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 are 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.
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, I 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 Zoom 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.
New Video With 40 Business Idea Tips
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.
Starting a business on your own is very difficult. I would know. I've done it. When I was a young entrepreneur, not having guidance and support led me to fail in many of my earlier attempts to start a business. Today I understand the value of having mentoring and an opportunity to learn from other people's mistakes. That's why I've put together a number of online courses and coaching programs to help young entrepreneurs.
Here is a list of discounts for my Udemy courses and here is a page where you can learn
how my business coaching can help you.
Tutorials On How To Start Specific Businesses
I am working on a full list of businesses or services you can start:
restaurant or diner, coffee shop, barbershop, nightclub,
local event, most kinds of stores ranging from boutiques to grocery stores to jewelry shops, animal care or grooming,
lawn care or landscaping businesses, moving businesses, gym,
a t-shirt business,
gelato, frozen yogurt or ice cream shop,
a deli, liquor store or a sandwich shop,
a a beauty salon or a hair salon, a spa,
a daycare business, hardware store,
cleaning business that is either commercial or residential, car wash,
general contractor business, dog walking or pet sitting, martial arts studio, or a dance studio.
I am also working on a list of tutorials for how you can promote certain companies.
The first one I am working on is law firm marketing.
Here is a list of potential online businesses you can start: blogging, affiliate marketing,
marketing agency,
elearning, create a channel on YouTube,
become an author and sell books on Amazon and the Kindle, or become a freelancer or a local concierge. You can also create a mobile app or a
website that provides some service or product or content that people can visit.
There are also businesses you can start today or this week by licensing paid content and reselling it on your website. Here are tutorials on
how to license ebooks or online courses, and begin reselling them.
Article by Alex Genadinik
Page Table Of Contents
About The Author
This article was written by Alex Genadinik, a serial entrepreneur, bestselling author, and one of the world's leading online educators with over 1,000,000 students on Udemy and Coursera. Alex has personally coached over 1,000 entrepreneurs across all types of businesses — from local service companies to technology startups — which gives him a uniquely practical perspective on what actually works when starting and growing a business.
Alex is a three-time Amazon bestselling author. His business plan book and mobile app business book are both leading titles in their respective niches on Amazon. He also created the Problemio app series — some of the top-rated business apps on iPhone and Android — which have helped over 2,000,000 people start and grow their businesses.
In addition to writing and teaching, Alex is available as a business coach for one-on-one entrepreneurs, and as a corporate speaker on topics including entrepreneurship, marketing strategy, communication, leadership, and productivity. If you are looking for a speaker for your company event, conference, or university program, visit enterprisespeaker.com for the full list of topics and booking information.
Frequently Asked Questions About Types Of Business Ideas
What is the difference between a business idea and a business model?
A business idea is the concept - what product or service you will offer and who it is for. A business model is the mechanism by which the business makes money from that idea. For example, "an app that helps people find dog walkers" is a business idea. Whether you charge dog owners, charge dog walkers, or take a percentage of each transaction is the business model. You need both - a good idea without a clear business model rarely succeeds.
What types of business ideas are most likely to succeed?
There is no single answer, but businesses that solve a clear and painful problem for a specific audience tend to have the highest success rates. Commoditized businesses in proven markets have lower failure rates than innovative ones, but also lower upside. The most important factor is usually the founder's ability to execute and adapt, not the idea itself.
What are some low-cost business ideas you can start with little money?
Service-based businesses typically require the least startup capital. Freelancing, consulting, coaching, tutoring, bookkeeping, social media management, and cleaning services can all be started with minimal upfront investment. Online businesses like blogging, affiliate marketing, and selling courses also have very low startup costs compared to physical businesses.
What is a scalable business idea?
A scalable business is one where revenue can grow without a proportional increase in costs or effort. Software, online courses, and digital products are highly scalable because the same product can be sold to thousands of customers without recreating it. Service businesses like plumbing or hair salons are less scalable because revenue is capped by the hours in a day. Scalability is one of the main reasons investors favor technology startups over traditional businesses.
Should I start an online business or a local business?
It depends on your skills, resources, and goals. Local businesses have less competition in a specific geographic area and can build strong community relationships, but are limited in how large they can grow. Online businesses can reach a global audience and scale more easily, but face much broader competition. If you are starting out, a local service business often provides faster first revenue while an online business takes longer to build but has higher long-term potential.
How do I know if my business idea is good?
The best way is to test it with real potential customers before investing heavily. Talk to people in your target audience about the problem you are solving. See if they are currently paying for a solution. A good business idea solves a real problem that enough people have, that they are willing to pay to solve, and that you can reach efficiently. An idea that only you think is great is not enough - the market has to validate it.
What is the difference between a product business and a service business?
A product business creates a physical or digital item that can be sold repeatedly - like a book, app, or manufactured good. A service business sells time and expertise - like consulting, coaching, or cleaning. Product businesses can scale more easily since the product can be replicated at low cost. Service businesses are easier to start and often generate revenue faster, but scaling requires hiring people or raising prices.
What are passive income business ideas?
Passive income businesses generate revenue with minimal ongoing effort after initial setup. Common examples include selling online courses, writing books, affiliate marketing, building software or mobile apps, licensing content or intellectual property, and rental income. True passive income rarely requires zero effort - most passive income streams require significant upfront work and ongoing maintenance - but they can eventually generate income with far less active work than a traditional business.