You’ve just come up with what you think is a great business or product idea. What now? Glad you asked, because this is where millions of would-be entrepreneurs stumble without ever getting started. Before you try to raise money, file for a patent or write a business plan, heed these words: That’s not what you need to do.
Here are the things you must know in order to even justify writing a business plan, let alone investing money:
• Road test your business idea. This critical but often-skipped step has saved many an entrepreneur from certain failure. Before you write one word of a business plan, or spend a single dollar, you need to honestly – and I emphasize honestly – assess the validity of your idea, or the promise of your product. Think of it as a sanity check on whether your idea is really the basis for a successful business, or more wishful thinking than you first thought.
A business plan won’t tell you this. That comes later once you’ve proven your concept. But that plan is guaranteed to be vastly more effective with the road test behind you. The steps that follow here will help you with your “road test.”
• Find the fatal flaw. Every business that flops has a fatal flaw of some kind; or perhaps many. Your mission is to find that flaw before it finds you. And banish the thought that your idea is perfect. It’s not. One mark of a smart entrepreneur is a willingness to constantly question his or her own ideas.
Ask yourself: What am I missing? What possible pitfalls am I not seeing? How might competitors respond? What on Earth makes me think that my business or product idea will work when the great majority of others don’t?
• Assess your range of risks. There may be more risks than you think. For example, bringing a product to market involves many risks. Can you make it on a large enough scale to pay off? Does your product require users to change their behavior in any way (consumers don’t like to do that). Will it last?
• Analyze the market. Ask the fundamental question: Is this really a good market? But in doing that, you must also understand that a “market” means buyers, not products or an industry. Your business or product will have to offer those buyers some clearly visible benefit in order for them to choose you over someone else.
• Define your team. Are you planning to go it alone, or will you need others involved in building your business and executing on your idea? This can mean working with outside advisers, or bringing in partners and employees. In any case, your “team” will be critical to your success. •
Daniel Kehrer is Founder of BizBest www.bizbest.com
Join PBN for the best networking event and party of the winter - January 15, 2015 - the Book of Lists Party at the Providence Public Library. Reserve your spot by December 31st and get a holiday gift from PBN!
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.