I Have a Great Idea – What Now?

One of the most common questions encountered in regard to new businesses is in regard to what to do with an idea. There is often a misconception among those who have not yet ventured into the realm of starting a business that an idea has value. In truth, ideas are fairly worthless without execution.

If you have an idea for a new business, a product, or a service, the first thing you need to do is to get customer validation – that is, confirm that someone with no ulterior motive (that rules out your parents/siblings/kids) would pay for a good execution of your idea. For more details on this aspect of getting started, read my earlier post on Starting a Business.

Assuming you can get your idea validated with a paying customer, it’s time to do some thinking about your ability to succeed at your project. This is, perhaps, one of the reasons that some advocate writing a formal business plan – because it will make you think about some of the questions you really should be answering:

  • Who is your competition?
  • What are they doing?
  • What are some of the industry rules, processes, or expectations?
  • How will you set yourself apart?
  • What are the barriers to entry?
  • What are your start-up costs and your operating costs?
  • Where will the money to run the business come from?
  • How will you make money, and how long will it take to prove profitable?

There are, of course, many other questions that a business plan covers. It will walk you through an overview of your business, industry analysis, marketing plans, sales, operations, finances. It will enable you to see the bigger picture of your own business before you risk a single dime.

I recently advised a couple of people who were setting out to build a business. Both were creating online stores to market and sell their products, and wanted to know what it would take to succeed. In both cases, the products were high quality, with a corresponding price tag. In one case, there was a large start-up cost in terms of machinery, other than that, the two businesses were quite comparable.

For both, I advised they start with the most basic eCommerce system available that could be quickly installed and configured, although it’s longevity for their business was questionable. The reason was that the system is free to install, and can get someone non-technical running with an online store in a matter of hours (this includes many kinds of reports, product management, newsletters, etc). However, once both their businesses start to be profitable, I suggested that they then invest in a better eCommerce solution, which would be more pricey.

In other words, both needed to understand that the distribution channel would not set themselves apart, and so they shouldn’t be focused on it (even though both would be primarily marketing via their websites). However, their product needed to be as good as possible, and that’s where the energy was directed.

If you want to succeed, you need to understand what it will take, and which parts of the road are not important. For the unimportant pieces, push it out to the most time- and cost-effective solution, while for the important pieces, spend the time and money to do it right.