There are many ways to categorize different businesses ideas. For our purposes, let's categorize them into three general types: innovative, commoditized, and hybrid which is a mix of the two. Let's examine each.
There were other ways to categorize business ideas. For example, we could have made a distinction of high tech business ideas, and low tech ideas. We could have also made a distinction between local businesses and ones that operate globally, or online or offline.
The reason I chose to categorize different business ideas into innovative, commoditized and hybrid business ideas is for practical purposes to help us evaluate risk, and to see how many unknowns there are to starting any particular business.
These are ideas for new kinds of websites and mobile apps. It could also be new kinds of gadgets, smart phones, tablets, or other electronic devices.
The great thing about these kinds of ideas is that they lead the way for everyone else. They create whole new markets and for a short time get a lead over other kinds of businesses. They tend to also have potential to grow rapidly, and for that reason, are attractive investments for venture capital and seed investors.
The problem with innovative businesses is that precisely because they are new, and their products are also new, no one really knows what the demand for them will be, and how well they will ultimately grow, or whether they will not find market acceptance.
Figuring out how to get the market to accept their products, and how to market and grow their business is up to the founders of companies with innovative products. So while innovating is exciting, it adds a whole layer of risk that customers may not ultimately be interested in their products. Other kinds of companies never have to face this particular risk. Let's consider some types of business ideas that do not have that kind of a market adoption risk.
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There are many types of businesses which have been around for a long time that do not have to innovate, and can still be great businesses. Just think about the different businesses in any city. Every city needs restaurants, cleaners, dentists, mechanics, people to fix homes, etc. The list goes on. The core differences between these types of businesses and innovative businesses are that these tend to be service-based business with a local focus. For that reason these have less potential to become multi-billion dollar businesses. Additionally, they do not grow as quickly.
But the great thing is that there is no risk of demand. There is definitely demand for these kinds of businesses as long as the entrepreneur can provide the service with a high-enough degree of quality.
IMPORTANT NOTE: If you are considering starting such a business, since it is commoditized and has been done successfully many times in the past, there should be almost no part of it that you are not sure of once you start. There is knowledge out there for how to start it, promote it, run it, how much money is needed and how to spend that money wisely, etc. So your challenge becomes simply to find and learn this information. Having mentors who have created such a business before is a really great option if you can get it. In fact, one of the most common business idea mistakes is to go into a business without having fully researched how to do it right when that information is readily available.
What we refer to in this article as hybrid business ideas are the kinds of ideas which borrow a little bit from both, the commoditized types of ideas and the innovative. Here are some examples.
- Restaurants that serve fusion cuisine. They are traditional types of businesses, but with a new twist on their main product which is the food.
- Websites to find school tutors. These kinds of sites take a local service that has been around for a long time, and make it easier to find tutors.
As you see, no idea is perfect. You have to choose between the extra costs and slow growth of traditional types of businesses.
Or you have to accept the higher risk of failure for technology based businesses. Of course, the traditional business ideas
give you the experience of many others to draw upon, and the technology based businesses give you potential for high growth.
But they are not without their difficulties. And no matter what kind
of a business idea you eventually choose,
over a long time, you will have to work incredibly hard to make that business a success. So make sure the idea you choose is really the
right one for you. And as always, we wish you the best of luck with your business.
If you are working on your business ideas, and getting into business planning, my business plan book can give you a lot of great guidance and direction.
Here is the link to the business plan book on Amazon, and here is the link to the business plan book on this site to help you learn more about the book before you decide to order it or not. And here is a page with all of my business and marketing books that might help you.
If you feel that you might benefit more from one-on-one business coaching where I answer all your questions on a Skype call or a phone call,
I offer that option. Here is a link to the page where you can learn how to hire a business coach to guide you as you start and grow your business.
And the best part about that coaching is that you can start it very cheaply and affordably.
After working with many entrepreneurs, I put together a very comprehensive video tutorial that addresses 40 of the most common issues that come up when people are dealing with business ideas. Among other things, the video covers many different business idea types, and what to do in every situation.
If you are uncertain about how to best protect your business ideas, please take a look at this video that explains how to protect business ideas.
Article by Alex Genadinik