“I have a business idea!” Five words that in many ways describe the American dream. One that’s synonymous with creativity, boldness, and tolerance for risk.
If you’ve found yourself shouting those words, you’re likely reading this post because you’re wondering how you can take your idea and make it fly. So much of what makes a business idea works is an entrepreneur’s willingness to research. And in this post, we’ve got ample information that can help you formulate a game plan that will guide you all the way to launch.
With that said, below are several steps you’ll want to navigate to increase your idea’s viability, market readiness, and ability to profit.
1. Pitch Your Idea to Trusted People
Business ideas tend to sound good in our heads. When they come out of our mouths though, their flaws begin to show.
Believe it or not, that’s a good thing. One of the best things you can do for your idea is to scrutinize it so it can improve. The most simple way to start on that revision journey is to share your idea with people you trust.
Be warned that great business ideas tend to get borrowed by opportunists. Because of that, we stress sharing your idea in its infancy with those you know intimately.
Feedback can hurt but a helpful comment or two could mean the difference between success and failure!
2. Research Your Market
What good is a business idea if it can’t make money? In our estimation, not good at all. That’s why we recommend that shortly after entrepreneurs exclaim “I have a business idea!” they buckle down and start doing market research.
Market research is a broad analysis of the success your idea is likely to have with consumers. During this research phase, you’ll want to ask questions like, “Who is my customer?”, “What are their needs?”, “Who is my competition?”, “What are similar products selling for?”, and so on.
The more questions you ask and the better your answers are, the clearer it will become as to whether or not your business is likely to turn a profit. Having a good gauge on profitability before you invest money in your idea can save you a lot of heartache so take research seriously.
3. Draft a Business Plan
With some product feedback and a beat on your market in place, you’re now in a position to start formalizing some of your findings. This formalization process usually takes place in the way of manifesting a business plan.
A business plan is a document that outlines everything about your product and its market. In short, an investor should be able to read your plan without you providing context and understand exactly what you’re selling, who’s buying it, and how/when you’ll hit profitability.
No detail is too small when it comes to a business plan so take the time to make your plan into an instruction manual for success. Also, be prepared to revisit your business plan as you stumble on more information throughout your launch process.
Not sure how to format a business plan? You can learn more here.
4. Weigh Funding Avenues
Almost every business idea requires money. That money might be for product development, marketing, labor costs, or anything in between.
There are several avenues that entrepreneurs can pull funding from. A few of the options we see exercised the most include:
Family and Friends
While a dicey proposition, raising money from family and friends to fund a business venture is worth exploring.
Family and friend loans will likely carry no interest and fees. That means your borrowed dollars will stretch further. On the flip side, a bad investment could mean losing a valuable relationship.
If you decide to take the risk and pitch your loved ones on your ambitions, break the ice by saying something like, “I have a business idea that you might want to partner with me on. Can you spare twenty minutes sometime this week so I can present it to you?”. If they say yes, give them a formal presentation like you would any investor.
Don’t be offended if they pass on your presentation or decline to invest.
We’re seeing swaths of entrepreneurs forgo traditional funding channels to raise money through crowdsourcing.
Crowdsourcing is when pools of small investors all chip in a small amount towards a loan. This mitigates risk for investors which in turn makes it easier for riskier proportions to get funded.
There are several crowdsourcing websites online that you can seek funding from. Just be sure to scrutinize interest rates being offered closely as terms on loans will vary.
While not as flashy or new, banks and credit unions are still a reliable means of securing a loan for business services. Simply walk into a local branch, fill out an application, and wait to hear back.
In some cases, you may have to pitch loan officers on your business idea to secure funding. Your business plan can usually do this on your behalf which, again, solidifies the importance of drafting a good one.
There are plenty of business credit cards on the market that can help you fund your idea. To apply for them, you may need what’s called an EIN which can be obtained for free through the IRS website.
Note that credit cards typically carry very high interest rates so be wary when charging thousands of dollars to a card, especially if you’re not sure when you’ll generate the income required to pay that balance down.
5. Prototype if Necessary
Not all business plans are centered around an original product. If yours is, you’ll need to add prototyping to your to-do list.
Prototyping is the process of creating a rough version of your product idea to ensure it works and to improve its design before it hits shelves. Since prototyping takes special expertise, you’ll likely need to engage a firm that can take your rough designs, finesse them, and then manufacturer a version of your product. This can be expensive so shop around when selecting a prototyping facility.
If your product is simple and you have some design experience, you may be able to self-prototype by leveraging 3D printing technology.
6. Build Your Brand
How you brand your business idea is just as important as the idea itself if not more so. Your brand embodies everything from your logo, to the lifestyle that your business represents.
Branding and marketing isn’t something that just anyone can do effectively. That’s why many of the biggest businesses in the world turn to professional agencies to help them carve out a branding niche that resonates with consumers.
You may want to go that same route.
If you prefer a DIY approach, our broad advice is to think about your target consumer very carefully when deciding how you’ll sell your business. What messaging would speak most to them? What would mobilize them to buy and share their love of your product?
These are big questions that require a lot of thought and ample testing.
7. Test, Revise and Test Again
By this point, you have a product, a plan, funding, and a brand. Before you invest the money required to take your business idea to the masses, we recommend taking it to a test market to continue working out kinks.
If your business idea is centered around a product, have an agency test your product with groups of focused buyers to get feedback. If your idea is centered around a service, do a limited launch to see how your service manages a handful of customers and use the feedback you receive to further finesse your offering.
8. Launch and Sustain
At a certain point, there will be nothing left to do with your great idea except to start selling it. When that time comes, go forth boldly, unaffected by the prospect of failure, and start drumming up sales!
Your success out of the gate will hinge on your ability to market. Therefore, ensure you have a marketing plan in place that you can follow before launching or have that aspect of your launch contracted out to an agency.
Don’t Let Your “I Have a Business Idea” Moment Fall Through the Cracks
The “I have a business idea” moment is a special one that should be celebrated and nurtured. That’s why we always push individuals to invest in their creativity by going through the motions of testing whether or not their idea can turn into a money-maker.
We hope our guide helps you explore your idea’s viability and welcome you to check out more of the business, finance, and general lifestyle content we have in our blog.