Online businesses are a proven way to make money while working from the comfort of your own home. You can start a business online for virtually any reason, but the most common reasons are:
- To replace income after losing a job
- To work on a side hustle
- To satisfy a lifelong ambition to own your own business
However, getting your business idea can feel overwhelming! Often times, this feeling stems from having a wealth of online options:
- Marketplaces like Etsy and Amazon are have ready and waiting audiences
- E-commerce platforms like Shopify and Squarespace let you set up your own branded storefront
- Even social media platforms like Instagram and YouTube are offering new ways to monetize
5 Simple Questions for Business Ideas
So, how do you come up with the right online business idea?
A great way to get started is to ask yourself these 5 simple questions:
- Why do I want to start a business?
- What idea addresses what I love, what I’m good at, what I can be paid for, and what the world needs?
- What is my competition like?
- Who is my target market?
- What is my brand about?
Why do I want to start a business?
Understand why you want to start a business is a critical first step in ideation.
Too many aspirational entrepreneurs forget to factor in their personal reasons. Yes, we all want to make money — but understanding your “why” will give you direction and keep you focused.
Here are a few “why” questions you should answer before starting your business:
- What made me initially interested in started my own business?
- What am I passionate about?
- What would motivate me to get up every morning?
- Where do I want my life to be in 5 years?
What business idea addresses What I Love, What I’m Good At, What I Can Be Paid For, and What the World Needs?
Once you’ve answered your “why” questions, it’s time zero in on getting the actual idea for your online business.
There are multiple tools for entrepreneurial brainstorming, but one of our favorites is called IKIGAI:
A Japanese concept that translates to “reason for being”, Ikigai is often used to figure out one’s purpose in life. However, it can also be adapted to come up with business ideas!
To get started with Ikigai, you simply answer four questions:
- What do I love to do?
- What am I good at?
- What can I be paid for?
- What does the world need?
Once you’ve answered these questions, you then look at the overlapping sections in the Ikigai diagram to brainstorm ideas.
Example: if you love to bake and decorate cakes, and you’re good at creating and editing videos, you could create a YouTube channel that focuses on teaching others how to make their own cakes. Combine this with YouTube’s advertising revenue, channel memberships and merch options, and you’ve got a potential business idea that fits you.
What is my competition like?
Now that you’ve brainstormed a few ideas, it’s time to look at your competition.
For many first-time business owners, seeing strong and successful competitors can be intimidating.
However, being aware of your competition can yield many benefits:
- You’ll learn from your competitors’ strengths and weaknesses
- You’ll get a better idea of how to price your products and services
- You’ll get clues on how and where to market your business
- You’ll get an idea of how much money you can make
Competition analysis can be the most grueling part of coming up with a business idea, but it can dramatically increase your chances of winning over customers and boosting sales!
Who is my target market?
Once you’ve assessed your business’ potential direct competitors, you should next figure out who your customers are.
Also known as the target market of your business, this group of people is eager for your products or services!
To understand your target market, you’ll need to determine:
- What they desire
- What problems they need solved
- How your product or service will help them
After you have a clear understanding of your customers’ desires, problems, and outcomes, it’s time to define them using 4 classic market segments:
- Demographic – What is their age? Occupation? Income?
- Geographic – Where do they live?
- Psychographic – What do they like or dislike?
- Behavioral – What is their actual buying behavior?
With a clear idea of of who the right customer is for your business, you’ll be able to develop more competitive products, promote more effectively, and increase sales.
What is my brand about?
The final step in developing a strong business idea is to create a clear brand identity.
Broadly speaking, brand identity is:
- How your brand looks – What is your brand’s name? What kind of graphic identity will you use in your marketing materials and product development?
- What your business says – What is the voice and tone of your business when it communicates to your customers? What is its “personality”?
- What your business values are – What promise do you make to your customers? What is mission and vision of your business?
With a strong brand, you make better and more consistent decisions, which will build trust with your customers. This in turn leads to customer lifetime value and maximizes the longevity of your business.
If you’ve made it this far, congratulations — most beginning entrepreneurs skip some or all of these steps. This may be why the U.S. Bureau of Labor Statistics reports that 20% of small businesses fail in the first year, and 50% fail in the first 5 years!
Figuring out the right business idea is hard work, but it can help you avoid many of the pitfalls other online businesses encounter.
What other questions do you have about getting a business idea? Let us know in the comments below!