Launching your own business is a risky endeavour. According to the Bureau of Labor Statistics, 20% of startups close down in the first year, and half of them within the first five years. There are many reasons why these figures are so high. CBInsights reports 35% of startups fail because of the lack of market demand, cash flow problems, competition, a flawed business model and some legal challenges. Aspiring entrepreneurs should keep this in mind while developing their own business ideas. There is a lot of advice available online on how to achieve it. Some of the points are discussed below.
1. Analyze your skills. You do not need to look for a business idea far. Think of your own talents and a proven track record, which you could use as the basis of your own business. Analyze what you do at your current job and after work, and think how you could use your skills to start your own business. For example, you might utilize your office skills to launch a consulting business. To come up with the right business idea, ask yourself what marketable skills and experience you have, and whether you could get paid for your products or services.
2. Do not try to be original. There are many talented entrepreneurs who waste their time and energy trying to come up with a unique business idea, when they should be really focusing on how to be better than existing businesses. Do not believe the myth that an idea is not good enough if there is competition. Think of Google: although it was not the first search engine when it entered the market, it managed to successfully take it over. You should make a list of inspiring businesses, and then think how you could leave your own mark on them.
3. Solve future problems. Typically, businesses solve existing problems. Why not to take the opposite approach and focus on solving problems which will occur in the future? Elon Musk’s ventures like Solar City and Tesla Motors are built around the lack of fossil fuels, which will become a serious problem in the future. Musk aims to fix this problem before it happens. Follow his example, and you will also have more time to innovate and secure your market share before others catch up.
4. Analyze the market. Most likely, a potential investor will ask you about the competitive advantage of your business idea. To answer this question, you need to conduct a market analysis. First, ask your customers directly what they want. Use questionnaires or interview them in person. If you already have customers, use statistics to better understand customer behaviour. Then systemize the information and analyze it in detail. The next step is to conduct a SWOT analysis. It will help you find out if there is a need for your product or service, and whether you can get the profit you expect.
5. Improve customer experience. One of the possible paths for entrepreneurs to explore is to to find a market niche where customer experience could be improved. This has been done well by Wanderful, a platform which connects female travellers with local women who could provide them with accommodation and travel advice. Beth Santos, Founder and CEO of Wanderful, noticed that although female solo travelers made up 11% of the travel industry, practically their safety and cultural concerns as well as gender norms were not taken into consideration. Addressing this need, Wanderful has managed to improve the overall travelling experience of female travellers.