The BIGG Successs Show
I Have An Idea For A Business! Now What?
Learn the first crucial steps to evaluate your business idea. Read the show summary at biggsuccess.com.
Welcome to The Big Success Show. Today, we'll talk about what to do once you get an idea for a business. The Big Success Show, with George and Mary Lynn. If you've never done it before, starting a business can seem like a daunting task. Seems like we often get asked a question about the crucial first steps. One of our listeners, David, emailed us with his big challenge. He has an idea for a business, but he doesn't know what to do now. So, he wants some direction to get started. And David, you have what you think is a good idea. That doesn't necessarily make it a good opportunity. And that's what you're really trying to prove to yourself. And there's four questions to answer to decide if you should act upon your idea. What should my business name be? How big will my name be on the door? Yes, those are some of them. Well, the first question, is there a market? Are there a sufficient number of people who would want your product or service? There's a number of ways to do this research. Check with trade associations for your particular business. Look at established businesses, people who are already up and running. You can conduct surveys, get out on the street, make some phone calls. If you want to, you can even do focus groups. Just keep this in mind. You'll never really know about the market until you actually launch. And you know, George, some markets are too big. Other markets are too small. You want a market that's just right. Jeez, you sound like freaking Goldilocks, Marylin. Who'd have thought that it was a great business book? You want a market that's not too big or too small. And okay, maybe you think, why wouldn't I want a big market? Well, that attracts big competitors. You're more likely to face stiff competition in a big market. If it's too small, there's no opportunity. Yeah, you know, a market that is too small means you'll likely waste a lot of resources for very little upside. You want a good niche, you just don't want it to be too small. Second question, ask yourself, is your market accessible? You may learn that there is a market for your idea, but you also have to be able to find the customers because you can have the best idea in the world, David. But if there isn't a way to tell your potential customers about it, it's going to go nowhere. For example, is there a publication, David, that customers of yours or the customers that you might have would read regularly? You can access that market then, perhaps they go to certain internet sites or they search certain internet terms, then you can access that market. There's a number of ways to reach your customers, but the point is you have to have a way to do it. Otherwise, it's not a good business opportunity. Right, and depending on your business, they may buy at certain specialty stores or buy from certain distributors. You can reach them that way if you can sell those places on your idea. That's a good idea, Marilyn. The third question is this, who's your competition? Perspective entrepreneurs often say, "I don't have any competition." Unfortunately, that's a very naive way of thinking of it. Everybody has competition, and the last thing you want to tell anybody who you're talking to about getting money is, "I don't have any competition because they'll blow you out of the water on that one." If you think that you don't, think again. Here's a simple example, picture a carpet cleaning business. You may say that, "Well, I've got these certain competitors." But here's one of your bigger competitors that you wouldn't think about. People doing the carpets themselves. They just go off to the grocery store, rent the equipment, and boom, they're your competitor. Another one is substitutions. For example, people who replace that nice plush carpet with hardwood floors or tile floors, because it's easier to clean, and that reduces the need for your service. While you're looking at your competitors, you also want to think about how big are they? If you have a small number of competitors, one or two, in an industry, that's where you want to be careful, because you're going to have to niche around them and compete around them. If it's much more fragmented, you've got a lot of little players that bodes well. Coming up, the fourth thing to know if your opportunity is a good one. Today we're answering a question from one of our listeners, David, and he has a business idea, and he's wanting to know what the next steps are. We've already talked about the market, accessibility to that market, and competition. The fourth question that you should ask David is this, will it provide a sufficient return? Look at how much money that you think you can make from it. Divide that by how much it will take to get started. That's your return. It has to be high enough, given everything else you can invest in, to justify investing in it. Otherwise, you'll never be able to attract the capital that you need. Now, how would you be able to get a hold of some solid numbers like that, George? Oh, man, Marilyn, that could be a show all by itself, maybe even more than one. We don't really know enough about David's idea to say for sure. Let's look at a real simple example, starting a retail store. There's publications that you could look at. There's probably a trade association that you could get some information from. There may be some franchises who are marketing a concept around one similar to yours. You can get information from them. I've even been guilty of sitting outside a store and looking at their customers walking in and out and calculating a number myself. There's many ways to do it, is the point. Ah, the business stalker, huh? All right, well, thanks, David. We hope that this helps you in your first phase. If you have a big challenge for us, email us through our website at bigsuccess.com. Let's get our big quote for the day. Our quote today comes from Tim Blixeth, who said, "Many great ideas go unexecuted, and many great executioners are without ideas. One without the other is worthless." You'll discover new worlds if you explore your ideas, map your course, and then set sale. Next time, we'll talk about the most important person to laugh at. And making fun of this person pays big dividends. Is it you? No. No. Until then, here's to your big success. [MUSIC] [BLANK_AUDIO]