An effective approach to discover a profitable business idea
Use innovation to discover profitable markets
This article is about a less known but very effective and proven methodology to help small and medium-sized businesses derive a profitable business idea using their existing resources. The approach is especially helpful for cases when businesses wish to enter into new markets or plan to diversify in new sectors without making a huge investment or during a cash crunch situation like the one faced by the global economy during the present outbreak.
“We don’t know how the businesses will perform post-Covid 19” is a phrase you frequently hear from many of the business mentors and experts or even from startup founders. Yes, if you ask anyone about the business success or sustainability at this time of crisis, you end up getting the same answers almost from every expert with exceptional examples from the sectors that will perform well during and post-pandemic.
Though it is a fact that not all startups or SMBs (small and medium business) can pivot or simply switch to tap into the opportunity that those few sectors like ed-tech, healthcare, or the ones related to ‘essential goods delivery’ are providing. It is because their offering is a fit to provide a certain value to a particular market segment. And if at all, the startup or a running business plan to provide a product or service to an entirely new set of customers in the sectors they aren’t related to, then they have to put a lot of effort in two things:
- Firstly, in redesigning the entire business model and its 9 components starting from the value proposition (with a minimum viable product) and customer validation to key partners, key resources, cost structure, and revenue models.
- Secondly, in differentiating themselves from an aggressive group of competitors in the form of incumbents (established players) or even startups already striving to expand in those sectors.
The question then arises “what do the startups or businesses do if they aren’t related to sectors seeing growth during COVID 19 or expected to grow in the post-pandemic world?
Well, this blog is all about helping businesses and startups get a real insight into how to generate a profitable business idea from their existing business line and using their existing resources during and in the post-pandemic situation.
None can deny the fact that most of the business and startups are going through a phase of intense fear and frustration as this pandemic brings many uncertainties with it. But there is a silver lining even for many of the businesses that are expected to be shut in a post-pandemic world.
Though there is no “one size fits all” solution for businesses and startups, the following unique and proven approach will certainly help a wide spectrum of businesses. The approach to finding a profitable business idea is divided into 3 steps:
Step 1: Identify the core capabilities of their offering
Many of the business owners or startup founders might simply laugh while reading this thinking that identification & exploitation of core capabilities is a part and parcel of a successful business and there is nothing new in this approach. But I challenge them to rethink those core capabilities not in terms of the business idea they built their startup or business around, but in terms of the core functions that each component of their product (offering) performs. The core function is the job that a component performs to attain the desired objective. The sole objective of identifying the core capabilities is to dig out the functional purpose that each component of the offered product or service fulfills.
Let’s understand this with the help of a real-world case study that is just one of many examples that I found to align perfectly with this very powerful approach.
A paper manufacturing business in one of the states of India is severely hit by the pandemic and has no idea about how to cope with this situation. Their business processes have stopped and there seems no way to bring the business operations back to track due to a sudden decline in demand for paper and the restrictions put by the government to stop all business activities.
Amidst this tragic blow, this paper manufacturing company came up with a brilliant idea to re-route their knowledge of manufacturing paper into the fabrication of medical equipment. Yes, you read it right. It’s an emergency hospital bed made from simple cardboard made out of paper with few other constituents used in paper & related industries. Click the link to see the video.
Now let’s see how this approach could be used to arrive at the same solution. The following table shows the technological functions performed by each component of the corrugated paper.
Step 2: Unlock potential applications of core abilities
The above table acts as a tool to unlock potential applications of the corrugated paper in different sectors. Following this approach, many applications of the core functional components can be discovered. Few applications are listed in the table below.
Each of the above-mentioned applications has several markets where the product or its components can be used.
Step 3: Derive the market segments
Once the potential applications are discovered, you can know your market segments through simple brainstorming with team members against each application.
As it is evident from the above table that one of the applications (holding objects) of the corrugated board made out of high strength paper has a market for hospital beds. The beds can also be used for patients in temporary quarantine centers. This market of emergency hospital beds can help this paper industry sustain itself for a reasonable period seeing the present situation.
Apart from this, more exciting and rewarding applications and market segments can be uncovered by industries through brainstorming.
If your business cannot do effective brainstorming due to a very small team size or you are at a very nascent stage in your startup journey with just 2-3 team members, you can check out an approach to unlock surprising applications of existing products to help sustain a business.
Though the above approach to find a profitable business idea can be a savior for many businesses and startups, adaptability and flexibility are also equally important for those who desire to prevent themselves from falling out. Your focus should be on the skills and tools that can help your business adapt as quickly as possible. If need be, do not hesitate to even switch your business from your current offering to an entirely different domain that promises sustainability.
Do you feel there is something more to be included? Kindly write to us. We will be more than happy to consider your valuable suggestions.