Over the past years, we have seen the rise of entrepreneurship. According to Small Biz Genius, 62% of adults believe entrepreneurship is a good career. 42% think it is easy to start a business and 49% believe they have what it takes to do it. Yet, only 9% of entrepreneurs have a bachelor degree in business. It doesn’t really matter and many entrepreneurs have made it without theoretical knowledge of business. But, when you know that 22.5% of businesses fail within the 1st year and that the number #1 reason for that failure is that there is no market need – you start to understand that whatever reason you have to start your business, you need to check on your business idea!
We have come across so many entrepreneurs and have launched different businesses ourselves which has given us experience in what works and what doesn’t. So, here is a quick check-list to bullet proof your business idea before you make the jump.
1. Choose a business idea that plays on your strengths
Whether you are going into business because you are tired of your 9 to 5 job, you want to be your own boss, you want a complete career change or feel like you have found a golden nugget, make sure your business idea plays on your strengths. It can be strength based on experience or passion but you do need to be invested in it. Why?
Because you’ll need to convince
Building a business isn’t only about convincing yourself that you can do it. It is also about convincing others that you are the best person/ company for the job. So, whether you build it on passion, on expertise or both, make sure that you have the conviction, and experience that you need to make a sales pitch.
Because you need to be in it for the long run
Rome wasn’t built in a day, and a business takes time to flourish. Don’t expect to make a full living out of it overnight. What does it mean? It means that you need to be committed enough to your idea to be able to hold on to it and find motivation to work on it everyday for various years. It will not be like a job, you won’t be able to wake up and say – I want to change. At least not as easily. So, make sure you are into it.
Because you’ll need to become the expert
Even if you start as a newbie and build up your expertise from there, if the business you are launching doesn’t play on your strengths, you won’t be able to commit sufficient number of hours or the dedication you need to become the absolute expert in your field. (For example, I personally don’t like accounting at all. I understand it but would never start a business around it) Believe me when I say this applies whether you are selling products or services, from luxury financial services to yoga classes or simple face wipes. You’ll need to become an absolute expert.
2. Niche down on your business idea
Niching down means really narrowing down exactly what it is that you are doing. You might be able to expand your products or services at a later stage of your business development. But at the beginning focus is key and most importantly, the people you are talking to need to be EXTREMELY clear on what it is you are trying to sell them and how it will help them. Imagine if I tell you “I help you realise your potential”, will you know if you need me to help you? Or if you know somebody else who needs help on that? Chances are you will not. Now, if I tell you “I help you build a kick-ass business plan so you can become your own boss”, it would be another story. Make sure you are clear on what you do, and make sure you express it correctly.
3. Identify your target audience
Know with absolute certainty who would be interested by the products/ services that you are going to offer. Who is it exactly. Start with avatars, or the “imaginary” profile of your perfect client but then, go deeper! Nowadays, with social media, it is easy to browse profiles and start identifying REAL persons that could be your target audience. Why is it interesting to do that? Because then you can learn more about them. Learn about the way they speak, the language they use to describe their problem. Identify what piques their interest and curiosity. Join the groups they are interested in and start building rapport. It will help you in niching down what you can offer them, but it will also help you in your sales pitch and increase your chances of converting prospects into real customers!
4. Make sure your business idea answers to a real market need
We’ve seen too many businesses and entrepreneurs crashing down because they decided to launch a business around something they loved or thought everybody would love, only to find themselves with 0 sales. Today, there is too much talk about “pursuing your passion”. Of course you should do that if you can but the truth is, if you want to make a living of your passion, you still need to make sure that people are ready and willing to pay for whatever it is you want to offer them. Unless you just want it to be a side hustle, in which case, go get it tiger! But if you want your business to be able to be your full time job down the line, you better make sure the demand exists. And, no. Asking your friends and family what they think is not enough. Chances are they’ll say it’s fantastic even if they aren’t really sure. That’s what people who love us do, they support even our craziest dreams.
Once again, in this case, starting with social media is not a bad idea. Surf groups, Facebook, Instagram, Pinterest and all those other platforms. Find out if your potential customers are looking for what it is that you want to offer them. How many persons would buy your product/ service if you launch it? Who are they? If you can’t find anybody expressing a need for your product/service – we’d advise to continue searching for your next big business idea.
5. Make a plan for your business idea!
We are not talking about an academic business plan, but you still need a plan. Why? For visibility and feasibility reasons. Here are some of the questions to ask yourself while building your plan:
How much initial investment do you need?
Not all business idea are equal in the eye of money. If you plan to launch a product, it will not be the same as launching a service. For a product, you’ll need budget for prototype, inventory, logistic, etc. If you want to launch a yoga studio, you might need to account for studio rental, works, decoration, licences, etc. And, if you launch a service, do you need softwares, website, other professional services? Do you need to invest in a training? What about marketing? What is it that you need as a BARE MINIMUM to get your business going?
Are you going to do it yourself?
This question might look weird, but it is interesting. Not all business owners need to develop the business themselves. You can have a fabulous idea, register your business but hire someone else to actually do it because you don’t have time to do it yourself, or because you simply have bigger fishes to fry. It is an important question because if you hire someone, you’ll need to account for it in your investment budget. And if you do it yourself, are you going to develop it on the side of your “day job” or are you going into it full time. If you do it on the side, what amount of time are you able to dedicate to your business. It will influence how much money you can make out of it or how fast you can develop it to a stage that can support you. If you quit your job to go into it full-time, how much money do you need to support yourself in the first months when your business doesn’t generate enough money to cover your living expenses?
What price are you going to sell your product/ service?
This is a very important one. Lately, you’ll read a lot of things about “be paid what you are worth”. It is true, you should not undersell your product/ services but you should also take into consideration what people are ready to pay for your product/ service as well as how much it actually costs you to make this product/ service available to them. That’s what you call UNITARY COST. DO NOT, I repeat DO NOT assign a price just because you’ve seen someone else put that price tag on a similar product/service without checking first if it covers your costs + give you sufficient margins to make an actual living.
What are your objectives?
How much do you want to make next month? In 3 months? In a year? How much do you need to sell to reach that objective? When will you break-even. It is important to have those elements down and know where you are going because it will also guide how much money and time you need to invest to actually reach those goals. And if you want to make your business your full-time job, it will give you a sense of when you’ll be able to make a living out of it. One word of caution: BE REALISTIC!
So now that you have the basics right. You know what business you want to start and how you are going to make it work. Time to talk branding and positioning! See you at the next stage of your entrepreneurial journey!