Starting a Business Series: Assessing Your Business Idea – Article #1

There’s something different about entrepreneurs. In some respects, we are gluttons for punishment. We will get back up and try again as often as it takes until we’ve finally succeeded at whatever we have set our minds to. While others might see such behavior and think that we’re crazy, I see it as noble and admirable. As a financial planner with years of business planning and growth, I work with fellow entrepreneurs often. I know where you are… you have a BIG IDEA, and you are excited about it. But removing the emotion, implementation begins with assessing your business idea. In this series, we will start here as the first step to getting your business running.

Podcast Time Index For “Starting a Business Series – Assessing Your Big Idea”

• 00:31 – Starting a Business, Part 1: The Big Idea
• 01:52 – Do you ever see a need, or have an idea?
• 03:24 – Defining the idea
• 04:36 – What is your main product or service?
• 06:24 – Survey the current marketplace
• 09:04 – Bounce ideas off of your closest friends and family
• 11:01 – Find motivation
• 17:15 – What are you dreaming for?

Dream Graveyard

This may sound a little odd, but have you ever wondered how many business ideas never amounted to anything? I mean, with all of the brilliant entrepreneurs that have come and gone, surely there must be millions of passing thoughts that never came to fruition. Now, don’t think me strange, but one of the things I like to do is go to old cemeteries to find the grave markers that are hundreds of years old. They fascinate me. When I was a kid, I learned how to do grave rubbings with paper and a piece of lead revealing what the headstone said even when I couldn’t read it.

Whenever I run across these old headstones, I feel a significant sense of loss and sadness. I’m not sad that the people died. That’s life and death. What makes me sad when I look at old gravestones is the insurmountable number of dreams that will never be fulfilled and the wisdom that will never be shared. This is the way I see all of the dreams that so many of us have never acted upon… faded old headstones marking lost potential.

Friends, I don’t want my dreams to die. I don’t want the wisdom I’ve earned through the school of hard knocks—and through formal education—to go to my grave, never benefiting others. That’s why Financially Simple exists. I want my big ideas to matter and to mean something to people like you.

The Big Idea

If you’re seriously thinking about starting a business, then chances are you have a BIG IDEA that will solve a problem or add value to the lives of others. Maybe you’ve figured out how to simplify a process or you’ve just graduated with a certification, a license, or an advanced degree in a professional field. That’s awesome, friend! Way to go! However, to build a great business, you need to spend a little bit of time preparing before you begin implementing your BIG IDEA.

So many times, I see people get a hair-brained idea and just take off. They start charging ahead with anything and everything but a clear direction. In those cases, some people do make it. I’ve met a few people who, just by accident or circumstance, survived the upstart of their business. What amazes me, though, is the number of people who never make it past the first year or two in their business. According to the U.S. Bureau of Labor Statistics, about 50% of all new businesses survive 5 years or more, and about one-third survive 10-years or more. This is heartwrenching to me. I hate this statistic!

If a client of mine comes to me with a BIG IDEA for a new business, I personally recommend that they walk through that idea in their mind before they take off running. I want them to stop. I have to tell myself to do the same thing all the time. I get a notion to do something and I just want to make it happen. However, what may be a great idea, might not hold up to all of the variables that life and business throw into the mix. That’s why I have to stop and run that idea through a mental test. Put your excitement aside for a moment and determine whether or not that BIG IDEA could launch a legitimate, profitable business. But how? By considering four steps during your assessment…

4 Steps to Take When Assessing Your Business Idea

Step #1 – Clearly Identify Your Main Product or Service

I love being around young, aspiring, wanna-be business owners who are full of vigor and vision. Up-and-coming entrepreneurs have a certain energy that I want to be surrounded by. Whether you want to open an auto-maintenance garage, an Internet-based business centered around an application, or a medical practice, you must clearly define your product, your service, or your product and your service. For example, the dentist will offer services. The app developer will offer a product, and the auto-garage owner will offer both products and services.

Before you jump into marketing and selling, you must know exactly what you are providing. Are you offering products? Services? Products and Services? Have you created a widget? Are you producing something that can add value to existing products or services, or are you offering a unique skillset or service?

Step #2 – Survey the Marketplace

Next, you want to look for similar businesses that are currently operating in your geographic or niche market. What are they doing well or poorly? Is there a strong enough market demand and/or a large enough customer base to support multiple businesses that sell similar products or services? Or does your product or service add enough value to the existing marketplace that you can capture a different niche within the marketplace? Is it possible that you can meet a need through location alone?

Your challenge is to determine how you can provide your product or service to your potential future customers for better results than your current competition. If multiple auto-garages, internet applications, and medical practices exist, then what are you able to do better than your surveyed competition? You can choose to have low prices or high prices, high quality or low quality, exceptional service, or poor service. There’s an old adage claiming that you can only be good at two of those things.

I won’t argue the merit of that debate, but I will ask you a question. When it comes to price, quality, or service, can you outperform other businesses in two of those areas? For instance, if you have higher quality and service than a similar business, you can charge higher prices. If you have low prices and excellent service, you can get away with slightly lower product quality.

Step #3 – Talk to Family and Friends

After you look at the current marketplace, you want to talk to your closest friends and family members to get their initial thoughts about your BIG IDEA. Now obviously, you don’t want to shout your idea from the mountaintops because you may truly have the next multi-billion dollar idea. Therefore, be careful who you tell. You want to make sure others keep your idea confidential.

You also want to take some of the advice you receive from friends and family with a grain of salt. If they truly care about you, they’re going to build your confidence. Your momma’s typically going to tell you, “Son, you can do anything in the world you wanna do.” Honestly, you will need that support and confidence to accomplish your BIG IDEA, but you also need someone to dissect your idea and tell you why it can’t work. You need someone that will poke holes in your plan, revealing every flaw, shredding it to the bare bones in the sweetest way possible.

Step #4 – Find Motivation

Possibly most important when you get a BIG IDEA is to find the motivation to keep on keeping on. If you don’t want your dreams to die, then you have to find the motivation to continue when things get rough. Businesses will wear you out. Just this week alone, I’m working on about 70-80 hours of time away from the house during working hours. I’ve not walked into my house before 10:00 o’clock at night, and I’ve left each morning before 5:00 am. Friends, I’m tired. Yet, I find inspiration to continue from two little items on my desk that I see every day. One item is sweet, and the other is motivational.

On top of my desk is a little car. To be exact, it’s a metal die-cast representation of a 1964 Shelby Cobra. I find the car’s story interesting, and I think Tim Allen and Jay Leno each have one as well. It carries a high price tag, but man, I fell in love with it when I was about 15-years-old. Since then, I’ve said that one day I will own a 1964 Shelby Cobra kit car because I don’t think I’ll ever want to afford the original. It’s like half a million dollars or more, and that’s a lot of money for me to pay for something that’s just a piece of metal with paint on it. However, I like the car, and my motivation is that one day, I will buy a car that’s similar to that Shelby Cobra. So to me, it’s motivating.

Sitting right in front of that Shelby Cobra is a Lego^® creation that spells out the word “DAD.” I intentionally keep that creation in front of the car because it reminds me that even though I work very hard and I might get up and chase the dollar every day, there are things that are more important to me.

Personally, I’m not so sure I want to work like Tony Robbins and Gary Vaynerchuk. I want to get behind them like a cheerleader at a football game and scream at the top of my lungs. I want to tell those guys to “Go make it happen! I’m here for you!” I want to chase my dreams like that and make my dreams happen. But I’ve got these amazing little kids at home who made the word “Dad” out of Legos^®,  and at this particular phase of my life, there’s nothing more important to me than to make sure those kids know their dad. As their dad, my goal is to do everything within my power to inspire my kids to chase their own dreams one day.

With those two items staring at me every day, I stay motivated. I’m motivated to stay focused while I’m at work. Then, when I get home, I’m motivated to be there and remain focused on my family.

Dream Big

So my challenge to you today is simple. Dream big. What are your dreams? What’s your BIG IDEA? Make it happen. Take the first step by identifying your product or service. Then survey your market and find your place in the world. Next, discuss your idea with trusted family members and friends. Take their suggestions for what they’re worth, not allowing any negative feedback to discourage you. Instead, let it be something constructive! Finally, stay motivated.

So let’s think and dream big. Life is hard. Businesses can be frustrating. In fact, my friends, starting a business is not for the faint of heart. You better have some gumption. While you chase your BIG IDEA, I’ll keep the money side, at least, financially simple.

If you’ve got a BIG IDEA and you’re not sure just how to make it a reality, reach out to us. The team of business experts at Financially Simple has decades of experience as business owners and advisors, and we’re ready to help you succeed!

Next Step: Turning your great idea into a thriving business will take a special person. Do You Have an Entrepreneurial Personality?