest part for others. If that’s you, use these simple steps to make your ideation process much much smoother.
Look for pain points
Find a business that works for you and can be done on your own
Think about the revenue options. Can it make money?
Look at the world and find ideas
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If you’re looking for more help
I offer 2 video courses which go into my full process for building a 1-person 6-figure business that works around your life, not the other way round. You can learn more about both of these below:
Course - Tiny Empires: Build a 6-figure business with no funding and no staff: This is very different to most business courses which are geared towards growth at all costs. The Tiny Empires method focuses on building a sustainable 1-person business by understanding the business models and strategies that work for small businesses and optimizing them using tools and systems. By the end of this course, you should have a clear step-by-step path from idea to revenue, to allow you to build a business which works around your life. Learn more
Course - Sales for Introverts (and people who don't like selling): This is not your average sales course. I don't use any salesmanship or sleazy tactics or endless unsolicited follow ups. Instead I focus on honesty, simplicity, human psychology and productive systems. By the end of this course, sales should no longer be a dreaded task and you will have actionable steps to become a sales master (even if you're shy). Learn more