Business idea
A business idea is a concept envisioned by individuals or teams that is commercially viable and capable of being monetized through the delivery of products. Serving as the foundation for entrepreneurial ventures, a robust business idea is essential for the development and success of new enterprises. It encapsulates the initial vision that guides market research, product development, and business strategy, ultimately contributing to economic growth and innovation.
Characteristics of a Promising Business IdeaInnovative: They introduce new or improved products, services, or processes. Unique: They offer something that is not readily available in the market.Problem solving: They address specific problems or fulfill unmet needs.Profitable: They have a clear path to financial sustainability.
- Understandable: They can be easily grasped and communicated. The concept behind Uber, using an app to hail a ride, is simple yet transformed urban mobility.
Meaning of innovation
For businesses, this could mean: creating new ideas, new product development through research and development, or improving existing services. Innovation can be the central focus of a business and this can help them to grow and become a market leader if they execute their ideas properly. Businesses that are focused on innovation are usually more efficient, cost-effective, and productive. Successful innovation should be built into the business strategy, where you can create a culture of innovation and drive forward creative problem-solving.Examples of innovation
- Apple was a $2 billion company in 1997, then it jumped to a $700 billion valuation in 2015 as a result of the innovation that came from the Macbook, iPod, iPad, and iPhone.
- Tesla built an electric car with exceptional aesthetics and efficiency, which has helped build the electric sports car company earn a market capitalization of $33 billion as of 2015, with revenues up 54% since 2014.
- Uber was founded in 2009 and has become a $50 billion company in just 6 years, with its simple yet unusual idea of getting a taxi with the press of a button that has completely revolutionized the way we book taxis.
Unique selling proposition
A unique selling point is the factor that makes a company or a product stand out from its competitors, whether it is through; pricing, quality, customer service or innovation.Each successful company has a unique selling proposition. A USP can be created through the element of being first to a market, for example Uber was the first company to allow for taxicab hailing via mobile app. Because Uber had reached this market first, it had a USP and therefore it received loyal customers. However; with fierce competition copying Uber's business model, Uber has had to develop its service through innovation.
Problem solving
Business ideas that solve problems are fundamental to developing the world.Profitability
Profitability is a business's ability to generate earnings compared to its costs over a certain period of time. This is possibly the most important aspect of any business idea in the long term, as this is what makes a business survive in order to keep having the impact that it has. Profitable ideas need a strong revenue stream against its costs and this tends to create the success of the business, however, some companies defy this and make losses to begin with, yet are still exceptional business ideas that are worth billions.High valued companies making a loss
- Snapchat is valued at $10 billion despite making a loss, because of the monetization potential it has based on the 100 million everyday users of the app.
- Uber is valued at $50 billion and is making a $417 million operating loss. Despite this, investors are still willing to offer large amounts of money to fund the company because of the potential the company has in the longer term.