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Is your idea as good as you think?
Category: Starting Up | 08 March, 2013 11:28
Having an idea is a great experience. It can get your creative juices flowing and can set you off on a journey towards the opening of a small business.
While it is very easy to get carried away with your idea, it is important to sit back and really consider whether or not what you have come up with will translate into a new company with legs.
The idea is of course the first step and you'll also need the right business model, pricing structure, funding, marketing and staff to make it work. Of course, there needs to be enough customers willing to pay for your goods and services. After coming up with an idea it is important to sit down and find out if it is a winner before diving straight into the new business.
Is there a market?
A crucial element when starting a new business is finding out if there is a market for what you will be offering. Research is vital as this will give you a clear idea of how successful your business will be if you manage to get your idea off the ground. Establishing a need for your new product or service will give you and your staff the confidence to back the venture and ensure it succeeds.
Even though your idea is undoubtedly a great one, a lack of consumer demand will mean that you are on a hiding to nothing when it comes to producing and selling to them. As well as working out how much of a market there is, you also need to sit down and determine what advertising, pricing and business model will work for the target demographic.
Understanding the potential customer base is crucial when it comes to working out whether or not an idea has the legs to make it into a mainstay of a small business.
How many are there? What type of people are they? Where do they shop? How do they behave and what drives their purchasing decisions? If they are consumers, how much do they typically earn and how much disposable income do they have? How often would they buy your product or service?
Carrying out research can be done without spending a huge amount of money with both primary and secondary research easy to conduct yourself.
Primary research could include focus groups, which will help you gauge attitudes towards your new idea. Conducting surveys will help you create a picture of how successful a launch may be and it could also help you understand the level of competition you will be facing. You might find out that another firm already does something similar to you, which of course will limit the success of your idea.
If this is the case, it's not the end of the world. You can use the existence of your competitors to help you. Understanding the way they use technology to their advantage, how they deal with customers, their pricing, marketing and even their business models. This can help identify areas of your business that need to be at a certain standard to cope with competition.
You can access valuable secondary data free of charge simply by asking for it via a phone call or email, or for a nominal charge to cover postage or photocopying.
Trade and industry associations often publish data such as sales figures, economic trends, and other reports, which can help you form a better idea of what you need to do.
Arming yourself with as much information as possible about the state, size and needs of consumers in your marketplace will help you form a better strategy when tackling starting your own business.
Funding
No matter how good your idea is, you need the funds in place to get your business off the ground. Being able to support your new venture and provide sufficient working capital until you start making sales and profits is imperative. It may be tempting to think you can manage on a shoestring budget, particularly if you're determined to get your idea to market, but you need to carry out an honest appraisal of your needs before starting out on your new UK SME adventure.
Coming up with what you expect to sell each month and when you expect to break even are crucial. It is easy to overestimate demand, but honesty really is the best policy to avoid getting into a mess.
Again industry figures and the profitability of others that are operating in your area will give you a good idea of the costs involved with your business. When it comes down to costs, it's better to over-estimate than to find yourself falling short. If you have the time, it could be worth coming up with three different forecasts. One if everything goes well and according to plan, another if sales don't pick up as you would have expected and a third that covers you if you don't get customers for a few weeks.
This may seem pessimistic, but it will give you a clear and concise idea of exactly where you need to be at certain points of your business venture.
Are you ready for the challenge?
Ultimately, when you are starting a new business you need to be ready to fight for it. Having an idea is the easy part, and you need to be ready to follow it through. There will undoubtedly be obstacles and hurdles along the way, but if you want it enough you'll be able to get through anything that is thrown at you.
Setting up a business is an endurance challenge and its success will hinge on you as the leader, you attitude to being successful and inspiring the staff you have at your disposal, but if your idea is something you're passionate about, which it probably will be, then you should be in a good position to make it work and establish your SME.
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