You have great idea you think you can turn into a viable business. That’s awesome! Now you need to get to work in order to make your dream a reality. Turning a great idea into a profitable business requires time, effort, and a willingness to do things the right way.
Below are three things you will need to consider in pursuit of your new business venture. Each one is considered a fundamental of business success. As you connect with others capable of helping you succeed, they may suggest a few other things for your consideration. Heed their valuable advice.
1. Realistic Market Demand
You may think your great idea is original, and perhaps it is, but don’t just assume. Take some time to do a bit of market research. See if there are other companies out there offering the same product or service you intend to offer. If you’re facing a lot of competition, you might find that turning your great idea into a viable business is more difficult than you originally anticipated.
Entrepreneur Magazine recommends a combination of first-person, secondary, and web research. First-person research involves speaking with people over the phone, face-to-face, and online. Make a point of asking the sorts of questions that will allow you to get a feel for what they think about your idea.
Secondary research involves looking at already published data from other entrepreneurs. This sort of research involves news articles, research papers, case studies, and the like. It goes hand-in-hand with web research, which consists of scouring the internet for as much information as you can find about your idea.
2. Amount and Sources of Funding
The vast majority of small businesses – roughly 80% – survive their first year of operation, according to the Motley Fool. Only half of them make it past five years. Among those that fail, the number one reason is a lack of adequate capital. Simply put, small business owners fail to secure enough funding to get them through the lean years.
A general rule for calculating funding is to start by estimating initial startup costs to cover equipment, office supplies, labor, and so forth. This should be followed by estimating the monthly costs of keeping the business going. You’ll need to think about everything from office rental rates to business insurance quotes.
Finally, put together a revenue forecast based on a modest expectation of your sales. Run the numbers on all three estimates to determine how much funding you’ll need for one year. Then secure enough funding to make it through at least two years.
3. A Well-Developed Business Plan
A business plan is a document that guides you through the early stages of getting started in your new venture. Bankers and investors often require business plans before they will even think about funding a new start up. However, a good plan goes well beyond the confines of funding. It forces you to think through the details of how you plan to establish, grow, and maintain your business.
The Small Business Administration (SBA) offers a comprehensive guide for writing business plans. They explain the differences between traditional business plans and lean startup plans, as well as offering examples of both. You would do well to visit the SBA website to take advantage of all the free information they provide.
Your great idea deserves a shot at becoming a viable business. But don’t expect overnight success. Taking an idea from concept stage to full operation requires a deliberate, step-by-step process that maximizes opportunities and mitigates risks. Seriously consider the three things explained in this post, then go out and get to work. The success of your business is in your hands.
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