Nowadays, a lot of inspiration can be drawn from just about everywhere. It is now easier to search for information through the internet. You can also get a lot of ideas from travelling, and it is a lot easier to travel now because of the growing seat sales and promo fares. You can really say, there is no shortage of ideas especially for a potential business venture.
An idea is one thing, but how would you know if the idea you came up while travelling strolling through the streets of Vietnam, or while enjoying a sumptuous food tour in Malaysia, is a good one? How would you know if it is something that you can profit from, and possibly make a living out of it?
Here are some guide to for you to figure out if your idea is worth pursuing.
Make a simple, lean business plan.
No need to make an elaborate business model for this. Make a simple, lean plan by answering the following questions.
- Why are you doing this? Every business needs a sense of purpose. What separates you from other people who has built a similar model?
- What problem are you solving? People purchase products or services because they need their problem solved. If their plumbing is damaged, they will need a plumber. If they are tired, they would go to a spa. In they are in need of a new watch, they go to a store and buy one. By answering this, you will also know who is your potential customers.
- How are your potential customers solving their problem today? Do you have possible competitors who are already solving their problem? If so, how is your solution better?
- Do you think you can make money? You don’t need to make deep financial forecast. Just make a rough calculations on how much you will need for operational expense and how much money you will probably earn. If your sales is more than your expenses, then you might be up to something.
Keep your business plan draft short, about a page only. 30 minutes should be enough to analyze your business idea.
Do research with your potential customers.
Try to validate your draft by interviewing a few potential customers. Do they actually have the problem you assumed they have? Were you accurate in your answer to how they are solving their problem? Pitch in your idea and see what they think.
In choosing people to interview, be as diverse as possible and interview as many as you can. They should have different backgrounds, family, job and other factors that will influence their decision in choosing which store to go to to solve their problem.
Show a sample or visual representation of your product or service to potential customers.
If you are selling a product, try and show your potential customers a sample. If you don’t have one, maybe you can try visuals to stimulate their imagination. If you are offering services, describe how your service would be better than the one they are currently using. Tell them what they can expect from your business.
Encourage your potential customers to critique your idea. Make it real and don’t be afraid to be criticize. With their opinions, you may be able to know if your business idea is good. Who knows, you might even get some ideas to improve yours.
Check for a suitable pricing range.
During your interview, make sure to ask how much they are paying for their current store. If you add some perks or if you have more to offer, are they willing to pay a little bit extra?
If you already have a price in mind, ask them if they are willing to pay that price for your product or service. Some people will say yes right away because they are in a hurry. You need to observe closely so you can filter out garbage data.
Find people who do not like your idea.
As you share your ideas to your potential customers or your family and friends, they might just agree with you to not hurt your feelings. Find people who thinks you should not be doing that business. Normally, this are people who are honest enough to tell you what they think.
When you talk to them, find out why they think your idea is not going to work. Why do they think it’s not going to work? What are the weak points in your ideas? Is there something they think you can do to improve them?
You don’t need to answer the weak points pointed out to you. Take notes and you can study on it later. Remember, some of their opinions might hurt you, but you need to have an open mind so you can get the best possible data. You will be investing your hard-earned money into it. It should be worth it.
Research on what you will need to start and how much it will cost.
At this stage, you should know if your idea can be turned into a profitable business or not. Once you have decided that it is base on your research, you will not need to know how much is it really going to cost you.
Build a more detailed financial projections base on the data you gathered. From the equipments you will need, to the space you are going to use to sell your product or service, down to the manpower cost and permits. After that, figure out how much you will need to operate your business on a monthly basis. Make a sales forecast on your possible sales. From these, you will be able to determine what would your cash flow look like and up to when you will subsidize operations until you will have a profit. Depending on the type, new business usually get their monthly expense from capitalization and not from sales. This is mainly because your business is just starting.
Even if you have enough capital to go big right away, temper your excitement and start as small as possible. Although you made a lot of research, and gave it a lot of thought, you can’t really be sure if it will have as much sales as you projected.
The beauty of a smaller startup business is that you’ll be able to change direction faster and react to customers feedback quickly.
Most business owners want to go big right away because starting small might project an image that you are not ready. But this is necessary as you are planning for a long term success, not an overnight fame.
When you start a business, make sure to leave your ego at home. Come to your business with an open mind, and be ready to listen to customer feedback. This might be your dream business, but they are the ones making your business alive. It is important to make them happy every time they visit so you will have a loyal customer.
Be flexible when it comes to suggestions. You don’t have to react right away at a customer’s opinion. Analyze each opinion and compare it to the others.
As you go along, you will realize if you are in the right market, or have the right strategy. If you don’t, change directions. This will enable you to find the best strategy for your business.