Things to Know, Consider and Do.
Just about anyone can come up with ideas for a business venture. This is usually the easy part. The difficult part usually lies in actually being able to transmute that idea into reality. It is at this stage that most people fall short.
While the vast majority of people will never take the necessary steps to turn their business ideas into a business venture, research tells us that the few who actually take the plunge will not get very far with their venture as 20% of such businesses will likely fail within the first year. Another 50% will fail in their second year of operation.
The reasons for these failure rates are varied, but some of the root causes have to do with the things that were done, or not done before the business kicked off. This article will explore some of these things that you should do before you actually start a business. In other words, how to take a business idea from just an idea to a full-fledged and active business.
One of the very first and most important things to do to actualize a business idea is to ensure that the idea is properly researched and that the concept is viable. After narrowing down the specific business idea, understanding the environment the business will operate in, the requirements for starting the business, its risks, and many other things, the following steps are important to take in developing the business idea into an actual enterprise.
8 Things to do to Help Actualize Your Business Idea
1. Figure out the what, why and how of the business: The very root cause for establishing any business is to attempt to solve a problem, to bridge a gap, or to take advantage of an opportunity within the market.
So the very first question you should seek to answer is what your business idea intends to do. Will it be a for-profit or a not for profit venture? Is its origin as a result of a market gap or the solution to a problem? How much do you know or have you learned about the industry the business will operate in as well as your competitors? Knowing the answer to these and other similar questions, even if at a high level, will help guide your thinking and planning as you progress along on the journey to actualizing the idea.
2. Develop an actionable business plan: It is very easy to overlook the importance of a business plan, especially if you think that your idea is going to be the next best invention since sliced bread. However, available evidence suggests that a lack of a business plan can contribute to the failure of a business. Having a concrete plan will help solidify many of the specifics of a business idea, and even if or when you hit a brick wall, you will have something to fall back on to steer you back on the “right” path.
Of course, as with all types of plans, it should not be set in stone and you should be willing and able to adapt and evolve it to meet with specific environmental, business, and other factors that may come into play as the venture progresses.
3. Understand the risks involved: There are many known and unknown risks involved in starting and/or running a new business. There are equally various types and sources of risks from financial, security, environmental, liability, operational, strategic and others. Understanding and planning on measures to counter known risks are important, but it is equally important to work on having the capacity or strategy to manage as many unknown risks that may come your way.
One of the most obvious options to manage risk is to get business insurance. But there is so much more to risk management than getting business insurance. It might be as simple as not doing business in a specific location like a state or country because of the specific dynamics of the locality. Or it could involve creating an LLC under which your business will operate to ensure that you are personally shielded from any liability that the business may incur.
4. Validate the idea with a Minimum Viable Product: One of the most significant lessons that startups and the startup movement have taught business people, owners and wannabe entrepreneurs is the art and importance of the Minimum Viable Product (MVP.)
Previously, before the rise and prevalence of the startup culture, the way most people went about starting a business was to have an idea and shortly thereafter, dive head-on into the project. The modern-day startup and their approach to first validating an idea with as minimal an amount of resource as possible, before going on to commit more resources into the project or business have taught and proven to us all that the latter approach is a more sustainable, cheaper and safer way to start a business.
This concept of the Minimum Viable Product can easily be seen as yet another risk mitigation strategy that was discussed in point 3 above.
5. Come up with a business name inline with the business identity: Choosing and settling on the ‘right’ name for your business can be crucial as it can sometimes play a role in the success or otherwise of the business. For one, it helps to clearly identify and differentiate your company and business from other businesses that offer similar or substitute products and services.
From having a memorable product name that can help with your marketing, advertising or branding, to (unknowingly) choosing a name that violates the trademark protection of an existing product, which can potentially lead to a lawsuit against your business, are just some ways and reasons why the choice of name for your business or product should be given careful consideration.
6. Ensure the right timing for starting the business. There are certain instances when the time to market of a business can spell doom for it. Or where the general situation in the local or global economy might make it an inopportune time to start a new business. A good example might be the pandemic by the name of Covid-19 that the whole world currently faces.
With a record 40 million unemployed people in the United States alone and a reported rise in the number of small (and even large) companies filing for bankruptcies, it is safe to assume that now may not be the best time to start certain types of businesses given the pandemic and high unemployment rates. But on the flip side, this pandemic might have created ripe opportunities for certain other types of businesses in certain industries to start or even flourish.
It is for this exact reason that anyone wishing to actualize their business idea must ensure that there are no extenuating factors that may be detrimental to starting a business at that point in time, even if it is not on the scale of a global pandemic.
7. Sourcing funding of the business: Arguably, the vast majority of people who get asked what the number one resource that they need for their business is, will say that it is capital. It is easy to assume that this will not be any different for someone who is just starting out to bring a business idea to life.
It is a given that starting a business can be challenging. It is even more challenging when you don’t have access to adequate finance. This is why long before you go live with your business or MVP, you should have a fairly good idea where the needed finance will come from to help get the business off the ground and sustain it for as long as possible.
Here, all the traditional sources of finance should and will come into play, like personal savings, borrowing from family and friends, or from the bank. But also, some of the more ‘evolved’ methods of financing should definitely be considered such as crowd-funding, equity financing and other such alternative sources of finance.
Lastly, and this speaks to the previously mentioned point of having a well-developed business plan, which should have a detailed section dedicated to finance, it can be quite important to have a fairly good idea how long any capital that you may have or intend to raise will last you in operating the business, or as it is known in startup terminology, how much capital run-way you have.
8. Kick start the business: Finally, when all the above have been done, and any other thing that you feel is necessary, then you can comfortably say that you are at a place where you can go live with your business.
While all the above-stated things and steps are important in helping you transmute your business idea into a real-world business, they are by no means all the work you will need to do. Once you go live with the business, it is safe to say that that’s where real work begins. The same tenacity and drive that you would have used in carrying out all the above steps should equally be applied, or perhaps even doubled or tripped once the business goes live.
When you do that, hopefully, yours will be one of the few businesses that survive and thrive for many years to come.
Author: Kanayo is a startup founder and a digital marketing professional. He is the founder of Telligent Marketing LLC, a digital marketing company that provides local SEO for lawyers to help them grow their law practices. Connect with him on Linkedln.