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8 Steps On How To Pick The Right Business Idea

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by Athan Slotkin, The Shadow CEO

Start-ups and small businesses play an increasingly important role in the economy. These enterprises help to transform innovative ideas into exciting real-world solutions. Starting a business is an even more exciting venture but it’s critical to find the right business idea if you’re set on becoming a successful entrepreneur.

Right now, during a global pandemic, may not seem like the best time to start a new business; and yet, the public has begun to show an even greater confidence in small businesses. During 2020, more than 4.4 million new businesses were created in the U.S. – a 51% increase from the 2010-19 average. For some who lost their jobs, they were then forced to get creative to stay afloat and sought to start a side business. Others grew tired of working for big company contracts and instead launched their entrepreneurial dreams. So, how did these business beginners get started and to join them, what businesses are needed right now?

Here are 8 steps to help new business entrepreneurs get on their feet and start the right business in the current climate.

Step 1: Evaluate ‘what is the current state of entrepreneurship?’.

Right now there are 31 million entrepreneurs in the U.S., and since the pandemic there has been a rise in the number of side hustle entrepreneurs. Figuring out the type of entrepreneur you want to be amongst the masses is key as there are more options than ever now. Deciding what area to start a company in should be based on your expertise, interest areas, and areas of opportunity in the market. It’s also important to consider different sectors in which businesses operate and evaluate the percentage breakdown of the overall market.

For example, the technology and healthcare sectors were some of the largest in late 2020. Note the correlation between the kinds of businesses that are opening and the kinds of businesses that are generating revenue within the breakdown to form your business idea.

Step 2: Determine ‘is your business idea hot or cold?’.

Before fleshing out business concepts, see if your business idea works in today’s consumer market and with your intended audience. Take a look at the current trends and figure out which businesses and sectors are cooling off. The pandemic served as such a ‘catalyst,’ accelerating already existing trends such as automation and the at-home office to form the more digitized world we are currently experiencing. Some trends and businesses I see cooling off include the use of the “office”, traditional retail outlets like malls, and physical newspapers/publications.

Step 3: Project what your budget breakdown needs are.

The cost-side of businesses may present larger implications on whether a business idea is actually the perfect fit. It’s important to understand the cost potential of different business types and structure your own budget breakdown. New businesses have a very wide range of investment (capital) needs. Some businesses require a lot of up-front and ongoing investment; and others require less up-front and ongoing investment. Determine what your budgetary needs are and if you need outside investments or can be personally funded.

Step 4: Assess what type of funding you need.

The entrepreneurial ecosystem relies on the funding mechanisms that finance business operations and growth. Investment types and areas of focus shift as a result of the changing world, but the funding landscape does offer opportunity for startups, depending upon the focus of the business. Examine the different stages and investment channel options to determine who you will be seeking funding from whether it’s angel investors, seed funding, or family and friends.

Step 5: Determine how to maximize revenue potential for your business ideas.

Revenue is what gets entrepreneurs excited. But keep in mind, not all businesses are created equal; just because you may have the passion for a certain idea does not mean the idea can be easily ‘monetized’. Evaluate which business idea will lead to long term revenue stability with my matrix utilizing three primary dimensions: core revenue potential, tangential revenue potential, and revenue scalability or capacity.

Step 6: Identify what skills you currently have to bring to the table for a potential business.

Is it customer service skills? Financial or system management? Often self-assessment can be difficult, so I recommend starting with learning how others think about entrepreneurship so you can adjust your approach and better understand your own abilities. Additionally, focus on the “hot” trends and then showcase your entrepreneurial skill by riding on these trends and developing your business.

Step 7: Think through what your goal is in creating a new business.

For some it’s to create a business that lasts for years to come and for others is to start up a successful business and sell or perhaps go IPO someday. Understanding ‘why you are creating a business’ is key to moving forward. It’s also critical to have an understanding of the future of business and how the world is working as entrepreneurs. This information will arm us to create the next biggest innovations and capitalize on them.

Step 8: Bring it all together by creating The Master Framework.

Becoming an entrepreneur is so awesome! But starting a new business is a material investment of your time, money, and energy, so it’s important to decide very carefully and seriously whether you want to jump on an idea. This is where you create your Master Framework. This helps plot and tie everything together – the problem your business is solving, how it fits into the industry, personal fulfillment, laying out upfront costs, assessing your financial goals and more! By utilizing this framework, you can limit the risks, enabling you to be a more mindful new entrepreneur, entering into your area with the fullest context possible on what to expect and how to expect it. Creating The Master Framework offers you knowledge that will empower you to make a more confident decision.

These 8 steps will guide you to shape and shift your possible business ideas. There is no shortage of business ideas or possibilities in this world, but you want the comfort and confidence that you will make the right decision and capitalize off the right one to help transform this world.

 

The Shadow CEO Athan Slotkin is a serial entrepreneur and award-winning business plan strategist. He’s successfully tested and launched multiple businesses, across industries. His rapid, iterative, heavily-analytical approach has been the key to over 500 new entrepreneurs in 2018 and 2019 alone, helping them package up their business with business plans, financial models and presentations, while teaching them how to become the stellar CEO they want to become along the way. His work has been featured across, TV, radio, and conferences worldwide.