Do you wish to start a business? Have you tested your idea first?
As we witnessed one of the worst pandemics ever in history, we are left to face a severe economic slowdown. Even so, people are still looking forward to starting up new businesses. Some ideas might claim to solve the problems we are facing now & some ideas might be of help once the economy reopens & recovers. As good as these ideas must be, they still require to go through a process of sifting & sorting through to push aside bad ones and pull up the good ones.
In today’s article, we shall talk about the basis on which you can weigh if your idea is ready to take upon the market or needs to be modified to achieve your business goals.
Focus on making calculated decisions rather than counting on certainty.
Before we get into the fundamentals, we need to remember this rule of thumb when it comes to business ideas: you have to guess. There’s no surety as such ever. As we all must be aware of, starting from scratch is risky no matter how much data one collects and how well you plan everything, the risk always exists. Since you’re always looking at the future, you are always guessing.
There’s a certain amount of research that goes into before starting a business or even while running the business. This data eliminates uncertainty. Entrepreneurs know that uncertainty is a part of reality and one has to live with it.
Educated guesses will take you a long way, but you cannot expect to eliminate them.
First Step: Explain what success means to you.
You need to be aware of what do you want from your business. Maybe its financial success, maybe freedom & independence, you want to make living on your terms or maybe you want to make a difference to the world.
In these times of crisis, few want to get through the financial mess and make a decent living for themselves because of the jobs that they’ve lost.
These answers might be different for every individual but answering these questions will help you perceive the following steps better.
Second Step: Take a long & critical look
Before going ahead with the prototype, surveys, market testing etc. Take a step back and take a good hard critical look at your idea. Try to look it at it from a third’s person perspective. As good as the idea might be there are chances that the idea would not be as feasible in the long run.
You need to be sure whether people want what your new business will sell. You might be in love with your idea and you’d buy it. But your consumer’s opinion can likely differ.
Third step: Make a list of concrete things that need to happen
List down specific things that you need to happen with an approximate timeline of when it should happen. Things like the writing of initial business plan, picking up a location, stock, marketing your launch, website and so forth. You don’t need to list everything, just the essentials. You can call these milestones.
If you’re not able to jot down this list
If you aren’t able to make this list, then this plays as an important input. This was you testing your business idea. If you don’t know enough about it to make a list, you a dream and a real feasible business idea and you need to acquire more knowledge.
You can partner with somebody or take up a job in that industry which will help you acquire insights and knowledge.
Are you still there? Have you passed so far?
If so, make a lean business plan.
Image source: leanplan.com
A lean business plan is different than the full formal business plan. A lean business plan consists of a page full of bullet-point lists and tables, for yourself. You can write down your strategy in short, this can be about the problem you’re addressing to and trying to solve, why you’re doing it, your strategic focus, execution & tactics and essential projections.
Use this plan to understand whether you know enough to go further. Just like your list of milestones, if you are unable to do this, then you aren’t ready. Your idea could be fine, but you need more to be able to decide. You need people who you can trust to help you flesh out your plan.
Conclusion: Make a decision based on educated guessing
Aiming for certainty is not the right approach. Understand that business and certainty don’t work well together and hence you want to develop your skill of making a calculated guess. Don’t be nervous when it comes to saying no. if these steps are saving from starting a bad business, hooray. If you do go forward, plan well, revise the plan often and execute it well.
About Devansh Lakhani
Director of Lakhani Financial Services, and a Chartered Accountant, he helps start-ups raise funds from his network of investors. He guides and advises start-ups to scale up by providing efficient sales, marketing, team building, and business management strategies. He has executed fundraising by block deals on the stock exchange and conducted IPOs and right issues on the SME platform to the tune of over Rs. 50 Crore. He is currently working with start-ups from various sectors to help them channelize their business models and investments.