You crave the freedom, flexibility and control that having your own business would give you, yet you hesitate to take the plunge and start. You love your new business idea, but will anyone else? Fear of failure and not making any money are common inhibitors for budding entrepreneurs.
These are very valid concerns, and common at the initial stages of any start up. When I work with my clients at this stage of business development, I advise them to eradicate their concerns by undertaking objective investigation into their prospects, competitors and the finances.
Here are five essential steps, written by Wendy Kerr, for evaluating if your idea is good enough to leave your job for, taken from her new book; “My New Business – a busy woman’s guide to start up success.”
Clarity about the business idea
Too often my start-up clients have an idea for their business which is vague, self-centered and feature driven. It is frankly, unattractive and therefore not viable.
It is critical to have clarity about:
- Who your ideal prospect is
- What their problems are
- How your idea solves their problem
The clearer you are on who your ideal prospect is, the easier it will be for you to morph your idea to meet their needs.
Are you unique?
As Sun Tzu said “keep your friends close, and your enemies closer”. Examining your competitors gives you valuable information about what they do well, and what they could improve on. Competitive analysis is very important to ensure that you are aware of what they are offering to your prospects, and what differentiates them. With this information, you can then craft your offering to be unique and more appealing.
Will someone buy it?
Your friends and family all love your idea. Sadly, their advice is not objective enough for you to gamble your future on. Finding out what complete strangers think of your idea, it’s benefits and pricing is critical before you make the leap and start your business. Create a prototype of your idea, or a vivid description if it’s a service. Then ask people who represent the profile of your ideal customer what they think. Would they buy it? Does it solve a problem they might have? You can do this via networking groups, an online survey made using survey monkey and posting it on social media, or organize a drinks evening and invite prospects along.
If doing this research intimidates you, then possibly setting up a business isn’t for you. As when you own your business, you will need to do much more audacious things than this.
Once you have their feedback, reflect and consider what needs t change in your offering to make it even more attractive.
Will it make any money?
The research is unequivocal, your idea is brilliant! Unique, attractive and solving a real need, the research prospects want to buy. Fantastic! But will it make you any money?
Before you get into the details of a business plan, source suppliers, and distribution networks, draft up a back of the envelope profit and loss statement. To do this estimate:
- What price you will sell each unit at
- What each unit will cost you to produce
Obviously the objective is to sell your unit at a higher price than it costs you to make. If this is the case, you will have a number which will be your profit per unit.
Then estimate how many units you will sell in your first year (or if you are selling your time, how many hours).
Now multiply your profit per unit by the number of units you wish to sell, and that will give you an estimate of the gross profit in your first year.
This is a back of the envelope estimate, so it doesn’t take into account operating costs for your business which do need to be taken from the gross profit figure. But at least you will have a feeling for how much money could be created from your business idea.
Are you passionate about it?
Starting and running your own business requires you to have tenacity, courage and drive. These attributes are all fuelled by passion. To succeed, you must be passionate about your idea, and also about running a business. Without passion for your idea, and entrepreneurship, no matter how great your idea is, you will fail. As a business owner you will be stretching yourself every day, learning new things to grow your business. And if your motivation isn’t fueled by passion, you will find it a hard road indeed.
About Wendy Kerr
With a 20-year career in multi-national blue chip organisations, Wendy has specialised in creating and launching new businesses around the world with companies such as Apple, FT and Intuit.
A Corporate Crossover herself, Wendy left her corporate career to create a successful 6 figure coaching and consulting business running it from London and Tokyo. She works with leaders of high growth, global technology companies. Clients include; Expedia, IBM, and Betfair.
Wanting to change the way work works, she has also mentored and fueled over 1,500 women to create a business that allows them to live the life they love.
Her company, Corporate Crossovers®, enables women wherever they are in their journey of leaving their job to start their business successfully, providing them with workshops, tools, and mentoring. She is a best selling author of two books; ‘Corporate Crossovers; when it’s time to leave the office and start your own business’, and ‘My new business; a busy women’s guide to start up success’.
She can be found on twitter at @wendy_kerr