What makes a good business idea

Not all great business ideas turn out to be viable business opportunities, so how do you assess if a new business idea has what it takes to flourish into a going concern? Well, there's certainly no official 'ideas for small business' test, but start by asking if your small business idea stands up to the following questions before you go any further, and then it will be on its way to becoming a good business idea. If you're still looking for a good business idea, then Smarta can sort you out here, with our 30 best business ideas you can start for next-to-nothing

Is there a market for it?

Very thorough market research is an absolute must for new business ideas. If there's not enough demand for your product, your business will never take off.  Furthermore, you need to understand your customer before trying to sell to them. Remember that if you're only planning to make a small profit margin on your product, you'll need a much greater demand. Growing markets are going to appeal more to investors and provide better business opportunities. You are more likely to get your great business idea off the ground if it has a sound set of USPs. If this all sounds a bit daunting, you can read more about market research in our Smarta guides here.

  • Do thorough market research
  • Smaller profit margin requires greater demand
  • Growing markets are preferable

Does it make life easier or solve a problem?

Every product serves a purpose - successful businesses are rarely built on novelty value. It could save people time, make a much-used process easier, provide them with a new luxury. It's crucial to be clear about how your product helps people or solves a specific problem.  Again, market research will help loads. If your business does have an outstanding purpose that helps people then why not form a CIC? Read more about the different business models here.

  • Know what purpose your product serves
  • Make sure this is in response to a market gap
  • Market research

Is it viable?

Unless you have lots of your own money to pour in, you need a business that can operate cheaply, to begin with, and one that doesn't require dozens of staff. Your business will only work if your product is technologically possible and manufacturing costs are feasible. Work out who would make it and for how much. On the other hand, you can always look for someone to invest in your business. The first place to turn to is those close to you; read our Smarta guide on how to work with Friends, Family and Fools here.

  • Be realistic
  • Low starting costs and less staff are more likely to work

Can it generate profit?

Work out how you'd make your product and how much you'd sell your product and/or service for. You need enough profit left over to sustain a business.  Factor in employees' salaries, expenses, administration costs, labour, transport and material costs. The smaller your profit margin, the more demand you need to make up for it.  Talk to manufacturers to find out about costs. If you are struggling in terms of profit, you can read our free guide on how to make your business more profitable here.

  • Work out all costs
  • Compare with estimated sale price
  • Smaller profit margin needs higher demand

Is there room for growth?

You could gradually offer a bigger range of products, set up business in new locations, make ongoing improvements to your service, reach more customers.  Look to web technology for ways to evolve.  It's best if plans for growth correspond with how the market you're working in looks set to develop over the next few years.  Operating in an expanding sector is a much better guarantee for growth potential.  Avoid markets based on trends - you don't want your idea to become passé after a year or two.

  • Expanding sectors, the web, more products, new locations, bigger customer base
  • Look at how your market will develop
  • Growth markets preferable
  • Avoid trends

Smarta Formations 

If your business idea does all of this and more then form your own limited company with Smarta today! 

We offer a company registration service powered by the National Business Register.  You can search for available names then register a business name, or set up a company and/or register a trademark with us. You will receive a professional binder with all your official documents via post within 3-days.

Smarta Formations is the quickest and easiest way for you to register your limited company. All the hard work is handled for you. 

Smarta Business Builder

To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website Builder, Business Plans, Accounting Software, Legal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.

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