Study notes

Starting a Business: Sources of Business Ideas (GCSE)

Where does an entrepreneur come up with the idea for his/her business? In practice there are many ways in which the business opportunity and idea is first spotted. As we shall see, sometimes luck plays a big part; at other times there is a role for approaches which encourage deliberate creativity.

Here are some of the main sources of business ideas for start-ups:

Business experience

Many ideas for successful businesses come from people who have experience of working in a particular market or industry. For the start-up, there are several advantages of applying this experience to a new business:

  • Better and more detailed understanding of what customers want
  • Knowledge of competitors, pricing, suppliers etc
  • Less need for start-up market research
  • Entrepreneur is able to make more realistic assumptions in the business plan about sales, costs etc
  • Industry contacts, who might then become the first customers of the start-up!

All of the above help the business planning process and you could argue that they reduce the risks of a start-up. On the other hand, you might argue that "familiarity breeds contempt". In other words, detailed experience of an industry means that the budding entrepreneur doesn't have a fresh perspective. Someone who is new to a market may be able to exploit approaches that have worked in other industries to make an impact with the start-up.

Personal experience

Many ideas come to entrepreneurs from their day-to-day dealings in life, or from their hobbies and interests. For some of us, frustrating or bad experiences are a source of irritation. For the entrepreneur they might suggest a business opportunity.

It is often said that one of the best ways to spot a business opportunity is to look for examples of poor customer service (complaints, product returns, persistent queues etc). Such examples suggest that there is an opportunity to do something better, quicker or cheaper than the existing products.

Hobbies and interests are also a rich source of business ideas, although you have to be careful to avoid assuming that, just because you have a passion for collecting rare tin openers, there is a ready market from people with similar interests! Many people have tried to turn their hobby into a business and found that generates only a small contribution to household income.


Simply observing what goes on around you can be a good way of spotting an idea. Often an idea will be launched in another country and has not yet been tried in other, similar economies. When Stephen Waring was in the USA attending a wedding, by luck he sat next to someone who ran a household service business (treating lawns). After some brief market research, Stephen found out that there was no similar business in the UK, so he launched one. It has since become a hugely successful franchise business – Green Thumb.

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