Is your business idea a good one?
First, let's face it, small business is tough. The "American Dream" of owning your own business and making a ton of money is very achievable but is nearly out of reach. As I tell people on a daily basis "Making money is very difficult and very easy." Every month I read an article that goes something like this.... "With $4 Million in annual sales the company is almost profitable." ALMOST! Wow... just goes to show how uphill the business climb can be.
I recently sold my business and there is nothing in life that I enjoy more than talking about people's dreams and ideas in business. Many people have an idea for a business in their head or in the beginning stages of planning but have no clue if it would make a good business...below are some ways to tell.
Many people either get too excited or too discouraged about their idea. As with most things in life a good dose of reality and balance do wonders. One thing is for sure, no business ever succeeded unless it was first started.
1. You don't have to be first or even best....
...If your goal is to make a living then figure out what it will take to do that and based on that determine if your idea is a good one. New ice creams, bakeries, clothing stores, consultants, and photographers "happen" all the time. You just have to evaluate your skills, experience, and potential market to see if your idea is a good one where you are.
As a matter of fact being first can actually be bad for business. Also, finding an idea you can improve on is a great way to get started.
If you want to really make alot of money then your business has be be scalable... it has to be able to grow beyond yourself. You only have 24 hours a day so you need to be able to expand your skills and services beyond yourself.
3. Pay Attention To Market Research and adjust your plans accordingly.
You need to do research on your potential type of business. If the research says it's highly competitive then believe it.... the data says restaurants have a 3%-5% profit margin-- believe it. If you think you are some kind of business Zorro you'll be in for a shock. Reality is reality because it is reality.
4. Don't Think You Have to be Huge
GOOGLE's and "Ben & Jerry's" are rare. There are thousands and thousands of entrepreneur millionaires who you have never heard of. Shoot for a piece of the pie, not the whole thing...they don't call it market "share" for nothing.
5. Do a Business Plan
Deciding if an idea is a good one involves looking at the potential numbers.
Here is a business plan in a nutshell: "How much of "this" can you sell to "who" for "what" profit?
Answering those questions in advance is what gives you the red or green light on your business. You can eliminate many ideas after you do the math. I was recently approached by someone very excited about an idea... they laid out the numbers of customers and the numbers of sales and was very excited... in the end however, if you got ALL of the area market share the gross revenue would only have been $150,000. I don't know what the gross profit would be but even at 40% the profit is not there to make it worth doing... the math made the decision for me!
Call similar businesses in other towns to get the owner's feedback on the realities of the industry you are thinking about. Don't over or underestimate your competition.
6. Consumables or Subscriptions
Whatever business you are in it needs to be repeatable... get a customer once, get paid many times.
I would rather build relationships with my customers who keep coming back over and over again. The power of multiplication is a wonderful thing.
7. Maximize Your Market Size
Sell something that you can sell nation or even world wide. Sell online!!! Sell to men and women. Sell belts AND belt buckles. Be willing to drop ship to people. Market in nearby towns.
Remember too, that a business idea that is very profitable in a big city is not necessarily good for a small town.
As a caveat here...it is also dangerous to OVER diversify. You need to be focused on getting the easiest and most accessible piece of the pie that you can.
8. Sell Hope
Sell something that makes life easier for people or makes them look, feel, or act better. The more you can make a guy feel like James Bond the more he'll open his wallet for you!
After looking these over I realize I mixed in some "How to do's" with my "What to do's" but all of the points are worth making.
These are just some good guides for business ideas. The more of them you fit into your idea the more likely you will be to make some money~~!