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The entrepreneurial spirit can be a tough thing to harness. Our passion for the project can have us placing the cart before the horse, pumping out product long before we have a good market. As new business owners, it goes without saying that we want our labor of love to be successful. Before moving forward with your idea, take a few steps back and thoroughly plan your new business out.
Define a Market
When asked who you will sell your product to, the gut reaction is to say, “Everyone.” The reality is that’s not possible. With seven billion people on Earth, even if your marketing campaign cost one penny per person, that would cost your new company $70 million just in advertising. If you had that money, chances are high that you would not need a new company. Narrow your target market down to the most extreme. Define your niche, keeping in mind that a niche is not a field. A deli is a field. Healthy sandwiches that can be eaten while jogging is a niche. Do not try to be all things to all people. Instead, be something special to a few people.
Know Your Regulations
According to the stories, Amazon, Apple, Disney and Google all started in a garage. These stories would have had a very different ending if code enforcement would have driven by. Every industry has its own regulations, guidelines and best practices. Know them. If your business needs manufacturing space, be certain that permitting allows for this. Food services have a long list of requirements. If you do not comply, your business may close before it starts. Often times, complying with laws or guidelines will require additional, and costly, equipment. You will want to know this information before you start.
How To Organize Your Company
There are four basic organizational structures for a business: sole proprietorship, partnerships, limited liability and corporation. Each of these organizational structures has their own strengths and weaknesses, limits and liabilities. As small business developer, you will have to choose one of the organizational forms. The Small Business Administration has a thorough breakdown of each.
Do A SWOT Analysis
SWOT stands for strength, weakness, opportunity and threats. It is a strong foundational analysis to help move your business from an idea to a reality. Your strengths are the things that you bring to the table while weaknesses are things that you are lacking. You will want to capitalize on your strengths and shore up your weaknesses. Opportunities often come as trends and may take a good amount of research to identify. Threats are dangers to a business. These could be cyber security threats or regulatory risks. You may have to outsource solutions to mitigate the risk of threats.
Develop a Business Plan
You may never look at it again, but the business plan is the most important thought experiment that you can do for your business. New thought author Napoleon Hill tells us to reduce our plan to writing because the moment it is completed, we will have given concrete form to an intangible desire. The business plan will hold the information that you already have, and the process will bring new questions to mind. Again, the Small Business Administration is a wonderful resource for business planning.
