Great ideas can come from anywhere, and unmet needs often make the best business ideas. Here, we’ll share tips for brainstorming. Once you have an idea, you can start your entrepreneurship journey.
1. Identify profitable startup ideas.
Successful startups begin with an idea. You can’t build a business without one. Here are some creative techniques for thinking of a product or service.
Ask your friends what frustrates them.
Founders often strike gold when they ask about their pals’ frustrations. “When you set out to build a product, it’s typically to solve an issue you’re fed up with. That’s why I teamed up with some of the same friends who were asking me to help them book party buses, and we created Swoop,” says Amir Ghorbani.
Like Amir Ghorbani, these founders got inspiration from challenges that bugged them and their friends.
Travis Kalanick and Garrett Campstarted Uber after struggling to get a cab.
Andrew Kortina and Iqram Magdon-Ismailfounded Venmo (acquired by PayPal) after they had trouble paying each other back by check.
Chris Riccobono and Aaron Sanandreslaunched UNTUCKit — a line of shirts that look good untucked — after getting frustrated with how wrinkly and ill-fitting their regular button-down shirts were when they didn’t tuck them in.
As you brainstorm, ask your friends to keep track of the day-to-day things that annoy them. Go through their lists and look for problems you might be able to solve.
Get inspired by emerging startups.
Checking out the businesses of emerging startups is a great way to kick your thought process into gear. You can get ideas from Product Hunt, a constantly updated curation of the newest apps, websites, and games.
An excellent success story of this approach is Zapier.
In the words of Wade Foster, CEO of Zapier, “One day Bryan [a co-founder] texted me and said, ‘Hey, one idea that I think could be useful is to make it simple for a business user to connect the tools they’re using. You could integrate Mailchimp and Wufoo or Zendesk and Salesforce with a quick drag-and-drop click UI.’”
Lots of discussions followed. And today, Zapier is worth $5 billion.
If you’re more of a physical-products entrepreneur, you can check Kickstarter for ideas. Product review sites likeUncrate,Werd, andWirecutter can spark your creativity and give you ideas as well.
Identify trends to future-proof your idea.
As the world changes, people will need different products to make their lives easier. For instance, the rise of Uber, Lyft, and other ride-sharing apps created a demand for a third-party app that shows the cheapest ride fares at any moment.
You want to get ahead of the curve. Read trend predictions for your industry or market, or check out universal trend forecasting publications likeTrend Hunter andSpringwise. Then ask yourself, “If these predictions come true, which tools will be necessary?”
2. Find and focus on a growing category (or categories).
Licensing expert and intellectual property strategistStephen Key recommends picking a category that fascinates you but isn’t overly competitive.
“I avoid industries that are notoriously challenging, like the toy industry. There are so many people creating in that space,” he explains. “You will have an easier time licensing your ideas if you focus on categories of products that are growing, as well as receptive to innovation.”
After you’ve picked a category, Key says you should study all the products in that category.
What’s the benefit of each product, and how do they vary?
What’s their packaging and marketing strategy?
What are the potential improvements?
What do reviewers say?
Once you’ve picked a product, consider questions like:
What can I do to improve it?
Can I add a new feature?
What about a different material?
Can I personalize it?
3. Fill an underserved demand.
Many people start successful businesses after noticing a gap in the market.
For example, when Laura and Kelly Moffat, self-described tomboys, were searching for clothes for their wedding, they realized it was difficult to find alternative options to a wedding dress.
Instead of leaving this as an unfixed problem, they found a solution by creating fitting clothing that makes people of the LGBTQ+ community feel comfortable and confident on their big day.
4. Make something better (or cheaper) than what’s out there.
You don’t always need to develop something brand-new. If you can offer an existing product at a lower price point, better quality, or, ideally, both, you’ll have plenty of customers. Better yet, there’s clearly an existing demand.
As you go about your day, list everything you use. Then review the list for something you could improve.
5. Network with other entrepreneurs.
Use Meetup or Eventbrite to find events in the local startup community. Not only will networking with other entrepreneurs help you build valuable relationships, but also it will give you lots of ideas.
“From entrepreneur groups to tech meetups, there are a ton of ways to meet like-minded individuals and gather resources. So Google these meetups and get ready to leave the house,” says Kim Kaupe, co-founder of ZinePak.
Check out this video for some quick tips on networking efficiently and meaningfully as an entrepreneur.
6. Research patent applications.
The United States Patent and Trademark Office (USPTO) makes patent applications public 18 months after filing.
Although we don’t recommend outright copying any inventions, browsing through these documents can give you a good sense of where a particular industry is headed. Find patents by searching for a particular keyword on Google Patents.
7. Have a brainstorming session.
If you need to get your creative juices flowing, invite three to five entrepreneurial-minded people to a brainstorming session. Ask everyone to come prepared to discuss a certain product category or question, such as:
What’s your favorite type of X, and why?
Do you use anything to accomplish Y? Why or why not?
The answers may lead to some great ideas.
5 Growth Tips for Entrepreneurs
Entrepreneurs come from many backgrounds and industries. However, they follow a similar path when starting their first business venture. Below, we’ll share tips that can help you launch a startup.
1. Validate your startup idea with buyer persona research.
Now that you’ve got an idea, don’t quit your day job yet. Before you go all-in, ensure you have customers who want your product (your friends and family don’t count).
To do this, start byunderstanding your buyer persona (i.e., the real people you plan to sell to). If your product doesn’t serve a need, they won’t be interested, no matter how innovative or cool it is. That’s why buyer persona and market research are vital.
After identifying your ideal customers, interview some of them. Show them a demo of your product, ask what they like and what they don’t, how much they’d pay for it, how often they’d use it, and so on.
If you want to test the market’s interest before building anything,build a landing page that describes your product or service.
Ask people to submit their email addresses in exchange for early access; a free subscription, membership, or product; or a discount, product updates, or other compelling offers. Then promote your page on social or paid search and see how many visitors convert to sign-ups.
2. Start with a minimum viable product (MVP).
An MVP is your tool or service’s simplest, most basic version. It’s functional enough to satisfy early customers and understand what you should improve.
Let’s say you want to build an app connecting college students with virtual tutors. You might create a bare-bones version, manually invite 150 tutors you found online to join, and then post the link to the app on the local university’s Facebook page.
If you get a decent number of sign-ups, that’s a sign you should move forward. If you barely get any, you should rethink the idea or start fresh.
Starting small with an MVP keeps your costs low and allows room for growth as the product continues to be validated.
3. Continue to iterate based on feedback.
Your MVP will not likely be enough to stay competitive in your market categories, especially if you have big dreams for your startup.
Now comes the cycle: generating interest and demand (marketing the product), securing customers (selling the product), gauging satisfaction, improving the product based on feedback … and repeating.
Optimizing all parts of this flywheel generates the revenue needed to invest in the product. Investing more in your product generates additional interest from:
Conventional wisdom says you should look for a co-founder when starting a new business. There are three main advantages to having a co-founder.
1. It’s easier to get funding.
Many venture capitalists are always reluctant to back solo founders. They have a deep-seated belief that multiple founders increase the odds of a company’s success.
2. You have emotional support.
Running a company is a stressful, exciting, and unique experience. If you’re riding the emotional roller coaster by yourself, you won’t have anyone to celebrate with during the ups or help when you’re surviving the downs.
A co-founder understands exactly what you’re going through and makes you feel less alone.
3. They can provide different skills, knowledge, and connections.
Maybe you’re great at selling, while your co-founder is more technical. You’ve got lots of connections, and they’ve started a business before. Picking a co-founder with a complementary resume is an excellent way to boost your chances of success.
But there are also drawbacks to having a co-founder.
1. There can be conflict.
You and your partner will inevitably disagree. A little healthy disagreement is productive, but you’ll waste valuable time and energy if you don’t find a solution relatively quickly. Plus, you might hurt your team’s morale.
2. You’ll have to split the equity.
If you’re the sole owner of your company, you start with 100% equity. As time goes on and you hire more people and/or receive funding, you’ll distribute that equity — but you’ll likely be giving 0.005% to 35% to a single entity, depending on who they are.
If you have a co-founder, you’re automatically giving up 40%-60% of your company in a single swoop.
3. Finding one can be difficult.
Finding someone with the same business ethics, work habits, and complementary personality can be challenging. Also, they need to believe in your vision, contribute the right skills, and have a desire to be your co-founder. That’s a tall order.
It’s worth noting that there are plenty of examples of successful startups with single founders and unsuccessful ones that failed due to co-founder disputes. Make a decision based on your situation, not traditional advice.
Where to Find a Co-Founder
If you decide you want a co-founder, the next step is finding one. Look within your network first. Choosing someone you already know, or whom your connections can vouch for, is less risky than a stranger.
This concept works in reverse as well: You’ve also got a better shot of convincing them to join you if they’re a first- or second-degree connection.
But if you’ve tapped your network without success, turn to “co-founder matching” services like Stealth.li and Founders Nation. You can also attend local entrepreneurship events to meet potential partners.
Gaining Experience as an Entrepreneur
There are two main ways to gain experience as an entrepreneur: Doing the work yourself or hiring others.
Acquiring Experience Yourself
You can acquire experience as you develop your new business. The ways you can acquire experience yourself include the following.
Networking with other professionals.
Networking will expose you to professionals you can learn from. You could even find a willing mentor. So join online professional networks like LinkedIn to find out about virtual or in-person networking events to connect and meet other entrepreneurs.
Conducting independent research.
Conducting personal research from reputable sources and former entrepreneurs will help you better understand your responsibilities. Behavioral research will prove useful, and finding resources to simplify your business operations will help you grow as you scale.
Taking entrepreneurial courses.
Exploring entrepreneurial studies through a college institution or certification course can offer more in-depth knowledge about breaking into the industry than typical internet sources.
Hiring for Experience
Often an entrepreneur beginning a business will hire for experience to guide them in the right direction.
1. Work with a business coach.
A paid option to gain experience is to work with abusiness coach or consultant. While a coach helps you improve your competency, a business consultant will solve problems for you as a contractor.
Developing critical skills, clarity on the steps needed for success, and other specific knowledge are vital to your entrepreneurial growth. With time, these skills can be achieved through building a close relationship with your coach as you conduct business.
2. Add experienced individuals to your team.
Learn from the people you bring to your team. You can learn from experienced talent and fill the gaps in your own knowledge as time progresses. This can include hiring a financial officer with years of experience to oversee financial matters you’re unfamiliar with or other critical team members to help your business operations.
When hiring, an entrepreneur should think about the work they do themselves and what they should trust someone else to do. Don’t hire someone to do a job you’re proficient in. Save that money for other talents who will fill gaps in your strategy and scale your business.
You have the knowledge and tools to become an entrepreneur, but starting your business comes with a price. Below we’ll discuss the many ways to finance your business from the ground up.
You have to spend money to make money. To fund your startup, consider the following options.
1. Ask your family and friends to invest in your business.
Many entrepreneurs rely on their friends and family for an initial investment, typically called a “seed round.” You can exchange funding for a stake in your startup (i.e., your cousin receives 4% of the company after giving you $12,000), request personal loans (with or without interest), or even donations.
2. Apply for a small-business grant.
Federal, state, and local governments have programs to help small businesses, includinglow-interest loans, venture capital, and grants. To find programs your company qualifies for, check outGrants.gov.
Most businesses aren’t eligible, so you might not be able to find anything. But it’s worth looking into, because, hey — it’s free money!
This method doesn’t just generate capital; it can also help you get early product feedback, brand awareness, and, sometimes, press if you have an interesting story or an especially cool product.
4. Pitch to angel investors.
Angel investors look for early-stage companies that can 10X or more their investment. Typically, an angel investor can put in an average of$25,000 to $50,000 in your business. With this in mind, they’ll be looking at the potential value of your business and how easy it is to make a profit fast.
They will be extremely diligent in making sure you understand your target customers, the product space, how you’ll make money, and how you’ll scale.
Make sure you’re prepared with a solid business plan and early signs of traction (such as “the average user refers two additional users in their first week” or “we doubled our revenue from January to March”).
Along with an angel’s funding, you’ll get access to their expertise and connections. They’ll receive equity in exchange.
5. Solicit venture capital.
Venture capital firms look for young, private companies. Like angel investors, VC firms are looking for high-risk, high-return investments. Their expected returns depend on the maturity of your startup. If they invest before your company goes public or gets acquired, a 3X return is good.
But if a VC firm invests very early, they’re probably looking for a 7X to 10X return.
6. Use a credit card for a short-term cash option.
It’s typically not a good idea to use your credit card to pay for business expenses — unless, of course, you can pay the balance.
Sometimes, you have no choice: You need money and fast. But sacrificing your credit score and racking up credit card debt will hurt your business in the long run (not to mention your personal financial health).
7. Get a microloan.
You can’t apply for a loan in your company’s first year, as lenders are unwilling to make such a high-risk investment. However, you can take advantage of the Small Business Administration’s microloan program. Small businesses can receive up to $50,000; the average SBA loan is $13,000.
You don’t need to accept money from anyone else if you don’t want to. Some companies like Mailchimp didn’t get a cent of investor funding. The founders paid the initial costs themselves, and when the company became profitable, they sold it for a staggering $12 billion.
Bootstrapping allows you (and your co-founder, if you have one) to hold on to a much bigger percentage of your company. But you may grow less quickly without big infusions of cash. If you do decide to bootstrap, keep your budget as lean as possible to extend your company’s lifetime.
How to Incorporate Your Business
At a certain point, you need to decide whether you want to incorporate your business. As a sole proprietor, you and your company are considered to be the same entity.
Once you incorporate, your business becomes separate from you. From a legal standpoint, it can buy and sell property, incur taxes, sue and be sued, set up contracts, and commit crimes.
The Advantages of Incorporating
First and most importantly, a corporation protects you from business debts and obligations. Creditors can typically only seek repayment from the corporation’s assets, not your personal assets (like your house, car, bank account, and so on).
You’re also not legally liable for the corporation’s actions. In contrast, as a sole proprietor, anyone who sues your business is suing you.
Having a corporation lets you transfer shares. You can sell some of your ownership in a company, transfer it, or give it away. If you want to accept external investments or bring a partner on board, you need the ability to divest.
Corporation status also gives you more credibility, which helps you attract investment capital.
Lastly, corporations can deduct normal business expenses before they allocate income.
The Disadvantages of Incorporating
It creates an additional tax burden: You need to periodically file with the state and pay yearly fees. The process can be time-consuming, and hiring a lawyer can cost a few hundred to a thousand dollars.
You don’t need to incorporate — there are a variety of business structures to choose from. But if you have a co-founder, need external funding, and would like legal protection, it’s a good idea.
Once you’ve decided to incorporate, you must choose between becoming a limited liability company (LLC) or an S corporation. The SBA has a handy guide onchoosing the right entity structure.
Help and Support for Entrepreneurs
As mentioned above, entrepreneurs typically grow their startups by bootstrapping (securing funding on their own), through small-business loans, or by securing funding from investors. Here are some resources to check out:
SBA Funding Programs. The SBA offers resources to help you find lenders, secure investment capital, win grants, and more.
Angel investing. Angel investors use their own money to invest and help entrepreneurs grow in exchange for equity. Many angel investing ecosystems are location-dependent, but organizations such asSeedInvest andAngelList can help you pitch accredited investors.
Venture capital. A venture capitalist does not use their own money to invest. They take fewer risks and have less agreeable terms, which is why you may want to avoid VC funding until you’re more established in your business. TheNational Venture Capital Association andGust can help you raise VC capital.
Counseling and Advocacy
The financial gap is not the only obstacle to overcome in entrepreneurship; you may also encounter a knowledge gap. That’s where training, counseling, and advocacy come in.
SBA Learning Center.The SBA offers a learning platform that empowers and educates small-business owners. They have business guides, courses, and development programs.
Business hubs. Some local governments cultivate business hubs that combine low-cost office space, networking, and other resources to support small businesses. These are entirely location-specific, but be sure to research if there’s an initiative in your area.
Trade/professional associations and business groups. Membership in a professional association may help you build trust with your customers, but it often comes with additional perks such as job boards, legal resources, training courses, and more. These are location or industry-specific.
As you pursue entrepreneurship, you may encounter a learning curve when it comes to certain aspects of business ownership. Keep in mind that you don’t have to go through the trials alone.
You can reduce the learning curve by participating in entrepreneur networks, groups, and events where members share experiences and learn together.
Your blind spot or struggle may be one that another member of the group encountered previously, and you can benefit from their knowledge. Similarly, you likely have input that could help another entrepreneur in need.
Here’s how you go about building your support network:
Find and attend entrepreneur events. The SBA offers both online and in-person events for entrepreneurs. Usetheir search engine to find those that apply to your situation.
Get a mentor or business coach. Personalized attention from a mentor or coach can help you work through issues one-on-one and help you develop as a leader.
Become the Entrepreneur You’re Meant to Be
The journey to entrepreneurship is long but rewarding. While it might not happen overnight, you know what it takes to become an entrepreneur, gain experience, and fund a business. We hope this article will help you grow the business you’ve been planning for and wish you all the best every step of the way.
Editor’s note: This post was originally published in August 2019 and has been updated for comprehensiveness.