How to Pick a Winning Small Business Idea

May 7, 2024

By: LOGO.COM

How to Pick a Winning Small Business Idea

Starting a small business is an exciting journey, filled with endless possibilities and the thrill of turning your passions into profit.

Whether you're crafting a side hustle or dreaming of something bigger, this guide will help you tap into your passions and interests to find a business idea that fits well with your skills and meets a real need in the market.

Step One: Use Your Interests and Passions

The first step is to take a deep dive into what you truly enjoy and what you're good at.

Here’s how to get started:

List Your Hobbies and Interests: Write down everything that you enjoy doing in your spare time, no matter how big or small. This could be anything from baking cakes to writing stories to tinkering with electronics.

Identify Your Skills: Next to each hobby and interest, write down the skills you have that enhance your ability to perform well in each activity.

For example, if you enjoy baking, your skills might include creativity in decorating, precision in measurement, and patience.

Evaluate Marketability: For each hobby and its associated skills, consider how they could be turned into services or products that others might pay for. Are people interested in buying custom cakes, reading your stories, or purchasing unique electronic gadgets?

For example, Emily enjoys creating unique jewelry in her spare time and wants to turn her hobby into a business. She uses various materials, such as beads, metals, and recycled items, to make necklaces, bracelets, and earrings. Emily writes down the skills that enhance her ability to perform jewelry making, which include precision to detail and the unique ability to visualize jewelry designs.

She then considers how she can turn her hobby and skills into a successful business. She already knows that there is a growing market for custom and handmade jewelry as people increasingly look for unique, personalized products and that she can use online platforms to market and sell her jewelry. With these insights, Emily decides to start small by setting up an online shop to sell her jewelry.

Brainstorming For Small Business Ideas: Mind Mapping

how to pick a winning small business idea

Mind mapping is a fantastic way to visually organize your thoughts around a central idea. With your ideas laid out, you can begin to see how different thoughts connect and lead you to a unique business plan.

Here’s how you can get started:

1. Place your main business concept or challenge at the center of a large piece of paper.

2. Draw lines out from the center for different aspects or components related to your main idea.

3. Along each line, jot down ideas, tasks, or further subtopics that relate to each component.

4. Employ different colors, symbols, or images to differentiate between themes or priorities. This will make your mind map easier to read and more engaging.

5. Draw connections between related ideas. Seeing how different thoughts interlink can help you discover innovative solutions or new angles to explore.

Once your brainstorming session is over, you can use the structure of your mind map to start building a more formal business plan, transitioning smoothly from idea generation to business execution.

Step Two: Identify Problems Your Business Idea Can Solve

Creating a successful business often starts with spotting a problem and figuring out how to solve it. If you’ve been brainstorming and can’t figure out exactly what you want your new business to be, focus on the frustrations and challenges you or others face daily. Solving these problems with your interests and skills can open up endless possibilities.

3 Tips to Help You Identify Problems

First, pay attention to everyday inconveniences and issues, whether they're your own or those experienced by people around you:

1. Listen and Observe

Notice what people complain about in your day-to-day interactions on social media or in community forums. These are great places to find unmet needs and common frustrations.

For example, if you're a photographer who regularly attends various events, you might often hear complaints about the hassle of finding and booking photographers, especially last minute.

This could inspire you to create an online platform where event organizers can quickly find and book photographers. This service could showcase photographers' availability, styles, rates, and sample portfolios, making it easy for anyone organizing an event to find the right photographer with just a few clicks.

2. Experience It Yourself

Try putting yourself in the shoes of others who face these challenges. Understanding problems firsthand can often lead to clearer insights into potential solutions.

For example, suppose you love making fresh salsa from vegetables you grow in your own garden, and you've noticed that your friends and family can't get enough of it. There's a good chance that others would appreciate your fresh, homemade salsa too, especially since most stores only offer mass-produced options. You could start a small business selling your salsa at local farmers' markets or through community food programs, emphasizing its freshness and organic origins.

3. Ask Directly

Conduct simple surveys or have casual conversations with potential customers to get a direct understanding of their needs and the problems they would pay to solve.

For example, Barry works at a plumbing company and is in a great position to hear directly from customers about their service experiences. He has noticed a common frustration with unclear pricing and the difficulty of booking appointments. Barry has an idea to start his own plumbing service, focusing on clear, upfront pricing and a user-friendly online appointment system. This approach could solve common customer frustrations and make his business stand out from the competition.

Evaluate the Problem Your Business Idea Can Solve

Once you've identified a few potential problems, it’s time to see if they could lead to viable business ideas. Ask yourself these questions:

“How common is the problem?”: The best problems to solve are those that affect many people or severely impact a smaller, specific group who are willing to pay for a solution.

“Will People Pay for a Solution?”: Ensure there's a market willing to spend money on your solution. A good business idea needs paying customers to survive.

“Can You Solve It?”: Consider whether you can realistically create and provide a solution. Think about the skills, resources, and time you have available.

Take a look at how Barry determines if his business idea can solve the problem his current customers are facing.

how to pick a winning small business idea

Step Three: Come Up With a Solution

Once you’re confident in the problem you want to solve, start shaping your business idea around a solution. Below are the key ways to start and improve with an example to show you how you can do it too.

Be Creative: Think outside the box. Innovative solutions that bring something new to the table often capture the market more effectively.

Create a Sample: Create a simple version of your product or service to show to potential users. This doesn’t have to be perfect; the goal is to get feedback and see if people find it useful.

Test Your Solution: Try selling your solution on a small scale—this could be at local markets, online, or to a specific community. This testing phase can tell you a lot about the demand and about any adjustments you need to make.

Refine and Adjust: Use customer feedback to improve your product or service. Being open to change and quick to adapt is key to turning a good idea into a great business.

Real-Life Example of Developing a Solution

Barry has been working for a local plumbing company for fifteen years but has dreamed of owning his own business. He’s heard from many customers about their frustrations about unclear pricing and how difficult it was to book an appointment. Using this information, Barry decided to take the leap and start his own plumbing business.

Here’s how he developed his business solution for transparent pricing and online booking, making his services stand out in the local market:

Barry’s Plumbing Service Development Process

Be Creative

Barry added a unique feature to his online booking system that instantly gives customers a price estimate after they describe their plumbing issue. This tool uses a database of common plumbing problems and standard rates to provide quotes, setting Barry's service apart from others who might require an onsite visit just to get an estimate.

Create a Sample

Barry put together a basic version of his website with key features:

  • A user-friendly interface
  • A detailed FAQ section that explains his pricing
  • A simple booking form

He initially launched this website to a small audience to see how it worked and what people thought of it.

Test Your Solution

To encourage people to try his new service, Barry offered a discount to first-time users who booked through his website. He promoted this offer in local community groups and on social media, targeting homeowners in his area. This initial promotion helped him learn how customers used the booking system and whether they liked knowing the service cost upfront.

Refine and Adjust

From the feedback he received, Barry learned that customers loved the clear pricing but also wanted a more mobile-friendly website and the option for quicker bookings in emergencies. Using this feedback, Barry improved his website to make it easier to use on phones and added a feature for emergency service requests.

Like Barry, when you focus on solving real problems, you can create an amazing small business idea. Your solution to everyday problems can fill a gap in the market, make a difference in your customers’ lives, and launch you as a business owner.

Checking if Your Business Idea Works

Before you dive into starting a new business, it’s crucial to check if your idea is likely to succeed. Here are some key questions to ask yourself that can help you validate your business idea:

Can you realistically make your idea happen with what you have or can easily get?

Make a list of everything you already own that can help start your business. This includes any money you can invest, tools and equipment you might have, your skills, and even your personal and professional connections. Then, think about the skills you have that are relevant to running your business. Are you already equipped with the knowledge you need, or will you need to learn more or bring in experts?

Do people actually want what you’re planning to sell?

It’s time to do some market research. To start, create simple surveys to ask family, friends, and potential customers about their interest in your product or service. You can use online tools like Google Forms to reach a wider audience. Listen carefully to what people like and dislike, and be prepared to adjust your business idea.

Getting feedback from others can also help you understand your potential customers, which will help you market your business to the right people once you’re ready.

Who else is doing something similar, and what can you do better?

Find other businesses that are similar to yours and pay attention to what they are doing. Are they successful? Do they have a lot of customers? Knowing who your competitors are can give you insights into what works and what the market is interested in.

Once you know your competitors, think about what you can offer that they don’t. This could be anything from lower prices, superior quality, innovative features, better customer service, or a more appealing business story.

Are you ready to put in the time and effort needed?

Starting your own business is thrilling, but it demands a lot of dedication and hard work. Before you jump in, it’s important to think about a few crucial things.

First, consider how passionate you are about your idea. Are you ready to put in long hours and tackle tough challenges? Be sure to look at your current responsibilities. Running a business takes a lot of time, so make sure you can fit this into your life without neglecting other important commitments.

These steps can help you determine whether your business idea has a good chance of success. Doing this groundwork not only reduces the risk of failure but also prepares you to build a strong, sustainable business.

What happens when you want to start a business but don’t have the budget to quit your 9-5?

As many small business owners have done before, sometimes the best option is to start a side hustle and grow it into a full-time business.

Here are five popular side hustle ideas that can grow into a profitable business:

1. Print-on-Demand

A print-on-demand (POD) business is a type of e-commerce in which you can sell customized products that are created and shipped only after a customer orders them. You can create designs that can be printed on various products, such as t-shirts, hoodies, mugs, posters, books, and more. Once you're happy with the product designs, you list them for sale on platforms such as Printful or integrate them into your own website.

Why It's a Good Business Idea

Low startup costs: There’s no need to invest in a large amount of inventory or worry about storage space.

Reduced risks: Since products are only made when an order is placed, you don’t risk money on unsold inventory.

Scalability: As your business grows, you don’t need to worry about scaling your production capabilities. The POD provider handles increased orders.

2. Tutoring or Coaching

If you're knowledgeable in a subject, you can start teaching students (or adults) in your community. If you want to make it more of a full-time gig, you can start tutoring online using platforms like Tutor.com or VIPKid, or even host your own classes via Zoom.

Why It’s a Good Business Idea

Set your own schedule: Whether you teach part-time or full-time, you can schedule sessions during hours that work for you and your clients, such as evenings or weekends.

Low startup costs: Online tutoring or coaching requires little more than a computer and internet access, while in-person learning might just need some basic teaching materials.

Growing market: Many students need extra help outside of school for academics, especially during testing seasons, and most parents would love to have their child attend tutoring during the summer months. For coaching in specialized skills like acting or nutrition, there's often a dedicated community eager to learn. They're usually happy to pay for advice from someone who has more experience to help improve their skills.

3. Freelance Writing

Whether it’s blog writing, copywriting, or creating technical content, freelance writing can be a lucrative way to utilize your writing skills. If you have specialized knowledge, you can also tap into niche markets and create tailored content. There are many platforms online, such as Fiverr or Upwork, where you can offer your services.

Why It’s a Good Business Idea

Work from anywhere: As a freelance writer, you can work from anywhere with an internet connection.

Control over income: You can often set your own rates, which can increase as you gain experience and establish a solid portfolio.

Multiple income streams: You can work with multiple clients and on different projects simultaneously.

4. Farmers’ Market Vendor

If you have a knack for gardening, baking, or crafting homemade goods, consider selling your products at local farmers' markets. This is a great way to make use of your hobbies and meet local customers directly.

Why It’s a Good Business Idea

No physical storefront: By selling at a farmers' market, you avoid the high overhead associated with maintaining a permanent physical location, such as rent, utilities, and large-scale inventory.

Schedule flexibility: You can choose which days to sell and have the flexibility to scale up or down based on the season and personal commitments.

Immediate revenue: Transactions at farmers' markets are typically done in cash or through digital payments such as Venmo. This instant income can be reinvested quickly to grow your business.

5. Digital Content Creation

If you’re creative, love social media, and have a knack for technology, a digital content creation business may be just for you. You can create a YouTube channel, start a podcast, become a content creator, or sell user-generated content to brands.

Why It’s a Good Business Idea

Minimal initial investment: Starting a digital content creation business often requires very little upfront cost. Basic necessities include a good camera or microphone, basic editing software, and a reliable internet connection.

Make money off of advertising: Platforms like YouTube share ad revenue with content creators, providing a passive income stream as your views and subscribers grow. If you’re new to Social Media, check out the ultimate guide on how to set it up.

Flexibility in scheduling: You can produce and release content according to your own schedule, allowing for a flexible work-life balance.

Whether you want to unleash your creative side, share your expertise, or turn a hobby into a profit, these business ideas give you a solid starting point to develop your skills and grow your operations.

Getting Ready to Launch

Once you've settled on the type of business you want to launch, it’s time for one of the more enjoyable aspects—choosing your business name!

Think of your business name as the face of your business – it's the first thing people will see, and you want to make sure it's a good representation of who you are and what you do. Be sure to choose a name that is easy to say, remember, and spell.

Do you need a little inspiration? LOGO.com’s Business Name Generator is a game-changer for coming up with unique business name ideas. Simply tell us more about your business, and our AI magic will generate a list of catchy and memorable business names.

We know finding the perfect business name can be hard. That’s why we have launched a new and improved business name generator — powered by AI.

Setting up your business is a breeze with our three simple steps at LOGO.com!

how to pick a winning small business idea

Step One: To get the best name suggestions, start by telling us more about your business, whether it is the product, service, or what is unique about your business. Utilize our filters to refine your search and select your favorite. You can also check the availability of domain names to ensure that your chosen company name aligns perfectly with your business website.

Step Two: Design a logo for your new venture using our free Logo Maker! Choose from a variety of unique templates and customize your logo to perfection before downloading it in various high-resolution formats.


how to pick a winning small business idea

Step Three: Launch your business by creating a free website, designing business cards, using our customizable social media templates, and more! To learn more, check out our resources and guides on how to start a business.

Next Steps to Take

With a winning business idea in place, it’s time to focus on making your business official. A solid business plan is your roadmap to success and is crucial for guiding your decisions.

Here are a few things you will need to consider:

  • The legal structure for your business, like a sole proprietorship, LLC, or corporation, is based on what best fits your needs.

  • The estimated expenses and income for the next few years.

  • A marketing strategy that will help you reach your customers.

Check out our blog, How to Start a Small Business from Scratch, for an in-depth look at everything you need to know to start your business.

Real-life Success Stories from a Small Business Idea

YouTube

Imagine starting a business in your garage with a couple of friends, trying to shake off the constraints of the conventional work environment. That's exactly what Steve Chen, Chad Hurley, and Jawed Karim did after they left their jobs at PayPal. They began their venture in Hurley’s garage in 2004 with an idea that now might make us smile: a video-dating platform where people could upload their dating profiles.

Despite these awkward beginnings and initial marketing missteps, the trio didn’t give up. While still in the developmental stage, they shifted their focus. This new direction evolved into what we now know as YouTube. The very first video, titled “Me at the Zoo,” featured Karim talking about elephant trunks, setting the tone for the type of everyday, relatable content that would soon dominate the platform.

When YouTube officially launched out of its beta phase, it was attracting a staggering eight billion views per day. Not long after, Google saw the platform's potential and acquired it, cementing YouTube’s status as a staple of digital culture, where millions still watch everything from commercials to casual personal videos.

Lesson Learned: YouTube’s journey from a garage-based startup to a global phenomenon teaches us that no idea is perfect from the start.

The Huffington Post

The Huffington Post's story is a vivid example of how resilience and vision can turn a small startup into a global powerhouse. Founded by Arianna Huffington in 2005, this online news platform started with a simple yet ambitious goal: to give people a fresh perspective on news.

Arianna Huffington wasn't new to the world of media and politics, having spent many years as a conservative commentator and political activist. But when she launched The Huffington Post, it was a risk. She wanted to create a space that mixed journalism with blogging, providing a platform for voices not typically heard in the mainstream media.

Despite initial popularity, The Huffington Post almost didn't make it past its first year. Financial challenges piled up quickly, forcing Arianna to make tough choices, including laying off most of her staff and even selling her home to keep the site alive. It was a stark reminder that passion alone doesn't pay the bills—but it wasn't the end of her story.

She kept pushing and adapting her strategy, and slowly, the site began to stabilize and then grow. Today, The Huffington Post (now simply HuffPost) isn't just surviving; it thrives with over 200 million readers and a team of 2,000 people worldwide.

Lesson Learned: Challenges are part of any business, but sticking with your vision can lead to amazing outcomes.

From Business Ideas to Business Reality

Coming up with a winning small business idea is just the beginning. Building a business usually doesn’t happen overnight, but with passion, planning, and persistence, you can transform a simple concept into a thriving business. Remember, every big business once started small, and with the right approach, yours can grow, too. Embrace the journey, and take your business from start to success with LOGO.com, your partner every step of the way.

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