The idea of starting a business can come from anywhere.
You might decide that you can do your profession better than the people you are currently working for, or you might have a completely different idea for a business.
Your business idea might involve manufacturring, or a service, or a combination of the two.
You might be offered the opportunity to buy your existing company, or another company in your industry, or buy a business in a completely different industry.
Personally, I and my clients have gotten ideas for new businesses from all sorts of places,
All of us have thought of ideas in the shower, while cutting the grass, working out, or practically anywhere.
The key thing is that when you get an idea, you’ve got to research it: how big is the market, what’s the pricing look like, what unique role could you play, etc.
If your research is positive, then you need to take our Entrepreneur’s Questionnaire on our web site, www.thesolutionsforum.net, to see if you’re suited from entrepreneurship.
Back in the day, I used to research ideas using traditional methods, such a customer interviews, questionaires and focus groups. I originally started The Marketing Doctor (TM), we used all these methods.
We still recommend doing market research, and not just among your friends over drinks. Friendly research is important, but shouldn’t stop there. Now, things are much easier: you’ve got the internet.
The internet allows you to look over who is out there in your chosen industry, what sort of public presence they have, and probably what their customers think of the existing offerings.
All of these external research items will help you flesh out your idea, to see if it’s a good one.
You might also find that you’ve got to pivot away from your original idea, because it’s either not workable, or isn’t likely to get to the profits you want.
If your market research is positive, then you can move to the mini market plan, to flesh out the financial committment. You should plan on doing ‘steady state’ financial profit and loss, which will serve as a long term goal of where you want your business to be.
A word should be inserted here about social responsibility of your proposed business. Is it going to use recycled materials, does it use a lot of water, could you defend your business in front of the city council?
One could say that the mere idea of starting a business is socially responsible, because you’re employing other people (eventually). We have a ‘socially responsible’ checklist in our Freebies on our Solutions Forum.net website.
If the ‘steady state’ doesn’t yield the kind of profits you and or your investors want, they you’ve got to figure out how to get to your profit goal.
We have done business plans backwards from time to time, working backward from the profits desired through taxes, personnel required, materials required into the top line revenue.
At this point, you have to determine the mix of after service and original equipment revenues. You should have an idea about the mix of these revenues from your market research.
You should also know what your price points are from your market research, so that you can determine your unit volume.
If you know your unit volume, you can figure out the market share that you need to get over the area that you plan to sell.
Does this share make sense? Are your competitors large and entrenched? If they are, you’re going to need to raise your marketing and sales promotion expenses in order to pry customers away from the competition. And, prying them away might take longer and cost more than you had planned (it normally does).
If your idea is particularly revolutionary, the market research may not be entirely positive, because the market hasn’t seen anything like it, and customer perceptions are hard things to change (which means more money and time).
As an example, when we did market research for an existing restaurant concpt, it wasn’t positive: odd name, no clear selling proposition, poor location.
But, I and a partner thought we saw an opportunity, and we did, but it cost us $150,000 in losses before we got to profitability. While we sold the restaurant for a modest profit, it was less and took longer to realize than we had planned. But we got a lifetime of stories.
On the other hand, when I got the idea for Solutions Forum (while sweeping my driveway), we took out the domain name first, and then did the market research. I was already working for a national competitor, who had retained us to open the Arizona market.Research was positive and that was 17 years and about 50 companies ago. We were profitable the first year (having grown to 23 clients in groups the first year), and have had only one unprofitable year, 2020 because of COVID.
WHAT’S YOUR UNIQUE SELLING PROPOSITION?
When I originally moved to Arizona, I worked for a series of companies on a retainer basis developing their sales.
I discovered that the startups didn’t have a unique selling proposition (USP), or why a customer would buy from them as opposed to one of their competitors. The USP would normally emerge from the initial sales calls, over about three months, and at a cost of $5-10,000.
The classic USP has four components: Price, Promotion, Service and Selection, not necessarily in that order of importance. We have found that Post Sale Service is alsow a component of a good USP, and most companies ignore it.
You might also want to add ‘socially responsible business’ if you think it’s important to your customers.
‘Locally owned and sourced’ is also a part of a potential USP.
If you’re a really good wordsmith, you can incorporate all of these into a paragraph, which would be your mission statement.
But, all of these snazzy statements should resolve around one overriding tenet: customer centricity.
CUSTOMER CENTRICITY IS KEY
We can’t stress enough focusing on your customers needs and wants.
Most businesses focus on price, to the exclusion of everything else, but that’s only part of the story. Your customers will tell you what’s most important, if you give them a chance.
How many television ads to you see where all they talk about is price?
Far too many. Car dealers are the worst offenders, mainly because there are probably too many of them, especially for GM and Ford. The foreign automakers have been smarter about the number of dealers they need. These dealers generally use a geographic model….where’s the customer demand?.