Startup ideas can be of different types based on whether they are based on a new concept or not. Validation of a particular business idea can be pretty risky, and this decision should be taken with utmost diligence. The need to weigh your options and choose wisely arises here. The three basic types of startup ideas are:
1) An innovative business idea
It is vital for the entrepreneur’s idea to be innovative and unique for the startup to succeed. Not everyone is willing to take risks in today’s world, which means that those who are ready can use it to their advantage. Higher risks always mean higher profits.
ype of startup idea involves an innovative idea that has not been conceived by anyone ever before. Everyone can walk in the footsteps of other people, but it is challenging to choose your way.
These might be risky, but if the idea is good, it will be successful even overseas. For innovative business ideas, it is essential that the concept is new and has not been considered before. There are various innovative business ideas like setting up a second-hand books library portal online or selling fruits and vegetables on an online portal.
Nowadays, people are even earning ideas like being a cuddler or owning a cat-themed restaurant. The best thing about such business ideas is that they lead the market in the future. An idea by one person may change the whole way that a product is viewed in a market. Such ideas are preferred by investors a lot.
These ideas have vast growth potential and are like an opportunity that can do wonders for the entrepreneur if grabbed. The only problem with such business ideas is that the idea is new, and no one knows the kind of demand the idea will generate.
There’s no idea whether it will be able to garner essential market acceptance or not. The founders have to carry the burden of making their idea marketable and gather a generally positive sentiment towards their vision. Often, the customers are unwilling to invest their money in something new, and they prefer to buy from established businesses.
Thus, there is a risk, plus there is competition, and the entrepreneur has to consider both the factors to generate the market potential for his idea. Artistic collaboration websites are a great example of innovative business ideas. Another one would be micro-lending web platforms.
2) Commoditized business ideas
It is one of the best types of startup. These are a type of business idea carried out for a long time and involves zero to minimal innovation. Because the innovation is nil, the risks are also pretty low. These ideas provide a standard source of income and do not lead to high profits.
These ideas have already been tried and tested by many people, and thus, there is no demand risk associated with them. Examples include mechanics, car cleaning, restaurants, shopping malls, etc.
These businesses do not need to innovate and can still survive in the market. Every city or village needs the basic services that are already being provided by different businesses. They do not transform into multi-billionaire models or grow rapidly but manage to survive in the market model. What matters in this business idea is quality.
The entrepreneur will be able to sell his product as long as he can maintain a basic standard of quality in his products. There are few decisions to be made in such business ideas, and the factors to be considered are minimal. There is a sense of surety over here.
The information is readily available to the entrepreneur, and he should make the best use of it to his advantage. He should learn from other business models offering the same products or services as him and use that to his advantage.
Commoditization happens when consumers can buy the same commodity from more than one buyer in a large market. Price is more or less the same to avoid much competition. Examples of commoditized business ideas are the food and hotel industry, clothing, etc.
3) Hybrid businesses
As the name suggests, hybrid businesses are a hybrid or mixture of innovative business ideas and commoditized business ideas. An example may be teaching school students through an online platform or selling food online.
The traditional ideas may be merged with modern ideas to generated a hybrid model. This type of startup idea can reap the benefits of both the other business ideas and suffer from the disadvantages of both.
Tips for choosing a business idea
Choosing a business idea can be cumbersome, and it is important to consider the tips while doing so. The tips to be considered are:
Focus on your skills and passion
It is very important to consider your skills and passion before considering a business idea. If you are not passionate about your idea, it will never turn out to be a success. If you have an innovative concept in mind, only then should you choose the creative business idea.
Choosing an innovative business idea when you don’t even know how you will work on an idea will lead you to nothing. If you are enthusiastic about an idea, you will work for it day and night, and that hard work will always pay off.
On the other hand, if you are working on an idea, just because you think that it may or may not work out, you will never be able to make it a success.
Measure work-life balance
The second most important tip is to measure your work-life balance if you decide to take up an idea. Will this idea provide you with time to have an everyday life with your family, or will it put you into an endless loop of work, work, and work.
Match your business idea to your lifestyle; otherwise, you may end up being in your office for 60 long hours, even when you don’t want to. This will bring lethargy into your daily life, and you will end up regretting your decision. Weighing the hours, you would dedicate to your work and your lifestyle will help you make a fair decision.
Test your idea
This is by far the most important step while evaluating a business idea. It would help if you considered a variety of factors for this. Firstly, is there adequate demand for the business idea that you are conceiving? Secondly, can you afford to pay for the costs of making your vision a reality, and third, how will you be any different from your competitors?
If you have answers to all these questions and they are in your favor, only then should you consider taking up your idea, otherwise abort it. An idea can always look just and fair on a piece of paper, but when carried out, will it be as successful as you are considering it to be.
It is always advisable to prepare a business idea before you choose a plan. Write down your strengths and weaknesses, the threats and opportunities that you will face as a business. This will give you a broad idea of how your idea will look in the real world.
Do a SWOT analysis for your business idea, as you do for yourself, and you will know about your shortcomings and strengths. Consider your competitors and layout strategies to fight their schemes—layout better plans to promote your idea and make it a success.
Thus, no one idea is good or bad. The choice is on you. You can choose high risks with high profits or low risks and low profits. The decision sums down to you being a risk-taker or not. No matter which business idea you choose, what will eventually matter is how hard you are working to make your vision a success. So, put your best efforts and decide to choose the business idea, with utmost care.
Frequently Asked Questions :
How many basic types of startup ideas are there?
There are three basic types of business ideas, i.e., innovative business ideas, commoditized business ideas, and hybrid business ideas.
How should one choose a startup idea?
Choosing a business idea entirely depends upon your willingness to take a risk. If you are a risk-taker, you should go for the innovative business idea, and if you are not a risk-taker, commoditized business ideas are the best for you.
Which types of startup ideas are the most profitable?
Innovative business ideas are the most profitable type of basic business ideas as these involve high risks and thus increased profits.
When should one choose a hybrid business idea?
A hybrid business idea should be chosen to take a moderate risk and want reasonable returns. Here, the chances of failure and survival of a business are almost equal, and your idea might help you gain a lot or lose a lot.