For my college class this week, we’ve been discussing how to choose a business idea in the process of development. Do you start with a product? Do you start with a business pattern and then pick a product? How do I know if a business idea is a good option?
We agreed that identifying a product and customer base first is more effective than choosing a business pattern (like advertising, affiliate, or merchant). The ideas of demand and competition help us know if a business idea is a good option. Competition refers to the number of people vying for customer attention and sales in a specific product or industry. Demand refers to the number of customers looking to buy in a certain product or industry. Increasing demand usually results in increased competition as businesses seek to profit by fulfilling the demand.
We recognized that industries dominated by big brands can be too competitive for small start-ups to easily be successful. The high cash flow creates a tall barrier of entry into the market. Other industries that are less monopolized and less expensive have a lower barrier to entry and would likely fit a small business much better.
We used a Google Ads tool called Keywords to look at how often different words are searched online and how high competition is for advertising related to those words. Comparing keywords ‘snowboard’ and ‘chess’, we found that snowboard was a more difficult industry to enter, while chess receives more traffic online and has much less competition. It’s a direct data-based result that I’ll certainly use for my business idea this semester and other ideas in the future.