2.1. Identifying Acceptable Online Business Ideas

“We all have ability. The difference is how we use it.” Charlotte Whitton

 Before you start your quest for ideas for your online business, you have to make sure you search in the right direction. You may encounter a great idea but is it in compliance with your potential, you resources, your goals? Some ideas are simple and don’t require much effort and time, other may require specific skills, hard work, many resources, strong team, finances and so on. Having that in mind it is very important to match the idea with your preferences, goals, strengths, resources, and tolerance for risk.

The online business idea itself is also closely related with a specific online business model, and therefore, before you start looking for ideas you might first select a preferred business model and focus on finding ides suitable for that model. As we believe that the simplest web business model is an Informative website, you might want to start looking for ideas/topics for your blog or online magazine. Anyway, in your research you may find an idea, (a need) that should be fulfilled with a specific online business model, for example, if there is raising demand for handmade jewelry and you have the skills to make some, you could open an e-shop for handmade jewelry. Another example is if you discover that people want ads free email service you should provide such web service charging small monthly or annual fees.

Another important aspect when searching for ideas is that you should be aware of the 3 (three) generic competitive strategies: 1. Cost Leadership, 2 Differentiation and 3, Niche marketing. Not every strategy is appropriate for inexperienced entrepreneurs and new small business.

Being a price (cost) leader is the most difficult strategy for small and new business. Established business can offer cheaper services and products for several reasons: they have more experience and high productivity, they have large customer base and established partners’ network, they can afford low margins and even work with losses if necessary. You might try to be a price leader if you are extra productive (experience craftsmen, fast content writer etc) or if you live in a low income country like India or Bangladesh since your living costs would be lower.

Differentiation means that you should try to be different and/or better from your competitors in one or more areas of the business. This may include but is not limited to providing specific features, extra services, high quality, availability, speed of services or something else that will motivate the customers to buy from you and become loyal to your brand. Differentiation may also be accomplished in the communication strategy (channels and way of promotion) or in the barding strategy of your business.

Serving a market niche means that you will try to avoid the (big) competitors by finding a small, unattractive market segment that is not served, or is neglected by the other business. For example, you may want to open a baby store specialized for twins or more narrowly, store for twin baby strollers. The main issue in this strategy is the size of the niche, or is it big enough to cover the operating costs of your business. If that’s not the case you may need to find different one or to serve more than one niche.

The Differentiation and the Niche Marketing strategy (or their combination) could work fine for new and small business, so, when looking for ideas you should ask yourself if you could be different and/or better than the competitors that already serve that market or is there an underserved market niche that you can serve profitably.

In-depth readings:

Assessment: Identify Your Entrepreneurial Personality Type

Must-Know Sources of Business Ideas for Entrepreneurs: Examples Included

9 ways to know if you have a great business idea

Porter’s Model of Generic Strategies for Competitive Advantage