How to Come Up With a Business Idea

Coming up with a business idea usually means noticing a problem rather than inventing a product. Most workable ideas come from a founder’s job, skills or daily frustrations, or from a proven business model applied where it is missing. Generate several candidates, then judge them by who would buy, why they would pay, and whether you can reach them.

This milestone has a reputation for being the creative part, the moment of inspiration. In the interviews I do with indie founders, it rarely sounds like that. The idea usually arrives as a complaint, a request from a client, or something they saw done badly at work. The founders who struggle most at this stage are the ones waiting for a better idea than the ones already in front of them.

What this decision really is

The decision at this milestone is not “what is the best business in the world?” It is “which problem am I going to spend the next year or two on?” That reframing matters because it changes what you look for. A clever product concept with no obvious buyer is a weaker starting point than a dull problem that someone already pays to fix.

It also helps to separate two jobs that people often blur together. The first is generating candidates: getting a list of possible businesses onto paper. The second is choosing: picking one to test. Founders who try to do both at once tend to kill every idea before it is written down. Generate first, judge second. The judging has its own guide, How to Evaluate a Business Idea, and the hard proof comes later, at How to Validate a Business Idea.

Where workable ideas tend to come from

The best evidence on this is older than most startup advice and still holds up. Amar Bhidé interviewed the founders of 100 companies from Inc. magazine’s 1989 list of fast-growing private firms. According to a review published by the Federal Reserve Bank of Boston, only 6 percent said they began with a unique product or service. Most had replicated or modified an idea they came across in an earlier job. The same review notes that the typical firm started with under $30,000 and that 41 percent had no business plan at all.

Paul Graham made a similar argument from the startup side in his 2012 essay “How to Get Startup Ideas.” His advice is not to try to think up ideas but to look for problems, ideally your own. He separates “organic” ideas, which grow out of the founder’s experience, from “made-up” ideas that sound plausible but that few people would actually use.

Put together with what I hear from founders, the common sources look like this:

Source	Why it tends to work	What to watch for
Your current or past job	You know the buyers, the workflows and what they already pay for	Employment contracts and non-compete terms; ideas that only make sense inside one company
Your own repeated frustrations	You can confirm the problem exists because you have it	You may be an unusual customer; check that others share it
A skill you can sell as a service	Revenue can start quickly with little spending	It can turn into a job you own rather than a business
A proven model in a new place or niche	Demand is already shown elsewhere	Copying the surface without the economics underneath
Tedious or unglamorous problems	Fewer founders compete for them	The work is genuinely hard, which is why others avoid it
A shift in technology, rules or habits	New gaps open before incumbents react	Being early can look the same as being wrong for a long time

Graham calls the reluctance to take on tedious, messy problems “schlep blindness.” His main example is Stripe: many programmers knew online payments were painful, few wanted to deal with them. That is one reason unglamorous markets reward people who are willing to do the dull work, a theme covered in Boring Businesses That Make Money.

What the choice depends on

Two founders can look at the same list and rightly pick different ideas. The choice depends on a handful of personal factors more than on which idea is objectively best.

• Money you can put at risk. A service business can start with a laptop. A laundromat, a storage facility or a product with inventory cannot. The SBA suggests budgeting at least a year of monthly expenses on top of one-time costs when you estimate what a business will need.
• Time you have each week. Some ideas can be tested in evenings. Others need full days with customers, which brings the next milestone, quitting your job, forward.
• Skills and credentials. Many trades need a license before you can sell at all. Some software ideas need you to build, or to pay someone who can.
• Access to buyers. The idea you can sell to people you already know will usually beat a better idea aimed at strangers.
• How many things you already run. Founders with several businesses tend to favor ideas that share an audience, a skill or a back office with what they already have. A solo founder starting from zero has more freedom and less leverage.

The options founders choose between

People often treat “business idea” as a synonym for “product idea.” In practice there are several routes, and they carry very different risks.

Route	How it starts	Speed to first revenue	Main risk
Service	You sell your time and skill directly	Fast	Income stops when you stop
Productized service	A fixed scope at a fixed price	Fast to medium	Scope creep and underpricing
Software or digital product	You build once and sell many times	Slow	Building something nobody pays for
Local or physical business	A location, equipment or a team	Medium	Up-front capital and fixed costs
Franchise	You license a tested system	Medium	Fees, rules and contracts that favor the franchisor
Buying an existing business	You take over customers and operations	Immediate, if the deal is sound	Paying too much or inheriting hidden problems

The SBA frames the last two neatly: a franchise gives you more guidance and less control, while buying an existing business gives you more control and less guidance. For people who have found an idea they like but cannot face starting from zero, buying is a real option and not a shortcut to be embarrassed about.

The mistakes that cost the most time

These are patterns I hear often at this milestone. None of them is fatal on its own, but each one tends to add months.

Waiting for an original idea. The Bhidé research above is the best antidote. If only a small minority of fast-growing companies began with something unique, originality is not the bar. Execution in a market you understand matters more.

Solving a problem nobody has. Graham calls this the most common mistake startups make. It usually comes from starting with a solution, a technology or a trend, and then looking for someone who needs it.

Going broad too early. Graham’s image is a “well”: a small group that wants something badly is a better start than a large group that wants it a little. Facebook began with Harvard students, not with everyone.

Avoiding competition. Founders often drop an idea the moment they find a competitor. A crowded market at least proves that people pay for the thing. What you need is a specific reason the existing options leave some buyers poorly served. The SBA lists market saturation as one factor to check, not a reason to stop.

Buying an idea instead of finding one. Packaged “business opportunities” are sold on the promise that the idea work is done for you. The FTC’s Business Opportunity Rule requires sellers to hand you a one-page disclosure document at least seven days before you sign or pay, and to back any earnings claim with a written statement. If those papers are missing or do not match the pitch, walk away.

Picking an idea you cannot reach. An idea aimed at hospital procurement teams is a hard start for someone who knows no one in hospitals. Reach is part of the idea, not a later problem.

A simple way to generate ideas

If you have no idea yet, or only one you are not sure about, a structured week tends to produce more than months of waiting.

1. List every recurring annoyance in your work for five working days. Include the ones that seem too small.
2. Write down every task people have paid you for, or asked you to do for free more than once.
3. List the businesses you use that are slow, expensive or badly run. Note which of them you could run better.
4. Look at what has changed recently in your field: new rules, new tools, new habits among customers.
5. For each item, write one sentence that names a type of buyer and the result you would charge them for, such as “I would charge small dental practices to keep their booking calendar full.” If you cannot finish the sentence, park the item.
6. Keep the five to ten sentences that survive and take them to the evaluation step.

The goal at the end of the week is a short list, not a winner. It is normal for the strongest candidate to be the least exciting one on the page.

The supporting guides for this milestone

Boring Businesses That Make Money looks at unglamorous businesses such as cleaning, pest control, HVAC, laundromats, storage and bookkeeping, using government and trade data to show why they keep working and where the catch is in each one. It is useful if your list is full of ideas that sound good but have no obvious buyer.

How to Evaluate a Business Idea turns the short list into a decision. It gives six criteria (problem, buyer, willingness to pay, reach, fit with the founder and economics) and a simple scoring table you can fill in for each candidate in under an hour.

How to know you are ready for the next milestone

Good ideas do not guarantee a business. Bureau of Labor Statistics data show that of US private sector establishments born in March 2013, about 80 percent were still operating a year later, about half after five years, and about 35 percent after ten. Many things drive those numbers besides the idea. Still, it is worth leaving this milestone with something sturdier than enthusiasm.

You are ready to move on when you can answer yes to most of these:

• You have one idea you want to test first, and a second in reserve.
• You can name the buyer: a type of person or company you could find and contact this month.
• You can say what they use today instead, and roughly what that costs them.
• You have a reason to believe you could deliver this better, cheaper or more conveniently for at least some of them.
• You can test the idea in weeks with little money, before building or buying much.

If you cannot answer most of these, go back to the list rather than forward to the build. If you can, the next question is a practical one about your time and income.

Where this sits on the route

This is milestone 2 of nine, in the Decide phase. Before it comes Why Start a Business?, which is about whether you want to do this at all and for what reasons. Your answer there should shape the ideas you keep: someone who wants freedom will choose differently from someone who wants to build something large.

After it comes Should You Quit Your Job to Start a Business?, which deals with the timing and money question once you have an idea worth pursuing. Then the Launch phase begins with How to Validate a Business Idea, where the idea meets real buyers.