These approaches are not entirely mutually exclusive. Let's start with the idea, rather than with formal research. Some of the possible sources for business ideas include:
- Self-discovery. Find out what you're truly passionate about and figure out how to make a business out of it.
- Inspiration. That idea that just popped into your head one day may not be so crazy after all.
- Observation. Be constantly looking for unmet needs. Is there a product or service that you would buy if it were accessible and affordable?
- Imitation. One way to increase your odds of success is to find a proven business model and replicate it in a different market. Or, consider buying a franchise, where you'll not only have a proven business model, but outside support for your business.
You can ask your friends and family, but when you do, make sure to let them know exactly what you are looking for -- honest, detailed feedback on the idea. True friends will be supportive of your ability to succeed, but they will also be willing to be honest with you.
If you make it past the friends and family round and still think you've got a viable business concept, put together a basic business plan. There are extensive resources to help you with this in our Business Plan section. It doesn't have to be incredibly detailed -- you're not going to the bank or investors with it.
Now, think of the three to five most successful entrepreneurs you know. (If you don't know that many, you'd better meet some -- it's going to be very difficult to be a successful entrepreneur yourself without several of them in your network.) Contact them and see if they'll take a look at your business plan and meet you over coffee or lunch (your treat!) to discuss it. Now would also be a good time to find a mentor.
If you feel you need some market research, turn to an online community in which you participate regularly, or find an online community of people who match your target market. Ask a few questions in the discussion forums, preferaby open-ended ones that will get you qualitative information, rather than just quantitative data. It may not be as statistically accurate as formal market research, but if you're not talking about risking huge sums of money, it's probably good enough. The higher the risk, the more formal research you need.
With this approach, you can pursue your passion, tempered by proven practices, and improve your possibilities of prosperity.