Ideas – every successful startup started with a good idea. Such ideas are however not the result of a sudden lightning-strike moment of inspiration but the product of a structure process. In our article, we’ll tell you how you can recognize a great startup idea and which sectors currently offer good opportunities for new business ideas.
What Characterizes a Good Startup Idea?
Innovative, disruptive, or game-changing? Many ideas are associated with a good startup idea – frequently, they also fit the bill. However, it is more important to pay attention some basic criteria. Your startup idea should have the following traits:
- Your idea should target a specific target group. You should identify and narrow that group down beforehand to discern your idea’s potential.
- Your idea should have a specific use and be able to solve a concrete problem on an existing market. Without a clear concept of value added your target group will not be willing pay for your idea.
- Your idea should be scalable. Meaning that you can increase revenue without needing to invest larger sums at the same time.
Good startup ideas solve problems.
It’s the most typical question at every pitch for investors: What kind of problem does your taret group have? Most importantly: How do you intend to solve it? A lack of demand on the market is still one of the most common reasons why aspiring companies fail.
Many of the most successful startups in the last years were based on a simple concept that, however, struck exactly the right nerve. The keyword is painspotting. A problem has to be so enormous that it almost causes the consumers pain. That’s when they are usually also ready to pay for a solution.
Your idea can be creative, even brilliant – if there is no demand, it won’t help you succeed. First, you need to ask several questions to identify to identify the point where necessity meets pain: Which tasks would customers love to avoid? What activity consumes too much time? What is too expensive for them? There are several ways to identify relevant problems:
- Use your professional expertise: Maybe you possess in-depth understanding of a certain field and you have already encountered problems: Make sure to find out whether this affects other people as well. To test that proposition the method of iterative product development works very well: Develop a preliminary version of your product as soon as possible – the Minimum Viable Product – and use it to get user feedback. That way, you can constantly adjust your idea to the preferences of the customers.
- Talk with other people: Friends, family, or workplace – often, other people have to face completely different problems. That’s why should always keep your eyes and ears open. Exchanging experiences with other founders can also help you gather new impressions. The Founders Foundation Startup School is such a place where ambitious and talented founders already found each other and were able to realize their ideas together.
- Conduct a market survey: Only someone who knows their industry and understands the potential needs of customers, can successfully position their product. Additionally, a competitor analysis can reveal whether there already are competitors with similar ideas. Use all possible sources for your survey, company databases, trade journals, social media, search engines. A structured market survey can later also help to convince investors of your idea.
- Monitor trends: Climate change, automation, urbanization – sweeping changes constantly require new solutions. So-called megatrends are not simply overly hyped fads but rather signs for fundemetnal upheavals of existing processes. For startups, this means that there are plenty of areas where they can position their innovative ideas. Since these trends always crate new changes, they always carry new chances for startups in their wake.
Optimize Existing Startup Ideas
Many founders find the thought of the market very enticing. But you don’t need to re-invent the wheel: Many successful startups have taken existing ideas and optimized them. Don’t be afraid of imitation.
Renowned company builder Rocket Internet is a good example: They’ve adopted the strategy to copy other ideas and apply them the most diverse branches of industry or countries.
The advantage is obvoisu: The ideas have already passed the proof of concept, the testing phase. You can use your competitiors’ key data for orientation, obverse their marketing activities, and ultimately get a better unstanding how you can realize your idea.
You must consider which unique selling proposition you want to use to stand out. Because the principle “survival of the fittest” applies here – whoever can implement a business model faster and better, will prevail in the end.
You different possibilities to profit from other startup ideas:
- Optimize existing ideas: faster, cheaper, more efficient – existing business models often have weaknesses that you can exploit for your idea. Leaner supply chains, more affordable products, or automated processes. Always think of the customer’s needs. As a source of inspiration, you can monitor trends developing in other countries. Especially in the US, many trends evolve that only later spill over into Europe. But be careful, not every tried-and-tested business model that works in another country automatically works everywhere. Cultural differences, for example, are always an obstacle. You should therefore consider how such ideas can be adaptated to the domestic market.
- Adapt successful ideas to other branches of industry: The concept of mymuesli proves that expanding your perspective is a worthwhile endeavour. Many startups have taken to the idea of personalized products and applied it successfully to other sectors, from personalized perfume to individual jewelry. The principle stays the same, the sector changes. Even large companies are now following the trend to import solutions from other branches.
- Offer new solutions for rigid trade branches: There are still many companies who haven’t adjusted their processed to the digital age. Whether it’s a lack of necessity, outdated company cultures, or problems with the execution – the reasons are plentiful. But what’s obvious: These companies have huge amounts of potential that remains unused. Look for branches with a low level of digitalized processes and offer them solutions – for example a software-as-a-service model that makes analog tasks more efficient. Best case scenario? Your solution is scalable and works for other companies as well.
Which Areas Currently Offer Good Chances for New Business Ideas?
Great startup ideas do not only solve problems but also strike a chord with the current mood. The perfect timing is one of the most important factors when implementing your idea successfully. However, it’s difficult to find that right moment. As a founder, you always should look out for current trends since they also mirror consumer needs.
For that purpose, you also need to look out for sectors that are popular with investors. Currently, you should look at the following sectors:
- Health: It wasn’t only the COVID pandemic that raised our awareness about the vulnerability of our health. There has been an ongoing trend for years that makes people’s rising conern for their physical well-being visible. Demographic changes will also lead to increasing investments into medicinal technology becoming more necessary. In the last year alone, the investments in the health sector have doubled in Germany, to a sum of around 1.3 billion Euros.
- New work: The pandemic has led to a sudden and accelerated creation of digital processes in many companies. Which not only had positive consequeces but also cast a spotlight on the problems with working remotely or from home. Security vulnerabilities, difficult communication, lack of work-life-balance – all new challenges that require new solutions. As a founder, you will have plenty big opportunities because new forms of work will further take root in German work culture in the next years.
- Sustainability: The immediate consequenes of climate change are affecting us more and more which also increases the awareness for transformation. Through the last years, sustainability has developed into one of the financially strongest startup sectors. Optimization of power consumption, recycled clothing, or climate-friendly search engines – there are many opportunities you can use to place your idea.
- Financial Technology: Banks, insurance companies, and real estate agencies are slowly turning into fintech, insurtech, and proptech. The traditional financial sector is in a process of profound transformation. Housing is financed through crowdinvesting, all aspects of personal finances are merged into one app, and insurance risks are calculated by algorithms. This kind of potential has already been recognized by investors: The investment sums in Germany for the sectors fintech and insurtech have risen by roughly 700% in the last year alone. If you have a suitable idea, you’ll find a market that offers huge changes for growth.
- EdTech: The demand for digital tools to support learning has risen drastically. Whether school, universities, or companys – institutions need innovative technologies to make learning proccesses more efficient. The COVID pandemic has provide the edtech market with a huge boost: Throughout the last year, more than 17 billion Euros were invested into the edtech sector worldwide. That’s three times more than before the pandemic. In Germany, the market is still in its early stages.
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