Entrepreneurial ideas are feasible, financially sound, technically feasible, and socially acceptable ideas for a product or service that could be useful to potential customers.
There is no way to convert an idea into a business opportunity and start a small business.
There is no such thing as an instant business opportunity most of the time.
It needs a series of steps to finalize it to make it a profitable business. It comes from a mechanism to generate many ideas to ensure at least one has the potential for a profitable business.
The first step in generating and evaluating ideas is to generate them.
The following sources are used by entrepreneurs worldwide to identify good ideas:
There is no one better at knowing what prospective customers need and what habits/tastes will be popular shortly than them.
A new product idea might come from a customer’s reaction to an existing product or service.
The features that should be included in a product or service can also be identified through contact with prospective consumers.
Prospective customers can be formally surveyed or informally monitored for potential ideas and needs.
For a new venture to succeed, it is necessary to ensure that the idea represents a large enough market.
2. The Founders
If you have saved money or received a bonus, why not invest it in your business? You don’t always have to invest in cash. A co-founder or partner who invests their time in helping you start your business while still working is also an investment. How about a founder who provides an office, machine, or technology license? All of these are sources of investment. It is also possible to temporarily stop paying yourself any wages.
The founders can surely invest in their companies at any time. Generally, this occurs when a company is just starting. There are often no revenues or external financing available when a company is set up, but there are always startup costs.
You can invest as much as your bank account allows (in terms of investment size). What are the advantages of investing in this way? An external financier can see it as a positive sign that the founder is also involved. Why would another person invest in your company if you are not ready to take the risk yourself?
3. Existing Organization
New ideas can be generated by evaluating existing organizations’ competing products and services.
A new product with a greater market appeals and performs better from this analysis.
Analyzing profitability and break-even levels in different industries or organizations indicates promising investment opportunities that are both profitable and relatively risk-free.
Various industries’ capacity utilization provides insight into the potential for further investment.
4. The 3fs: Family, Friends, And Fools
If you are planning on approaching professional investors, it might be a good idea to raise money from your family, friends, and fools first. They are usually relatives or friends who are close to you and invest mainly because they believe in your idea or you as an entrepreneur. Because they are usually not professional investors, you should not expect them to assess your company’s strategy professionally.
It is often pursued to cover startup costs or bridge the gap until a first round of (pre-)seed funding can be secured. In addition to being quick and cheap, this type of funding is also a good way of getting cash, especially if you take into account the risks that the 3Fs take (and are not always aware of themselves: hence, they are “fools”).
The amount usually involved with this type of investment is not very high, and it is usually repaid as a loan (without interest) or as an equity investment. Angel investing occurs when the amount invested, the share percentage, and the level of professionalism increase.
There are several other ways in which the government can provide new product ideas.
There are numerous possibilities for new products in the files of the Patent Office. These ideas can lead to more marketable new products.
Government regulations, industrial policies, investment guidelines, annual plans, five-year plans, etc., can also influence new product ideas.
Moreover, several government agencies assist entrepreneurs in evaluating business ideas today.
A fourth way to develop new venture ideas is through government publications on trade and industry.
6. Financial Institutions And Development Agencies
As well as offering ready projects, these organizations help potential entrepreneurs identify promising ideas.
Many organizations are working in the US to improve entrepreneurship and small businesses, including the Community Development Financial Institutions Fund, the Small Business Administration, the Office of Advocacy, the Chamber of Commerce, the Economic Development Administration, the Small Business and Entrepreneurship Council, and the House Committee on Small Business.
7. Research And Development
Among the greatest sources of new ideas is the entrepreneur’s “research and development.” The same may be an official laboratory at the company or a private laboratory at home.
It is often more difficult for entrepreneurs to conceptualize and develop successful new product ideas without formal institutional research and development.
Informally conducted research at the private level has produced many amazing product ideas.
An angel is an experienced entrepreneur with some money available (often from a previous venture) and invests it in new companies to help other entrepreneurs succeed. As angels sometimes invest together in groups, angel investments can amount to (or exceed) a million dollars/euros.
When to choose this source of financing: An angel is a great source of seed funding within the range listed above. Angels typically offer “smart capital”: money, networking opportunities, and knowledge within a particular industry. They perfectly ensure that your angel matches your company’s knowledge and experience. Moreover, they find new investment opportunities through their network and platforms like AngelList, Crunchbase, and F6s.
The “crowd” finances a company’s funding needs with crowdfunding. It is hard to imagine that crowdfunding did not exist once. The crowdfunding process involves entrepreneurs offering investment opportunities on one side of the platform and a large group of people investing small amounts on the other.
When to choose this source of financing: Crowdfunding generally comes in three forms: loans, pre-orders/donations, and convertible loans. Would you like a loan but can’t get one because of your risk profile? If you have a prototype and want to test the product/market fit but can’t afford to produce or deliver the first batch of actual products, you can go for pre-orders/donations. Kickstarter and Indiegogo offer these types of crowdfunding, mainly for products, projects, or gadgets aimed at consumers with a strong design element.
A convertible loan has the following advantages: 1) no shares are issued, 2) valuation discussions are deferred until the company’s value is more clearly defined, and 3) it is easy, fast, and cheaper than actual share transfers.
Crowdfunding platforms attract people who are not always professional investors and are more suitable for propositions that aren’t too complicated or technical and that can be easily understood by the general public (that’s why crowdfunding is called “crowd” funding). A consumer product is a good example.
Oneplanetcrowd, for example, focuses specifically on sustainable and impactful projects, so consider that when choosing a crowdfunding platform.
10. Focus Groups
To come up with new product ideas, focus groups can be useful.
For new product areas, the moderator focuses the group’s discussion in a directive or a nondirective way. Instead of simply asking questions to solicit participant responses, the moderator guides the group through an open, in-depth discussion.
A group of 8 to 14 participants conceptualizes and develops a new product idea based on input from other participants.
Idea and concept screening can also be done using this method.
When people meet with each other and participate in organized group experiences, they are stimulated to become more creative. It is the basis of the brainstorming method for generating new product ideas.
It would be most effective if the effort concentrated on a single product or market segment. The following four guidelines should be followed:
- Group members are not allowed to criticize each other.
- It is highly encouraged and recommended to have freewheeling ideas- the wilder, the better.
- A large number of ideas is desired to generate useful ideas.
- We encourage combining and improving ideas – others’ ideas can still lead to new ones.
No one should dominate or institute the brainstorming session.
12. Heuristics Method
By combining thoughts, insights, and learning, heuristics allow an entrepreneur to discover.
Entrepreneurs frequently are forced to settle for estimated outcomes of a decision rather than certainty, which explains the popularity of this technique.
Heuristic ideation techniques (HTT) are one type of heuristic approach.
Using this technique, we locate relevant concerts related to a particular product area and generate all possible combinations of those concerts.
It involves evaluating the value of various aspects of an idea to develop a new idea that provides maximum value to the entrepreneur and his new venture.
It involves creating regular schedules for developing, evaluating, and refining ideas.
13. Checklist Method
Many related issues or suggestions lead to the development of a new idea.
Using a checklist, the entrepreneur can develop new ideas or concentrate on specific “idea” areas. The checklist may be any length and any form.
The following are some general guidelines:
- Adapt to new uses? Adapt to new uses if modified?
- Is there anything else like this? What other ideas does this imply? Can I draw parallels from the past? What could I copy? Whom could I emulate?
- Change the meaning, the sourness, the motion, the smell, the form, the shape? Add other changes?
- How do we magnify? What do we add? More time? More frequency? More strength? More thickness? More value? More ingredients? Duplication? Multiplication? Exaggeration?
- What do we mean by “minimize”? Smaller? Condensed? Miniature? Lower? Shorter? Lighter? Omit? Streamline? Split up? Understated?
- Could there be another ingredient? Or another material? Or another process? Or another power? Or another place? Or another approach? Or another tone of voice?
- Other patterns? Other layouts? Other sequences? Rearrange? Interchange components? Change pact? Change schedule?
- How about reverse/negative/positive? What about backward/upside/down? Is it changing shoes? Is it turning the table? Is it turning the other cheek?
- Is it combining bending, alloying, an assortment, or an ensemble? Are there combining units/ combining purposes/ combining appeals/combining ideas?
14. Venture Capital/Private Equity
Professional investment firms which invest in companies that are not publicly traded are known as private equity. The venture capital industry (VC) specializes in risky investments in early-stage companies (from an investor’s perspective).
On the other hand, venture capital deals with investing in young companies with growth capital, while private equity deals with large companies that have been in business for some time. VC firms typically have a fund of a certain size (e.g., $100 million) that must be invested in several companies with different risk profiles within a given period (e.g., 10 years) to spread the risk. The shares will be sold for a profit/return in a few years.
When to go for this source of financing: Venture capital is most suitable for companies who have already cleared the seed stage and are seeking series A or B funding. As a result, companies that receive this type of funding will grow more rapidly than if they were growing organically, for instance, if they wish to expand internationally.
Funding from VC firms typically ranges from 500,000 to 20 million dollars/euros. A company must already have a proven product/market fit and steady revenue streams to raise funding from VC firms. It is also possible for venture capitalists with seed funds (starting at about 200,000 dollars/euros) to provide seed capital to companies that have not yet met the criteria above.
A VC firm often has a specific sector focus and a good knowledge/network within the sector, which is an advantage over angel investors. Venture capitalists often fund multiple rounds of funding for a company, whereas angels or seed investors are not always able to do so.
15. Debt Financing: The Bank
Budget management is always a prime factor, so you must be careful, especially on this step. A single minor mistake might cost you heavily.
Indeed, banks have started venture capital funds; however, they appear to be more risk-averse than angels, seed investors, and normal venture capital investors.
It is more likely, however, for them to invest in small and medium businesses, companies with lower risk profiles (than startups, for instance), and companies that can offer collateral. It can therefore be difficult for an early-stage startup that does not fit the focus of venture capital funds to secure financing from the banks.
When to for this source of financing: As mentioned, banks take less risk than, for instance, angels and VC investors. However, if you can provide collateral, A bank can also be a good option for financing building/machine investments, working capital financing, stock financing, or.
It is certainly possible for a bank to lend money to companies generating stable income streams that have been growing organically for several years (which makes them less risky). The benefit of debt financing is that you never need to give up equity in your company, so in the long run, it may prove cheaper than, for example, securing funding from a venture capitalist or an angel investor.
Working capital can be financed by factoring accounts receivable by lowering their size. Invoices can be sold to factoring companies (against a certain payment, of course) if you send them to a client, but they take 60 days to pay them.
You don’t need to wait 60 days for the invoice to be paid by the client with a factoring company. They also take on the risk that the client doesn’t pay you.
When to choose this source of financing: Having clients is one of the first things you must do to be eligible for factoring. Factoring is not an option if you don’t have any paying customers. If you have customers, factoring can be an excellent tool if the payment terms are long.
Invoices from large corporations can take a long time to be paid, and there is usually nothing you can do about it. Factoring can help keep your working capital position healthy. Are your accounts receivable management taking a lot of your time and energy? Do you often deal with bad debtors? Factoring could also be an option for you. The same will save you time and help you manage your budgets.
Many forms of financing are available to entrepreneurs. Because of this, it will not hurt to research the different types of funding. The same will help you choose the funding source that best suits your circumstances and the stage of your company. Resulting this lets you raise more money successfully. We have provided you with the 15 best sources, which you can refer to and try at your convenience. Also, if you don’t find them worthy and beneficial, you can choose other options, as many others are available.