by Dorina Hart | September 27, 2018
Being an entrepreneur is so much more than just having a great idea, because it is not an easy road to success. It can be a journey of constant mistakes, failures and disappointments can ultimately lead one to success. In the Merriam-Webster dictionary, the word idea is defined as a thought or opinion; thus, a new entrepreneur needs to understand that an idea is not a start of a business. Yet, that idea might become a crucial part of a business if the entrepreneur contributes his/her hard work, dedication, time, money, and picks a good team for the company.
Having a great idea means nothing if you don’t have a good business model that proves your concept is viable. So how do you move from the idea stage to the action plan that will bring you closer to starting your business? See the steps below:
Step 1: Define your basic idea
Start by defining your idea, your inspirations and motivations. Then expand into a business concept. Answer the question, “What is your business concept and what is your value proposition?” Determine what products or services you plan to offer and what type of value these products or services would create for your clients.
Step 2: Evaluate your own skills
It is extremely hard to start a business without a good skillset and experience. Therefore, you should look inward and decide if you have the required knowledge and experience to start the business.
Once you determine the need for improvement, you might want to consider attending classes at the local college/university, seminars, training, or maybe even work towards a certain certification or license. Another option might be going to work for a company in the industry you are interested in and learning the ins and outs of a business.
Step 3: Conduct market research
Market research is probably one of the most crucial parts of a business because it helps entrepreneurs to determine the market environment, demand, size, industry trends, demographics, lifestyles of your target market, and more. As a pre-venture, you will need to define your value proposition and what segment of the population would be interested in your product or service.
In order to determine this information, you will need to know who your target market is and their preferences.
Who buys this product/service?
Why do they buy it?
Why would they buy it from you instead of your competition?
Also, you will need to identify your competition and conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) on top competitors so you can determine their prices, how they operate, their location, and who their clients are.
Step 4: Identify capital needs
As an entrepreneur you need to understand the requirements for funding, particularly the amount of money you need to make your business concept viable. The financial feasibility analysis will help you determine the viability of your business model by estimating your start-up cost (the cost incurred before obtaining the first client), recurring costs (monthly expenses), projecting your future sales based on market research, and finding out when the company will break even (the point of balance where the company is neither making a profit or a loss). In other words, before you invest any capital into your new business idea, calculate the possibility of your company being in business in the next 12 months and figure out how much capital you need to continue your enterprise.
Step 5: Build your team
A professor once said that, “it is better to have a B-grade idea and A-grade team, than a B-grade team and A-grade idea.” He is right. With the A-team, entrepreneurs can test the B-grade idea and make appropriate changes by pivoting a new direction. However, with a B-grade team, it is hard to accomplish anything even if the idea is excellent.
Additionally, having the A-team can help entrepreneurs share team liabilities, costs and even their expertise to cover multiple functional areas, such as marketing, accounting, management, law, finance, etc.
Normally, the team is comprised of inside and outside team members. Inside team members are the founder and his/her teammates and employees. Outside team members would be subcontractors, attorneys, CPA/accountant, insurance agents, experts in the field, bankers, etc. So, don’t discount the power of a good team and be very selective when you form your team of inside and outside members.
Remember, “it is better to have a B-grade idea and A-grade team…” because this team can help you succeed and navigate through difficult times.
Starting a business is not an easy road and it takes a lot of hard work, perseverance, and knowledge to move from the concept stage to actually starting a business. An idea is just a thought until you decide to put it into your business model and execute it with your A-team.