If you’re planning on launching a business and have a great idea that you think could one day become a great money-maker, then your options for getting started are limited. Either look for investment or take a gamble yourself. But how can you know which is the best way to fund and lanch your business?
By Brian Smith
Well before you get to that stage, it’s crucial to fully analyse your idea and develop it to the point where it’s fully formed and you can safely take a risk, within reason. A business ‘idea’ is not the same as a business ‘plan’, and even some plans leave something to be desired. Go into business with a half-baked idea and you’ll find yourself filing for bankruptcy the same time next year. Go to an investor on the other hand, and you’ll be laughed out of the room.
To make sure that there are no gaping holes in your business plan then, read on and use the following points to analyse your strategy…
The Cost of Setting Up
Many people eager to come up with a new business idea will go to great lengths in detailing their overheads and income in order to provide profits and forecasts of their annual turnover. What many forget though is that the cost of starting up is considerably more, and usually involves buying in a lot of supplies, properties and materials. Include an estimate figure here too then, and make sure you know precisely when you’ll be likely to breakeven.
The Moral and Legal Aspects
When trying to be conscientious and diligent in coming up with a business plan, many of us will focus on the numbers and our projections. While this is good however, it can also mean that we end up losing sight of some of the more basic concerns and practical issues – such as the legal considerations or the ethical ones. If you’re selling plastic surgery procedures, have you considered how they might affect your customers psychologically? If you’re selling food, have you thought about the licenses you need? And about how you can ensure no one is going to get food poisoning? If you can’t guarantee that your business isn’t going to be safe from lawsuits and bad press, then you shouldn’t expect an investor to come anywhere near it…
Protection for IPs
Most businesses that we come up with in our spare time revolve around inventions or new services. Many of us have had a eureka moment at some point where we’ve come up with a new way to time eggs, or a great idea for a chain of ‘coffee shops with a twist’, and every now and then someone has the courage to try and make that into their living.
But if you are trying to make a living purely from an idea, then you need to recognise that that idea is your most important asset and you need to treat it as such. This means getting protection for your ideas, whether that’s in the form of copyright, patent or trademark. Either way, you need to prove you own your ideas before you can take them forward – otherwise someone will just find a way to copy you.
Even once you’ve protected your ideas though, it’s always important to keep one eye on what the competition are doing and on what they might do in future. You need to analyse the market and show an investor, or yourself, why you’re offering something that a bigger company can’t do better. Starting out as a new business you’re going to have relatively limited finances and resources, so an established company is likely to be able to outgun you in most areas. The only way to survive is to be able to offer something unique and different and to anticipate the direction the competition is going to go in.
Most important of all though is to make sure that there’s a market for the product or service you’re offering. You might assume that people want the product you’ve created because you would use it yourself, but this is a misconception that has cost many people a lot of money.
If you want to get investors interested, and if you want to avoid losing a lot of money, then use surveys and focus groups and prove that there are people out there willing to actually pay for your proposition…
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Today’s feature writer, Brian Smith, is an employee at Yellowstone Capital which provides business funding solutions in New York. He is a diligent employee and he takes his family on road trips when he isn’t busy with work.
What’s the hardest thing about starting a new business? Share in the comments section.