Best business ideas: How to choose the right one for you

Published Wednesday 5 November 2025

Table of contents

• What makes a good business idea
• Tips for landing on the best business ideas
• Find a small business idea you're passionate about
• Choose an idea that fits with your skills
• Online vs offline business considerations
• Location and market considerations
• How to make money from your small business idea
• Most profitable business types to consider
• The best business idea is the one that fits you
• FAQs on finding business ideas

Key takeaways

• Apply the three-criteria framework to evaluate business ideas by ensuring they align with your passion, match your existing skills, and offer clear revenue potential before committing resources.

• Leverage your existing capabilities and experience when selecting a business concept, as this reduces startup costs and increases your probability of success while avoiding expensive mistakes.

• Research your target market thoroughly to identify genuine customer needs and analyze competitors, as understanding market demand and gaps helps position your business for success.

• Consider hybrid business models that combine online and offline elements or multiple revenue streams, as this approach can maximize your reach and profitability potential.

What makes a good business idea

Good business ideas come in two forms – innovative disruptions and practical improvements to existing solutions.

Innovative ideas challenge conventions:

• Market disruption: Amazon transformed book buying by moving it online when customers preferred physical stores
• Trust barriers: Airbnb succeeded by enabling strangers to share homes, and in 2023 alone, the platform generated $9.92 billion in transaction rates.

Practical ideas improve existing solutions:

• Location advantage: Offering the same service in an underserved area
• Price positioning: Delivering similar value at lower cost
• Niche focus: Throx sells socks in threes to solve the common lost-sock problem

Tips for landing on the best business ideas

Business idea evaluation uses three core criteria to filter opportunities and reduce investment risk. Apply this framework before committing resources to any concept.

• Passion alignment: Choose ideas that genuinely excite you. Strong personal interest sustains motivation through challenges and helps you absorb industry knowledge faster.
• Skill compatibility: Use your existing experience, qualifications, or natural talents. The more relevant skills you have, the lower your startup costs and the higher your chance of success. This matters because nearly two-thirds of small business owners use personal or family savings to start their business.
• Revenue potential: Identify clear paths from concept to cash. Strong ideas offer multiple monetisation options and sustainable profit margins.

Find a small business idea you're passionate about

Passion-driven business selection starts with identifying ideas that genuinely excite you. Passionate entrepreneurs consistently outperform those motivated solely by profit, with studies showing that entrepreneurial passion is positively correlated with entrepreneurial success.

Why passion matters:

• Sustained motivation: You'll work longer hours without burnout
• Obstacle resilience: Challenges become problems to solve, not reasons to quit
• Faster learning: Your brain absorbs information more effectively in areas of genuine interest
• Authentic marketing: Customers sense and respond to genuine enthusiasm

How to identify your passion areas:

Review your current ideas and prioritise those that make you genuinely excited to start working.

Choose an idea that fits with your skills

Skill-based business selection reduces startup costs and increases success probability by leveraging your existing capabilities. Match business requirements with your current skillset.

Financial benefits:

• Lower startup costs: Handle key tasks yourself instead of hiring professionals
• Better funding prospects: Lenders favour entrepreneurs with relevant experience
• Reduced risk: Understanding your industry helps avoid costly mistakes

Skill-to-business matching:

• App development: Requires basic coding or product development experience
• Service businesses: Need industry knowledge and customer service skills
• Retail operations: Benefit from sales, inventory, or customer experience

You don't need to be an expert before you start. Make sure you can handle the main tasks, and learn more as your business grows.

Online vs offline business considerations

Think about where your business will live. An online business can reach customers anywhere, often with lower startup costs. You won't need to pay for a physical shop, and you can manage things from almost anywhere.

A bricks and mortar business helps you build a strong connection with your local community. It gives customers a hands-on experience with your products or services. You do not have to choose just one. Many businesses use both.

For example, in 2022, most of Apple's sales – 62% – came from indirect channels like retailers, while direct channels made up 38% of revenue.

Location and market considerations

Whether you're online or on the main street, your market matters. Take a look around your community or your target online space. Is there a real need for your idea? Who would your customers be, and what are they looking for?

Also, check out the competition. Understanding what others are doing can help you find a gap or a way to do things better. Your idea is more likely to succeed if it meets a real need in your market.

How to make money from your small business idea

A business model is your plan for converting your idea into sustainable revenue. It defines what you sell, to whom, and how you get paid.

Common revenue models:

• Retail: Sell products directly to consumers
• Wholesale: Supply products to other businesses
• Service-based: Charge hourly rates or project fees
• Subscription: Recurring monthly or annual payments. For example, in 2023, 87.3% of Spotify's €13.25 billion in revenue came from premium memberships.
• Licensing: Lease your products or intellectual property

Distribution channels

• Online: E-commerce, digital services, software
• Physical: Brick-and-mortar stores, service locations
• Hybrid: Combine online and offline touchpoints

Business models usually fit into categories such as retail, manufacturing, software services, or professional services.

• what customers are charged for
• average markups on products or services
• reasonable operating costs

Mixing business models

Some business ideas fit only one business model. For example, if you open a shop, you will likely follow the same model as other retailers. Other ideas let you use more than one business model.

If you've invented a product, for example, you might manufacture it, supply it to retailers, and sell it direct to customers through your own store. Find out which business models fit your idea. An accountant who knows your industry can help you choose the right one.

At this stage, you are only choosing between business ideas. You do not need a full financial plan yet. Ask yourself:

• can I realistically make money from this idea?
• do I need special expertise (such as wholesale experience) to make the business work?

Once you have chosen an idea, ask a financial advisor to help you plan your business model in detail.

Most profitable business types to consider

Passion and skills matter most, but some fields are often more profitable. Use these examples for inspiration. Profitability depends on how you run your business.

• Professional services: If you have expertise in areas like design, marketing, or IT, you can turn your skills into a service.
• Skilled trades: Plumbers, electricians, and builders are always in demand. A trade business can be very successful.
• Health and wellness: From personal training to therapy, businesses that help people feel good are a growing area. For instance, the employment of fitness trainers and instructors is projected to grow 14% between 2022 and 2032.
• Retail: Finding a unique product or a special niche can help you stand out in the retail world, both online and off—for example, the secondhand-clothing market is projected to nearly double by 2027.

The best business idea is the one that fits you

Successful business idea selection requires three validated criteria: personal passion, skill alignment, and clear revenue potential.

Your next steps

1. Validate your choice: Ensure your selected idea meets all three criteria
2. : Develop realistic revenue projections and startup costs
3. Set up your systems: Establish proper financial tracking from day one

Once you have chosen your business idea, strong financial management is key. You can use Xero accounting software to manage your accounting, invoicing, and cash flow, so you can focus on growing your business.

Find out more in the guide to starting a small business and explore online business ideas for digital opportunities.

FAQs on finding business ideas

Here are answers to some common questions about finding the right business idea.

What is the most successful small business?

The most successful small business is one that aligns with your passion, skills, and the needs of the market. There's no single answer, as success depends on many factors, including how well the business is managed and how it connects with its customers.

What is the most profitable business?

Profitability can be high in many industries, especially in services like finance, healthcare, and software. However, the most profitable business for you will be one where you can manage costs effectively, provide real value, and build a strong customer base.

What is the best business idea right now?

Ideas that tap into current trends like online services, sustainability, or home improvement can be great starting points. The 'best' idea, however, is one that has lasting demand and that you have the skills and passion to see through.

Which business is best in New Zealand?

New Zealand has strong sectors in tourism, agriculture, construction, and technology. However, a successful local business often comes from spotting a specific need in your community, whether it's a great local cafe, a specialised trade service, or a unique retail shop.