There are many ways to categorize different businesses ideas. For our purposes, let’s categorize them into three general types: innovative, commoditized, and hybrid which is a mix of the two. Let’s examine each.
These are ideas for new kinds of websites and mobile apps. It could also be new kinds of gadgets, smart phones, tablets, or other electronic devices.
The great thing about these kinds of ideas is that they lead the way for everyone else. They create whole new markets and for a short time get a lead over other kinds of businesses. They tend to also have potential to grow rapidly, and for that reason, are attractive investments for venture capital and seed investors.
The problem with innovative businesses is that precisely because they are new, and their products are also new, no one really knows what the demand for them will be, and how well they will ultimately grow, or whether they will not find market acceptance.
Figuring out how to get the market to accept their products, and how to market and grow their business is up to the founders of companies with innovative products. So while innovating is exciting, it adds a whole layer of risk that customers may not ultimately be interested in their products. Other kinds of companies never have to face this particular risk. Let’s consider some types of business ideas that do not have that kind of a market adoption risk.
There are many types of businesses which have been around for a long time that do not have to innovate, and can still be great businesses. Just think about the different businesses in any city. Every city needs restaurants, cleaners, dentists, mechanics, people to fix homes, etc. The list goes on. The core differences between these types of businesses and innovative businesses are that these tend to be service-based business with a local focus. For that reason these have less potential to become multi-billion dollar businesses. Additionally, they do not grow as quickly.
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But the great thing is that there is no risk of demand. There is definitely demand for these kinds of businesses as long as the entrepreneur can provide the service with a high-enough degree of quality.
What we refer to in this article as hybrid business ideas are the kinds of ideas which borrow a little bit from both, the commoditized types of ideas and the innovative. Here are some examples.
- Restaurants that serve fusion cuisine. They are traditional types of businesses, but with a new twist on their main product which is the food.
- Websites to find school tutors. These kinds of sites take a local service that has been around for a long time, and make it easier to find tutors.
There is a bit of a balance of innovation risk vs. commoditized business, which has an added benefit of giving you a good way to differentiate the business from other similar businesses, and often provides a marketing gimmick to get people’s attention.
Further Business Resources
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Author: Alex Genadinik