One of the biggest challenges I had when starting my business was actually coming up with the idea. I wanted something that was scale-able as well as in demand. For years I went through hundreds of ideas before settling up my first business, in fact the idea was always there but needed three of us to come together to make it happen. Through this period, I uncovered what I believe are the five most important concepts in determining what makes the perfect business idea.
So, what is
a perfect idea? Each individual entrepreneur has their concept of the perfect
business. While Google is a great business for the founders of that company -
it may not be a great business for others that are non-tech savvy or who do not
want to run such a large organization.
Therefore,
each perfect business is defined by the business owners. Keeping this in mind,
let's start on the following five tips of finding the perfect business:
1. Understanding 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 want. 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.
Moreover, 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.
2. 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.
3. Understand Your Competition
Every
business has competition - either direct or indirect. Think about the cinema.
They have direct competition from Net Flix, DVD rental and of course
television. They also have indirect competition from any other activity that
consumers spend their disposable income on like bowling, leisure activities,
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 creating a price
war 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.
4. 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 (big
investment but vital for growth), 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 ideas fail because they could not cover simple expenses
like rent or utilities.
5. You and your mindset
Know who you
are or as Plato said ‘Know thyself’. Know your strengths and weaknesses. Know
that you are ready, willing and able to do what it takes to make your venture a
success. Many business owners think all they have to do is open the front door
and hang out a sign and ‘bang’ they have it made. But, 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. The question is to know how hard
you are willing to work and how much ‘skin in the game’ and not just money are
you prepared to invest in YOUR business.
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 - so 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.
Source: https://www.businessknowhow.com/startup/findbusinessidea.htm
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