Having a great business idea can be very exciting. At the same time, having a great business idea can also feel quite overwhelming. As time passes, not taking action on your business idea can cause regret and frustration wondering about the “what if I had taken action” scenario. Even worse, someone else had the same idea, took action, and is now operating a version of a business that you envisioned long ago.
Taking the first step toward a starting point for how to turn your idea into a business can be very challenging, as there are so many options. It can also be very expensive when you don’t thoroughly evaluate the business opportunity, the potential returns, and the long term version. Building a business plan is a fast and inexpensive way to begin evaluating the idea as a business and create financial projections to better vet the idea. Essentially, you want to test drive the idea.
We are often very excited and driven to launch a new idea as a business and in that excitement we can easily overlook many things. In this post, we want to share a few very high level concepts you may want to consider to start working toward turning your idea into a business.
Let’s start with three easy steps that entail defining the idea in greater detail, validating the idea in the marketplace, and creating viable, desirable, and sustainable action steps before your invest your time, money, and energy into launching the business.
The first step in test driving a new business is defining what kind of business you want to have. From here you must ask yourself the following questions to help further define what your business will look like.
- What problem will your business solve
- Who are your potential customers
- Who are your competitors
- How do you plan to market your business
- How will your business make money
- Where will you be located
By considering questions like these, you are helping identify your business’s unique value proposition. Your value proposition is the most important thing you should take out of defining your business. It is the foundational piece of your business and instrumental in defining how you will find success in your market. Put simply, a value proposition is the perceived value your business has by your customers and the reason someone would purchase from you rather than your competition. When creating a new business it is important to have a unique value proposition otherwise consumers will have no reason to seek out your services.
The second step is validating your business idea. While having an amazing idea for a business is great, it is important to validate your business idea before deciding to open up shop. Validation allows you to have a better idea of how well your business will perform, or under perform, in many cases.
This step is sometimes overlooked and can be very costly when excited entrepreneurs invest in their business only to find out the market or the customers they thought they would serve do not exist. In fact, in a recent study by CBInsights, as many as 43% of businesses that failed, reported not finding “product-market fit” as the leading factor.
One key factor to having a successful business is that you must ensure there is a market your business can thrive in, you have to be sure that thanks to your unique value proposition your services will have some demand. Just because you think your business idea or approach to a problem is sound, doesn’t necessarily mean your business will be successful. During the validation of your business idea as a business, you’ll want to first conduct market research. This can be primary research and secondary research. The type of business, the size of the business, and many other factors should be considered when deciding “how much’ research should take place and at what level. Be realistic about your skill set, you may want to enlist the assistance of an experienced business advisor, researcher, or other professionals in the industry to assist you as needed. Also, be mindful of who you share your business idea with. Consider what you will share openly versus what you will only share with some form of a confidentiality agreement in place, before you get started.
As part of your primary research, consider speaking to potential customers about what current solutions they are using to solve or address the problem your potential business aims to solve. Conducting Primary or secondary research at this stage can save you a lot of time and money later. Here you may also discover new ways to tweak and improve your business to further serve your customers needs and ensure you avoid the fail points of others. For a more in depth discussion in this area of speaking to potential customers, be sure to get your copy of “How to Turn Your Idea Into a Business” for tips, questions and templates.
Now that you’ve validated your business idea it is time to take action. The first thing you need to do is build a business plan. By focusing on the 7 key areas of business planning you can create a business plan that will help you actualize your business. Apply the considerations you took to define your business and the information you found from validating your business idea, to construct a plan that will guide you forward. The journey of starting a business is full of pitfalls and success is never guaranteed. However, taking these proactive steps and applying the work you’ve done to define, validate, and build a business plan, can help prepare you for many scenarios you may not have considered. Building a business plan is one of the best tools we’ve found to holistically evaluate the viability of a business idea as a new business.
If you are looking for a great starting pint to build the first version of your business plan, be sure to check out our new Mini Business Plan Template that includes a free mini course of business planning basics.