1. Talk it Out with Trusted Allies
Once you have a business idea that you think has real potential, don’t keep it to yourself! Share it with trusted associates for their help in refining and perfecting your vision, especially if they’re within your target market as a potential customer for your business idea. Make sure to ask questions: Do you think this business idea has potential? How can I flesh it out? Would you buy this product or pay for this service and if so, at what price?
What if you don’t have any associates in the business area you are pursuing? Hone your networking skills, and don’t forget that even people who aren’t involved in your business can provide vital feedback by playing prospective customers.
Getting honest feedback, while sometimes painful, is an essential first step in turning your business dream into a reality.
2. Research the Market
After you have developed your core business idea, some market research is in order. What other players occupy the space you want to pursue? How will your offering be similar or different? And where will your customers come from?
In the research process, be sure to focus on more than the success stories. Is there a similar business you can look to that didn’t find success? Ask yourself what you will do differently.
Further, try and identify potential partners during this process. If you are launching a pet foods product, for instance, what sort of retail locations will you want to align yourself with? The same is true for service businesses. Is there a company out there that might value your service as an add-on? Partnerships will be valuable as you try and grow your business.
During this process, you may learn things that will cause you to reshape or reconsider your original idea, which is important during the planning phase. Is there a niche market you can target? Is the market crowded with players with little differentiation? What competitive advantage can you develop?
3. Draft a Business Plan
Another vital step in launching a new business is developing a business plan. Business plans can be formal or informal, but they allow you to crystallize the core components of your business before launch.
Things to consider: your business “story” and how you will frame it to potential investors and other interested parties, financial and operational goals, projections, and how you see the business scaling over time.
If you aren’t ready to dive into a full business plan, the One Page Business Plan is a great resource. It is a short book designed to help you focus your ideas on your developing business so you can easily share them with potential partners and investors.
Business Model Generation is another excellent book that breaks down the nitty-gritty details of planning a profitable small business.
4. Build a Prototype
Prototyping is an essential early step in business planning. It allows you to test out whether or not your vision is feasible.
And “prototyping” is not just for outfits that make physical products. A prototype can also be a simple website representing your future business that you use to collect email addresses from interested parties. If you are after a specific niche like fashion or cooking, you might also consider creating a blog that will help you find a following, so you don’t necessarily need to go out and build a fully formed product—the goal is to validate that some people are willing to pay for what you’re planning to create.
The prototyping phase is all about taking your business vision and making it real to test out whether or not real consumers will bite.
5. Raise Funds
Consider how much money you need to start up and how you would like to fund your new enterprise. Some of the most popular approaches include:
- “Bootstrapped” businesses are developed by founders with little or no outside investment.
- Bank loans or loans from the SBA (Small Business Administration) require that you pay back principal and interest.
- Many new businesses approach outside investors who put in money in exchange for a stake in the company’s eventual revenue.
- Finally, newer models like “crowdfunding” via outfits like Kickstarter allow would-be entrepreneurs to collect micro-donations to help their businesses grow.
Once you have a strong idea of all of the steps outlined above, you’ll be ready to launch your business.