Ideas are funny things. Sometimes, they hit you like lightning. Other times, you find them only after hours of hard thinking. But when you have a good one, you know it in your gut. This is absolutely true for ideas for starting a business.
But, almost always, other people won’t share your gut feel. The truth is, ground-breaking ideas and crazy ones look very similar in the beginning. If you want to start a business based on your idea, you’ll have to convince a lot of skeptical people to lend you money or to buy your new product or service.
It’s not an easy road ahead.
So, let’s go over a few things to make sure you really have a great idea worth pouring your heart, your time, and your money into. If you do go ahead and start a business, you’ll need to be absolutely passionate about the idea. That passion will have to carry you through the hard times ahead. You need to make sure that the idea is worth it.
The four points below will help you look at your idea on starting a business more critically. I’ve added short explanations to each of these points, but I’ve also expanded each into full articles. You can move forward and start a business without reading the detailed articles, but I hope you do find time to go through them because they give you additional information.
Know What’s Unique About Your Idea on Starting a Business
Businesses tend to succeed if they do something better than all their competitors. This can be a better product or service, or even a better way to make the product or provide the service.
Knowing your uniqueness will not only help you compete with other businesses, it will also help you make better business decisions. You will more easily convince investors or lenders to fund your business too.
Here’s a longer article on things to look for to spot a great business idea.
Have an Idea on How Much Money You’ll Need to Prove Your Concept
Other than friends and family, you probably won’t be able to get a real investor until you can prove that your idea is a good one. You do this by building a prototype or showing in some other way (e.g. cook a great meal for a potential investor for your restaurant) that you have a great idea for starting a business that customers will pay for.
To get to this stage, you’ll likely have to use your own money. This is why you should have some idea of how much you’ll have to spend. At this initial idea stage, this amount will just be a best guess. Still, it’s important to have an amount anyway so you can pay attention to it as you continue with your planning.
Here’s a longer article on how to estimate your initial costs.
Understand How You’re Going to Make Money and How Much You’re Likely to Make
This category makes you think through:
- How much you’re going to sell your goods/services for and
- How you’re going to market them.
The numbers are going to be guesses right now. You’ll refine them as you do more research and get more information about, for example, your actual manufacturing or labor costs. Still, it’s good to have a rough idea and a plan, even at this initial stage of starting a business.
Look here for more tips on setting your pricing point and deciding on a pricing model.
Think About Your Exit Strategy
Maybe you want to run your business until you retire. Maybe you want to sell it within five years for a lot of money. That’s all fine.
Know that about half of new businesses won’t survive their first five years. Still, because you’re passionate about your business idea, it’s too easy to sink your life savings into a business that eventually fails.
Don’t do that.
Even from the start, you should have a rough idea of how much you’ll put into the business before you stop. Know at what point you’ll call it quits.
Here’s a more detailed article on how to know it’s time to quit.
What to Do Next in Starting a Business
At this stage of your business planning, you’ve only written down your idea and thought through the four points above. Maybe you’ve jotted down some notes. You might have done some research on the internet on starting a business or even in each of the categories I touched on above. But you should not have spent a cent just yet.
Next, you should be thinking about what type of business entity you should establish to run your business.
Questions? Comments?
