One of the greatest challenges i had in starting my
business was actually coming up with the idea. I
wanted something that was scalable as well as
needed in our society. I combed through hundreds of
ideas before settling on my current venture. Through
this discovery period, I uncovered what I believe are
the five most important concepts in determining
what makes the perfect business idea.
Step One - Knowing your customer: This might
seem strange to start here as how do you know your
customers before you have a business idea in place.
The answer is simple - your customers make the
business, therefore without customers there is no
business. If you have a business idea don't try to
develop the idea around what YOU think potential
customers will like or need, but find out what your
customers actually desire. Too often business owners
get an idea in their head and jump right in with both
feet. However, they soon find out that their target
market does not want what they are offering.
Spending both time and money on a project just to
see it languish is not the perfect business idea.
Let's say you don't already have an idea - getting out
and understand consumers (those who will
eventually become your customers) may lead you to
the perfect idea. Knowing what potential consumers
need and building products to meets those needs will
get customers beating a path to your door - that is a
perfect business idea.
Step Two - Passion: Passion here does not mean
being fanatical about your product or service. But, it
does mean having some interest in what you do.
More times than not, you will be spending 15 to 18
hours a day working on your business in the
beginning - usually for the first 12 to 18 months
(more like 2 years in this economy). You have to
constantly be thinking about ways to improve and
grow your business as well as be out talking about it
to everyone, everywhere. If you end up starting a
venture that you don't have passion for, something
that does not make you jump out of bed each
morning, it will be very hard to put in the hours and
energy to make it successful - thus not a perfect
business idea.
Step Three - Understand Your Competition: Every
business has competition - either direct or indirect.
Think about movie theaters. They have direct
competition from video rental stores or at home
television. They also have indirect competition from
any other activity that consumers spend their
disposable income on like bowling, paint ball, golf,
etc. Anything that people do in their spare time.
Further, some competitors are ruthless. Meaning that
if you promote and offer a product that is similar to
theirs but at a lower price, these competitors will just
lower their price to match or beat you. If they are
already established businesses - they may be able to
undercut your price enough to drive you out of
business.
If you don't know your competition - what they are
willing to do to keep you out of their market - you
may be spending more of your time in a pricing war
then growing your business - not the perfect
business idea.
Step Four - Cash Flow: Lots of entrepreneurs enter
the business world with great ideas but very poor
understanding of the capital it will take to get their
venture off the ground. Most will prototype their
product or service and understand what it takes to
make the product or provide the service but they
don't understand the capital it takes to manage the
rest of the organization - including marketing (very
expensive but extremely necessary), employees
(more than just salaries or wages), insurance or
supplies and all the little miscellaneous expenses
that add up very quickly like phone, internet,
computer services, etc. Knowing your total cash flow
will help ensure that all of your costs (variable and
fixed) can be covered by the business - the perfect
business idea. I have seen way too many businesses
with great products fail because they could not cover
simple expenses like rent or utilities.
Step Five - You: Know who you are. Know your
strengths and weaknesses. Know that you are ready,
willing and able to do what it takes to make your
venture a success. I have worked with many business
owners in the past that think all they have to do is
hang out their shingle and they have it made. Thus,
when it comes down to actually running the business
day-to-day - they are unwilling to invest the time,
energy or money necessary for success. Thus, know
how hard you are willing to work.
Moreover, know your personal financial situation and
what you need the business to generate to cover
your lifestyle. If you think your business will pay you
a great salary from day one - it will not. And, if you
need it to, it is not the perfect business idea for you.
Take away outside distractions like your personal
financial situation - get those in order - thus, when
your business concept does materialize - you will be
able to solely focus on its conception and growth. In
the end providing you the financial security you are
seeking - it will be the perfect business idea.
Regardless of the level of your desire for your
business - a lifestyle mom and pop operation or a
multi-national conglomerate - if you develop a
business idea with these five concepts in mind - your
idea will be the perfect business idea for you.
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