Insights into the world of small business lending and development
Turn your bright idea into a business: Does your small business idea have legs?
This is the first post in our new series about how you can turn your dream of owning a small business into a reality. Check back each week for new posts.
Congratulations! You have a great idea for a new business and want to start your journey as an entrepreneur. But starting a business can seem like a daunting task and you might need some help figuring out if you’re ready to turn your idea into a reality. Read on for tips to help you determine if your business idea has legs.
Validate your idea
Before spending any money on starting a business, do your homework. There are a few questions you should ask to figure out if your idea is a good bet or not.
- Is there a strong need for your idea? In order to be in business, someone must pay for your product or service.
- A need can include: a community coffee shop in an area where there’s little competition, a clean home or an idea for a new invention like a portable solar power device.
- Does your product or service already exist? Do a quick “Google search.”
- For businesses focused on intellectual property, being first is critical.
- For most businesses, improving on an existing model is a tried and true way of starting a business.
- Do you understand your competition? You need to know your competitors, what they are charging and be able to clearly articulate how you are different.
- Direct competition is another business that provides the same service, such as two hairdressers in the same neighborhood.
- Indirect competition is when businesses compete for the time and money of the same group, such as a movie theater and a bowling alley.
- What is your value proposition? Another way of saying, “Why should I (the customer) choose you (the business)?”
- It can be a unique skill or service or that you offer a good product with a friendly smile.
- Trust should always be part of your value proposition. That is why your personal network is often critical for your first few clients, and why networking to build new connections is so important.
- Is there a market? You know what you are selling, but to whom are you selling?
- >Are there enough people willing to buy to make a profit?
- Figure out your specific customer. For example, not all people with feet will buy high-end sneakers. Understand who (age, gender, income etc.) is directly interested in your product—that is your market.
- Is your market narrowed down to your specific customers?
- Once you have identified your market, research it, and ensure the current market is not already oversaturated.
- Where are your customers located? What do they like? How do you reach them effectively?
- >Talk to your potential clients. Are they excited about your idea/product?
- Are you committed to your idea? Starting a business is no easy feat, and chances are you’ll work harder than you ever have. The most successful business owners are fully committed to their idea and will do whatever it takes to get their business off the ground.
If you can answer these questions positively, there’s a good chance your small business idea has a solid foundation. However, don’t put out the “Open for Business” sign quite yet. You also need to make sure your idea is financially viable and that you’ve considered the costs involved. Stay tuned for part two in this series, “Does Your Business Idea Make Financial Sense?”