There are great ideas, and then there are great business ideas.Maybe you have been thinking hard for business ideas for 2014. The difference between the two is that a great idea is just that. In a perfect world, someone would create a product or service with that idea, and offer it to people who wanted it. A great business idea has to pass some tests. The mix has to be right for it to succeed which are feasibility of cost, time to market, price, and of course ready demand. A business partner once told me if there is money, anything can be done. That is true to a certain extent, but most of us don’t have unlimited access to capital. What is a great opportunity for someone else, may not be good for us.
So with those concepts in mind, here’s what I think could be great business ideas for this year. You may have other viewpoints, so feel free to comment below.
LED Bulb Industry
As of early January 2014, a survey results showed that over 60% of Americans doesn’t know that their 40 watt and 60 watt incandescent bulbs are being phased out. So from January 1, 2014, you won’t find these bulbs in store anymore. Legally. I am sure those within the lighting industry would know this and if they didn’t, this is even better for those thinking of jumping into this industry.
There are many ways you can enter this market. The most straight forward way is to of course sell them online as a eTailer (online retailer via a website or Amazon). Selling via a website is the lowest cost startup but you will be faced with immense competition and many competitors compete on price. If you do attempt selling online keep these points at the forefront: Search engine marketing, search engine optimization, pay per click marketing and optimization. Many people think selling online is just simply setting up a website and customers will come in but there is much more to it than that.
You could also be a importer/distributor/wholesaler for LED bulbs if you have some capital. Note that this is a B2B business which could take some time to spool up prior to profitability while you create rapport with your clients. Ideally, you could partner with an established distributor who has ready in-roads with larger retailers while you imported the products. Then under the distributor, supply the products to retailers like Costco. This is a 2-in-1 idea for you. Package the LED bulbs in bulk that would be suitable for 1 and/or 2 bedrooms, for example, 4 bulbs of 60 watt equivalent, 2 bulbs of 100 watt equivalent, and 4 bulbs of 40 watt equivalent. Then make this very price competitive. This will change your profit analysis from per unit to per package and also make customer transactions (sales and refunds) more worth the while.
Buy a Business
Yeap, you read it right. I know this article is about business ideas and you might have thought it meant only starting a new business. If you have capital saved up toward going out on your own, buying a business could be a great way to start. Buy a great business though, not an average one.
This is one big topic so I can’t run through everything you need to know in a blog post. I have an eBook coming out that will cover this in more detail. Nonetheless, buying a business is one way to fast track your way to your business goals. The top advantage is simple, because someone else has already proven that the business is feasible and profitable. Another good reason is that the baby boomers are retiring and will be looking to sell their business. You will have a bigger pool of choices.
Which brings me to some main points. If you were to buy a business make sure it is:
* Profitable. The valuation is based on profit. Don’t buy a business based on asset price. That’s not buying a business, that’s buying property.
* Is not in an industry that is declining or have its main product line being disrupted by a new competing product coming out into the market. For example, don’t buy a calculator factory because these are declining as more and more people use smartphones with calculator apps.
* Showing a history of growth. While not ideal, you could consider a flat revenue business but only if you are confident you know what the problem is and can grow it. Don’t buy a business that has revenue or margins shrinking.
These tips would mean that the potential businesses you narrow down would have a higher valuation. They are valued higher for a reason. For the same reason, would you buy a pennystock whose company is loss making or a more expensive stock with dividend track record, profit growth, and solid management? You get what you pay for. I don’t mean don’t negotiate for the best deal though.
Find a Problem, then Develop a Solution
Instead of giving you a direct idea with this one, I’m going to teach you how to develop your own idea. You give someone food, they survive for a day. You teach them how to farm, they live a lifetime. Cliché maybe, but the truths remain.
I believe it was Donald Trump who said in his book “Never Give Up” that if you solve problems, people will pay you for the solution. However, to know the problem in the first place, you either need to be at ground zero where the action is or be familiar with the issue. I find the best 2 ways are to make a note of all the “problems” and “issues” you have in your life, then go through them to determine the feasibility of a solution. You could also send out an email to all your friends and ask them what problems they face at home, work, and play. This is a period of brainstorming, most times it doesn’t come in a single day.
With each of the problems and possible solutions that you come to think of, go through a feasibility test with each one of them. Here’s a quick list:
* Will people pay for it? Many people like eco products, but many also wouldn’t pay a premium for it.
* Can it be manufactured or service provided within a reasonable cost to ensure profitability?
* How much capital will be required to start?
* How long would it take to get consumer (target group) acceptance?
* Is this something I can be passionate about?