Welcome to part five in our series on assessing whether starting a small business is right for you.
Now that you’ve determined that you are capable of running a small business, you’ve come up with some business ideas, you’ve explored those ideas and expanded those ideas, you’re ready to take that one concept you’ve decided on and turn it into reality.
Here are an even dozen things you need to remember when you are taking your business concept and turning it into reality:
1. Define your difference.
Not only do you need to differentiate your product or service from competitors, you need to clearly communicate that to people. If your idea is not clearly defined and not obviously different somehow from your competitors, people may get a “been there, done that” vibe from it.
2. Identify the problem-need-want your idea solves.
If your product or service doesn’t address an identifiable problem or fill a need or want that people have, people are not going to spend money on it. There is a reason infomercials make everyday tasks look nearly impossible to perform. They want people to believe their products are solving problems (even if those problems are extremely far-fetched).
Your product or service should:
- shorten the time it takes to do something,
- make it easier to find something,
- make something more exciting or more functional, or
- improve people’s lives in some way.
3. Conduct a Needs Assessment.
In consumer purchasing, there are five needs that you should try to turn into a ‘want.’
- Immediate need: These are needs that people want to fulfill right now because they feel they have to. They could be an overpriced morning latte, a jug of milk from the supermarket or an urgent need to get a painful tooth examined. These can also cover habitual needs like manicures, haircuts and regular forms of recreation.
- Timely need: This type of need is one that will be purchased in an approximate amount of time. For example, if someone knows they need snow boots for an upcoming trip or they need to book a limo ride in a couple of weeks for a big date.
- Untimely need: A need that is recognized, but there is no time frame for fulfilling it.
- Unrecognized need: A need that exists for a consumer, but they must be stimulated to recognize the need exists.
- Non-need: Maybe the most difficult to pull off, this is when a seller creates an environment that causes people to buy something they absolutely don’t need. It helps to turn the non-need into a fad like the Pet Rock or create some mystique around the product or service to make people believe it’s something they desire like a $1,000 bottle of Champaign.
4. Use clear, strong language.
This is not the time for vagueness. Avoid jargon and find the exact words that will create a description that will stimulate people’s imaginations and get them excited about your idea. If you can’t get others excited for your idea, it will likely fizzle.
5. Do your homework.
You might think you’re the first person ever to come up with this idea, but are you really? Check. Research online and offline by going to industry conferences and talking to experts. Find some mentors who can help you. It pays to perform this due diligence now because you don’t want to find yourself months down the road and past the point of no return with a product or service that someone has just launched that completely undermines yours.
6. Do even more homework.
Even if nobody else has come up with your exact idea, someone may have come up with an idea that solves the same problem as yours, just in a different way. These are still competition for you, as they might draw potential customers away from your business.
7. Define your customer base.
No, you’re customer base is not ‘everyone.’ Starting with that mindset is just asking for trouble. (It’s also lazy!) You don’t just need to identify your customer base, you also need to segment it into:
- early adopters,
- eager adopters, and
- people who will need to be convinced to buy it.
8. Determine your resource requirements.
First off, this is not something you can sit down and scribble out in 15 minutes on a napkin. As with most steps in this process, this should take you quite a bit of time to research.
You need to ascertain:
- what exactly you’ll need to get started,
- whether you’ll be able to build your product (or offer your service) in your garage using standard tools and materials or whether you’ll need to have it built in a special environment,
- how important a website and/or an app will be to your business and if you will need to hire a professional to develop one or if a free version will suffice,
- whether you can handle getting your business started on your own or you will require a team and who that team will need to include, and
- how much money you’ll need to get your idea launched.
Conduct research, check with suppliers and talk with industry experts and specialists.
9. Build a prototype.
Obviously, this is a crucial step with a product, but you can also build a prototype of a service by creating a process map that details exactly how the service will be provided to customers and what will need to happen internally to meet customer needs.
A physical prototype should be completely operational and be able to demonstrate its functionality, its reliability and include specs on its production requirements. If you can’t build an actual prototype, have serviceable models (including computer models) and detailed specs.
10. Do the math.
The math in this case is a detailed financial analysis that includes:
- a realistic and convincing revenue projection,
- related costs,
- an estimated break-even point and the details you used to come to that estimation, and
- estimated future profits and accompanying details.
Get help with all this if you need to because a poor financial projection can destroy even the greatest idea.
11. Write your plan.
This isn’t the pitch you’re going to give potential investors, this is the internal plan for you to follow. You can’t just ‘wing it’ when trying to start a business. You need a step-by-step process to follow that you can consult if you get lost somewhere along the way. The plan is bound to change and fluctuate, which is perfectly normal. Your plan should be flexible. But you do need one.
Start by gathering all the information that you’ll need for the plan.
You’ll also need to assess your business’s objectives, including:
- realistic and
- time defined.
And you will need to assess what your business needs to do to meet your goals. These include
- broad goals,
- generalized goals and even
- subjective goals.
Accuracy is key. If you borrow money or attract investors, you may be held accountable for the projections you have in your plan. Plan carefully and be diligent.
12. Remember this process takes patience.
A lot of patience.
Next week will be the final instalment of this series.