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How do I develop a business idea?

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How do I develop a business idea?

A business idea is essential if you want to succeed with your business. Whether you are planning to have your business full-time or just as a side job, it is important that you have a good business idea – an idea that is a market for and that you can make money on. Below you will learn more about how a good business idea arises, as well as how you test it in practice.

What is a business idea?

A business idea is, as the name suggests, an idea that describes how you want to make money on a product or business. If you want to create a successful business, it is important that you have a clearly defined business idea – especially if you need to pitch it to others.

Your business idea is thus essential when you need to lay out a business plan when you need to pick up affiliates, get a bank loan or pitch your idea to investors who need to be convinced that your business idea actually holds.

The business idea can be both a simple idea, which is not further defined. However, if you want something out of your business idea, it is a good idea to work out a structured description of it. That way, you will be forced to think it through so that you can actually assess whether it will work in the market or not.

How do I develop a business idea?

The best way to describe your business idea is through a value proposition, which in English goes by the name-value offer. The value proposition is a simple description of your business idea in relation to future customers.

When describing your idea as a value proposition, you need to get into different points around what value your product creates for which segment and how it is done in practice. Below is a brief description of the individual points.

What value does your business idea create?

The first thing you need to describe is what value you expect your business idea to create. The most important thing is that you find out what problem your business idea solves for the potential customers.

Who is the target group?

The next thing you need to do is describe which segment your business idea is targeted at. Describe them as accurately as possible. In this way, it is possible to assess whether the business potential is sustainable in practice.

How can you create value?

The last point that should be included in your value proposition is how you will be able to bring your business idea to life. What is it that makes you want to be able to conquer the market over, say, a competitor?

How do I test my business idea?

It is a good idea to test your business idea as early in the phase as possible. You can do this either by conducting a market analysis, where you test whether it holds true. If it is a business idea that is at an early stage, you do not need to prepare a particularly advanced market analysis.

Consider the following points, among others:

  • Does your business idea solve a real problem?
  • Is your business idea understandable to a customer, investor, or bank?
  • Is it necessary for improvements to be made?

When you test your idea at an early stage, you will quickly find out whether it is actually worth building on. You may find that adjustments are needed if it is to work in practice.

You save yourself money, resources, and time, even if you find that your business idea may not work anyway. It is therefore important that you test it before you decide to go ahead with realizing it.

How do I develop a business model?

Once you have developed and formulated your business idea, formulate a business model that describes how you make money on your business idea. The business model aims, among other things, to form an overview of potential customers, sales channels, and your finances.

Your business model specifically contains a specific description of your business. It should contain at least the following points:

  • Your value proposition: Your value proposition is a simple but concrete description of your business idea, which should be easy to understand for future customers.
  • Your target audience: Describe who the potential customers are.
  • Your sales channels: Describe how you want to reach your potential customers.
  • Your partners: Which partners and business partners should help with what?
  • Expected Revenue: Prepare a detailed budget of your expected income and expenses.

The purpose of the business model is to find a solution that increases the likelihood of profit in the business. It is about choosing a business model where risk and earning potential are balanced.

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