I often receive questions pertaining to the idea to start a business. “What is a good idea for a start-up?” “How do I know whether the new idea is good?” “I have this product. Can I use this product as the main idea for my new venture?” “Can you help to write a new business idea?”
Well, these are only some of the types of questions I normally receive from students, participants who attended my talks, lecturers who are involved in the entrepreneurship program and the existing entrepreneurs who wanted to commence a new business venture. Then I think it’s better for me to share my article so that more people could gain benefits from it.
First of all, let’s ask why we need good ideas? For a very obvious reason, we need to monetise the idea, gain revenue and later profit from it. We have to be realistic in our quest for the idea.
Wikipedia says that “A business idea is a concept that can be used for financial gain that is usually centred on a product or service that can be offered for money. An idea is the first milestone in the process of building a successful business.”
I am going to share some personal suggestions on how to find a suitable idea for your start-up.
Finding The Problem To Solve
The good business idea generation is finding problem(s) to solve. Either find problems within your personal interest and passion or try to solve the problems outside of your passion and means. For instance, you love cars. You need to study the full ecosystem within the car industry supply chain. Look at the needs and requirements of the industry, the vendors, the suppliers, the clients, the fans, the sellers, the showrooms, the after-sales service, the technical training and the quality compliance.
Then try to determine the gap within the process and how best you could generate the ideas that could solve any problems at the same time you must remember that your ideas could be monetised and you must also know who will be your “paymaster”. The paymaster is your primary target audience or target market.
Find out the severity of the problems. If the problems have high severity and are very impactful to the business supply chain, then you will have better chances of getting people to pay for your idea or services or products as you will be solving their problems. “Their” means the users and the paymasters.
If you could find the right problems to solve and you must gauge the number of future users from your new idea. Then you will ask “How do I know the number of users?” right?
Having given the example in the auto industry, then you have to seek the TIV (Total Industry Volume) of each country. TIV is the number of vehicles sold in each country including passenger cars, motorcycles, light vehicles, heavy vehicles, busses and others. After this, you will narrow down your info towards which particular segmentation of the vehicles your new idea is useful. You could obtain the market capitalisation and users from any reliable sources such as the census, data from the Government, and statistics from the related bodies and agencies.
Then you look back at your idea, how best your new idea could solve the current problems and how much you can charge the users using your start-up idea.
As I said earlier, you don’t have to choose problems within your personal interest. Sometimes, you and your partner (s) could see the potential from the areas, industry or scope that are not within your passion or capacity but you guys knew that there is high business potential if you could solve the problems. Then go for it.
Jot down all your possible ideas and expand them. At this stage, you might have identified needs or areas that can be improved within the ecosystem. Jot them down.
You and your partner can create various brainstorming notes and sort them out according to topics, sub topics, issues and expected problems to solve and expected solutions. These notes will be very useful as at the start-up level, you will continuously re-look, re-set, re-arrange and re-do your ideas to fine tune them and this could be tuned and modified from time to time.
How To Monetise Your Idea.
Once you have so-called endorsed and agreed that your idea could possibly solve the problems, you need to sit down with your partner and team to discuss the next move. How can your company monetise the future users?
Start-ups should not look at the high charging system to the users as this will not give many benefits as you need to compete with giants such as GLC (Government Link Companies), Listed Companies and companies with experience. For example, you wanted to come up with the IT system for a car company and you feel like charging them USD100,000 to 500,000 for them to use your system. Your system may be better and more comprehensive than the existing system let’s say something like SAP or Microsoft. But you must remember that these big guys have been in the industry for ages and you can’t even compete if the company asks you to do the POC (Proof of Concept) within 1-2 weeks as you don’t have enough manpower to do the programming and etc.
Then my suggestion would be, to look at the future users that you could charge perhaps something like USD10 per month but you could have access to millions of people around the globe. In other words, find the mass users rather than the big companies as you wanted to give more people access to your new idea and gain traction and subscribers and participants.
I think once you have read my explanation on the mass users under this section, you may want to re-check item 1 – “Finding the Suitable Problems to Solve”. Seek for bigger target markets and how can your new idea be utilized with a lower charging rate but for a bigger audience.
Perhaps before you read the Item “How To Monetise Your Idea”, you may have some ideas on solving the industry issues and might be targeting the big firms I presume. We have to be realistic that we are still at the infancy stage. New. Fewer people. Low budget. No branding. No track records.
Thus, find the idea that could be monetized to a large number of audiences at a lower charging rate but the target audience is huger enough to make millions or billions for you.
Find The Right Business Model
You read this because you want to start a new business or new venture. Or you want to share with your friends or your loved ones. You might have an idea of the type of business you want to run, but you’re not entirely sure. Or you might even be asking, “What is a business model?”
You’re perfectly understandable, starting a new business is filled with uncertainty, excitement and full of unknown issues. Nonetheless, in order for you to further enhance the chances of start-ups’ success, there are a few items which I would like to share. I’ve read various start-up articles and here are some of the pointers. I recap them.
- A deep understanding of the problem that you’re solving for your customers.
- A market where your customers can actually pay for what you’re offering.
- A business model that actually makes your business money.
For the entirety of this post, we’re going to dive deep into that third point — finding a business model that aligns with your market and brings in revenue.
What is a business model? Put simply, a business model is an approach that you’re taking to make money for your start-ups. It’s how you deliver value propositions to your future clients or customers, via products or services, in exchange for a set cost. You could better define your value propositions in your Business Model Canvas (BMC). Through BMC, you will start developing your value propositions based on the problems that you wanted to solve and add to the customer segment or I called it the “paymaster”.
Kindly remember that your business model isn’t a fixed item. It is adaptable and changeable. Think of it as a way to experiment and test different ways to monetize your business. It’s more the revenue model you’re following. For example, think of a company like Facebook. They started by making the platform completely free, and once the audience was large enough, they began monetizing via advertising. And that’s just one model they could have taken.
Others would have included charging a monthly subscription fee, or selling products and services.
Often, the business model you adopt will depend upon your market and what they’re willing to pay for. There’s a good chance that you might not end with the same business model you started with.
Take Amazon, for example. Today, Amazon AWS is one of Amazon’s biggest revenue generators by providing scalable cloud infrastructure solutions. But, when it was initially created, it was for an entirely different purpose.
It’s important to note that a business model is not a business plan.
Your business model is the revenue-generating approach you’re taking, while a business plan is an in-depth document that outlines your future and how you’ll go about achieving that future.
Forbes suggested two business models for your start-ups for the revenue model. Forbes recommended these two and I agree with the idea.
At the highest level, there are two types of revenue models—transactional and subscription models. The main difference is that in the first option you are selling ownership with one-time transactions, while in the second you are selling temporary access.
The subscription model makes a lot of sense in the scalable digital world because it provides predictable, recurring revenue to the company (and hopefully higher customer lifetime value) while at the same time requiring a smaller upfront investment by the customer.
Because of this, a lot of the older software giants such as Microsoft and Adobe are putting effort into migrating from a transactional to a subscription-based revenue model. If you are building a scalable, digital start-up, the subscription model should be the default choice from 2022 onwards. I truly hope that the shared info will be some new insights for you, your partners and your team.
