There are many ways to come up with a good business idea. If you are aware of a problem in your local area which has not been addressed yet and you have a solution for it, it may serve as the inspiration for your big business idea. However, a good business idea is not all that it takes to make it big in the world of business.
Running a successful business goes far beyond just having an ingenious business idea and acquiring start up finance. There are several things that you need to remember when you are about to start your own business.
The following are common factors that generally contribute to the downfall of a business, and which, if you can avoid, might just save your business from going under in those fragile first few months:
Keep It Simple
First time business owners often have a tendency to over-complicate their ideas and it may result in inexperienced professionals becoming obsessed with the execution of complex solutions to address a simple everyday problem. The first thing that you need to do is prevent your idea from turning into something which is really complicated to understand in the first place, let alone execute.
Simplicity is the key. As a general rule, the more elaborate or complicated your idea becomes, the more expensive its execution can get. Solutions which are extremely complex do not just pose problems when business owners try to implement them, but also make it difficult when it comes to marketing too.
Start small and streamline your focus. You should think of ways to deliver a high quality and simple product or service and take things forward from that point. There are many benefits to simplifying your product such as lowering your production costs and determining your minimum viable product (MVP).
Concentrate on the Market Instead of the Product
Many small businesses and startups believe in the philosophy of ‘a good product sells itself’ and relying on your product to this extent for driving sales may be a big mistake. This often results in lack of understanding regarding the market that you are getting into. People must be willing to buy the product that you are thinking about selling.
In other words, there should be a demand for the product or service which you will be offering in the near future. Developing a state-of-the-art technological product will be of little value if there is no market for it. Trying to capture a small segment of the market is always better than trying to create a market for a non-existent need and hoping that it is received well.
When it comes to expenses, it is always better to give yourself some leeway. Chances are quite high that there will be a lot of overspending involved. Therefore, it is a better idea to overestimate your business’s costs as it prepares you for the worst.
This will give you more room to work financially and ensure that any upward fluctuations in production costs can still be accounted for in your balance sheet. Underestimating your expenses can spell disaster for your business as you will not be prepared for emergencies and you may also have to cut back on important expenditure later on.
Put Together A Support Team
It is simple impossible to run a business on your own. Right from the point of your business’s inception, you must have a support team in place. Those you look to for support don’t necessarily need to be your partners; they can be your former colleagues, mentors, friends or family. In times of crisis, having a support system to fall back on can make a huge difference to the survival chances of your business.
Assess Your Business Idea Carefully
Another mistake that most budding entrepreneurs make is that they take the plunge without much thought or preparation. If you are not prepared to start a business, it is better to wait for some time as your motivation may falter if you are not committed and dedicated to the objective of establishing your business.
Before proceeding with the production of the product or service which you intend to offer to your target audience, you must try to gain an understanding of the niche or industry that you are getting into. Market research is a step in the process of building a business which should not be skipped at any cost as it lets you know whether or not a market exists for your product.
It also gives you a better understanding as to how the particular industry or niche works and what obstacles you may have to overcome to be successful. Try to learn more about your competition and become aware of their strengths and weaknesses to gain an edge over their product or service.
Try To Generate Income As Soon As Possible
Getting into a business which will take too long to reach the break even point may not be a favourable idea for first time business owners. Building a business takes a lot of commitment and the prospect of generating revenue is what keeps you and your staff motivated throughout the process.
Additionally, you cannot keep pumping money into a business which you know will not generate money for another year or so. Cash flow can make or break businesses and for newly established businesses it is especially important to have a positive cash flow.
You should think of income as the lifeline of your business. There are many ways to achieve this such as accepting pre-orders or requesting deposits. Taking such steps will ensure that your business starts generating income as early on as possible.
As an aspiring business owner, you need to be prepared for difficult times ahead and accept that your day-to-day life may change after you take the big step of quitting your job. At the heart of any successful business is a commitment to make it grow and this may involve building and maintaining relationships even when you are stressed or sleep deprived.