August 24th, 2011 David Finkel (Taxloopholes.com Advisor)
Today I wanted to talk directly with those of you who are in “start up mode” and share with you a simple, 4-step action plan for any Level One business to get to Early Stage Level Two as quickly as possible.
Step 1: Clarify your basic business idea.
Let’s say you’ve been dreaming of your new business for months or even years and playing the “what if” game in your head. It’s time to get serious and turn your dreams into tangible, concrete ideas on paper. To clarify your core business concept, start by answering these questions:
– In two or three sentences, describe your business idea.
– Who is your ideal customer? Describe that person’s characteristics in as much detail as possible.
– What exactly will that ideal customer buy from you? Describe your product or service including the key features and benefits that will prompt your customers to buy it.
– How much will your ideal customers pay? How and when will you collect that money?
– Who will be your main competitors? List the most important ones.
– What will separate you from your competitors? How will you find space in your market or niche to generate sales?
– What is your dream for how you will expand and grow your business? What do you imagine it will look like in three to five years?
Action Step 2: Conduct your market research.
Before launching your business, invest the time and energy to do an intense period of market research. Study your prospective customers, your competitors, your likely key vendors, and your business advisors. Use this as a chance to sharpen your thinking, gather raw data, and record the information you’ll need for your planning process.
Get online and start Googling away (that is a word right?). Phantom shop your competitors. Interview your prospective vendors. Talk with your advisors and mentors. See if you still want to move forward with your business idea. If you do, determine how you can refine it to increase your odds of success.
Action Step 3: Write your business plan “draft.”
A business plan is the written outline for how you will launch your new business. Too many business owners never take time to write one because they find it intimidating. However, you don’t need to create a perfect business plan; you just need to use it as a template. It will help you refine your thinking, organize your thoughts, and identify the questions you need to ask.
You don’t need to have all the answers, but you do need to identify the questions you need to pay attention to-immediately and over time.
Your business plan will help you create a clear action plan with defined next steps, timelines, and deliverables. In addition, if you need to raise outside capital, your business plan will be essential to helping you fund your new company.
Note how I suggest writing a “draft” of your business plan. I do this intentionally to reinforce the concept that your business plan will always be a work in progress and you don’t have to get it perfect. It’s the process of doing the plan and updating it annually that is so useful.
I drafted my first business plan about 13 years ago for a business I later I sold for a multimillion-dollar payday. This business plan was only six pages! Looking back, I used very few of the stated ideas in the business that I ultimately grew. But-an awfully big but-the exercise of writing it and updating it two to three times a year helped keep me focused. It required me to stay clear on where my priorities and attention needed to be as I grew the business.
Action Step 4: Test your product or service to make sure it will sell.
If your new business involves selling a product or service that customers are already buying from someone else, then you just need to know you can attract enough new or existing customers to buy from you so that your business will succeed. But what if your product or service is new? Then you have to find a quick, fast, and cost-effective way to see if people actually will buy it before you go to the expense of investing time and money in large amounts. This might mean creating and selling a prototype. Or you might sell a service you have to establish as you go. Or you can canvass members of your target market and gauge their feedback on whether they would buy if it were available. In any case, use your best efforts to get objective feedback and test the waters on the viability of your business idea.
Proving your idea is viable means determining if the market will buy your product or service from you at a price that can be profitable. What’s the best guarantee of getting accurate information? Actually close a sale! You can sell a prototype and deliver later; you can sell someone else’s product or service that you buy wholesale; you can even sell the product or service and just go back the next day and refund the money, telling them about a delay in your ability to deliver. Yes, you may lose a sale, but at least you’ll know you can actually make that sale! This confirmation is worth the world to you in Level One when you’re wondering if you can sell your product or service at a profitable price for your business.
I hope you found these four steps useful.
If you would like the Maui team to help you plan and launch your new business, I strongly encourage you to check out our Business Consulting Program. I think you’ll find the detailed, step-by-step format with which we work with business owners a huge resource in helping you launch your business the RIGHT way from the start.