Business Tips Write For Us – 1. Am I viable as an entrepreneur?
The first thing to do to find out if a business idea is viable is to turn the question around and ask yourself, “Am I possible for the concept? This is the crucial question and yet the one that many entrepreneurs do not ask themselves. In fact, the exceptions can be counted on the fingers of one hand.
Many business creation experts agree with this opinion and give the idea a relative value. The profile of the entrepreneur and the team is one of the factors that most influence the success of a project. Many projects have failed and were staffed exclusively by technologists who lacked entrepreneurial skills.
Self-examination must be done with a high degree of honesty. And although it seems obvious, very few do. For example, if I intend to launch a project based on Public Relations and commercial skills, but I have difficulties communicating and an alarming shyness, I must realize that this is not the most suitable project for my profile.
Do I want to develop my professional career as an entrepreneur? Do I have the necessary skills and abilities to carry out my project? If the answers are yes, go to the next question.
2. Am I willing to sleep very little in the next few years?
In the previous analysis, you verified that you can negotiate, sell, communicate and That you are a creative person and do not wrinkle in the face of difficulties. That you have leadership skills, to lead teams, to delegate… The time has come to find out if you are the first to be convinced of your project.
Experience tells me that business ideas don’t succeed without a lot of personal energy, business ideas don’t succeed. The entrepreneur must analyze the extent to which he is willing to fight to assume the risk of running a business. If you are looking for security and personal comfort, it is better not to start an undertaking because business initiatives imply not sleeping enough nights.
Some ideas that initially seemed mediocre have been much more successful than other more innovative projects, thanks to the fact that they had people behind them with the necessary drive and drive.
So, are you willing to go through hardships? To endure that many do not understand you? To cross the desert alone? If the answer is that you prefer to be quiet after five in the afternoon, entrepreneurship may not be your best alternative. Otherwise, keep reading.
3. Should I and can I run my business with more partners?
If you have detected deficiencies in your entrepreneurial profile by answering the previous questions, you should look for a solution before proceeding. That is, look for a partner.
It is recommended that associates have a balanced team looking for a high degree of entrepreneurs who deal with rapport. Multidisciplinary teams are more likely to succeed. Companies have three legs: one for design, another for operations and another for clients, which is why they require entrepreneurs to take care of each of them. And let’s face it, it’s hard to find a person with all three facets because the level of sophistication of each one is increasing.
Of course, things don’t always go well: Many companies fail because of problems between partners that arise when the benefits come. For this reason, we recommend being very careful with the travel companions you choose.
4. Do I have experience in the sector?
It’s not essential, but it helps. Most ideas arise in the environment of the entrepreneur. If you are from Madrid, it is difficult to come up to develop on the coast. And one of those environments is working life. The saying “shoemaker to your shoes” is perfectly applicable. The best way to add value to the market is by undertaking in a known sector, especially if the project is small.
5. What is my business idea?
To start a company, it is essential to have a clear business idea and know the subject matter. The first thing is to accurately describe the service that will be offered. Analyze what and for whom it is intended and why it would be valued by potential customers.
All the experts in business creation that we have consulted agree in pointing out the importance of this business idea analysis: “What products or services am I going to offer to the market? What will my business model be? What innovation, from a technological or business point of view, does my company contribute? These are some of the questions that the entrepreneur must answer.
6. What are your weaknesses, strengths, threats and opportunities?
The initials of these four words form the acronym DAFO, an essential resource for analyzing the viability of a business idea.
It consists of transferring to paper the evaluation of the strengths and weaknesses of the company to see which is the most appropriate strategy to launch the business.
There is no need to fear that the result of the SWOT is negative. If we realize that there is no market or that it will be challenging to find our site because technical, financial or human resources are needed that we do not have, it is better to go back.
When doing this research, you must also evaluate the opportunity cost of the change. Let’s think of a bank employee who is going to become independent. The first thing to analyze is whether he will be paid less as an entrepreneur than an employee and if he is willing to take it on.
If your idea’s strengths and opportunities outweigh the drawbacks, continue with the analysis.
7. Does my product or service cover a market need, or do I seek to create it?
Another cornerstone of feasibility analysis. The time has come to study the audience we are going to address. You have to start by looking whether there is a market for what I am going to offer. If so, it will be necessary to check if I can fill a gap in that market and, if not, if I can create a new need. Of course, in the latter case, it is convenient not to lose the north. It is not easy to awaken a new interest in consumers on a planetary scale, much less for a small company.
To move from the business idea to the market opportunity, an unsatisfied need must be identified: Sometimes great ideas arise that create a market, but it is more frequent that the process is reversed, that the business idea arises from deficiencies found in public. It is easier to do better what other competitors do poorly or target an underserved market niche than to invent a new product or service on the market.
In fact, most of the companies we consulted have origins in a market need.
8. What is the potential market that I am addressing?
To determine if a product or service is salable or acceptable to the public, you must resort to an essential research tool: market analysis.
It is about finding out if customers are willing to pay for what you offer. And, if so, who they are, where they live, what they do, and why they would buy your product or service. You also have to analyze what the sector in which I am going to compete is like and how it will evolve in the coming years.
To obtain these data, information can be consulted on the Internet, carried out field work and observation, carried out small surveys and interviews with potential clients. In addition, experts recommend starting the analysis with a real customer with a first and last name. Many successful SMB technology consultancies today launched into the market from a single client. This is how they tested and improved the idea and the business model and then began to gain market share thanks to word of mouth.
9. What is my target customer like Business Tips?
We look for the robot portrait of our target audience, with as many details as possible. It may happen that when we have it, we are surprised to find among our public people who do not fit that profile (for example, older people who become regular customers of your adventure sports clothing store). But most of them will have some common characteristics, the discovery of which will allow us to refine the commercial strategies to reach them much more.
In the first place, it is very beneficial to have identified our clients to be able to plan the estimated income and the rate of acceptance of the business… And secondly, the public, like the market, evolves.
For this reason, we must always be attentive to changes in their needs and the appearance of new consumer trends to avoid running out of response capacity.
As we have said, the Internet is a handy tool for obtaining demographic data, average expenses, and consumption trends… In addition, it may be an excellent option to carry out a pilot test of the idea.
10. Is it the right time to launch my idea?
The best thing is to set up the company to coincide with favourable trends. For example, people are more aware of children’s education than years ago; therefore, it may be an excellent time to start an educational support company at home. If, in addition, the Government makes a legislative change that favours or helps complementary education, it would significantly increase the demand for the previous service and the company’s chances of success.
Nor should we underestimate the importance of luck. It is one of the factors that can most influence the success or failure of a business. Unfortunately, uncertainty can also turn against you.
The analysis of the moment of launch should also be taken into account if you import a successful business idea into another country. One of the most important and common sources of business innovation is translation, that is, the implementation in a new market of a product or service that works in a particular place in space-time.
But this does not always guarantee that customers will be obtained (perhaps the market is not ready, the business has legal restrictions, or the idea does not fit with consumer trends…).
11. Are there competitors in the market?
As we have seen, the most likely answer to this question is yes. And the next thing I have to ask myself is: Who are they? What are the inefficiencies in your services, and what do I intend to improve? If the market is ripe, how can I capture your customers?
Just as we have done a robot portrait of our customers, now we have to do one of our competitors. Remember that you arrive at the market later and that you can win the war if you know ideally the weak points of your enemy.
By studying the offer of a sector, uncovered niches can be detected. For example, we want to set up a rural tourism house, and discover that most of the accommodation is not equipped for the disabled. There is our opportunity.
12. What are they like, and what are their sales strategies?
The analysis of the competition is a task that, the entrepreneur can do perfectly with little time and imagination. Look at the type of customer your competitors have. Become a fictitious buyer to see their customer service strategies, sales, etc. Find out if they have strategic allies, what marketing strategy they use, and what personnel policy they have…
It is an investigation that you can and should do yourself. And its results are significant because they will determine whether we should go ahead. For example, if I realize that the market I am targeting is tiny, either I am very innovative and can steal market share from existing competitors, or I give up because there may not be room for me.
The book Launch Your Own Business Successfully, by Jon Smith, recounts a curious case of how Amazon obtained information from the competition: they made weekly orders and analyzed the numbering of their invoices, which, erroneously, was always sequential. This is how they find out how many sales they make, calculate the approximate value of the business, etc.
13. What are my competitive advantages?
The analysis of the competition that you must carry out has a double objective: to demonstrate that the supposed competitive advantages of your business idea are genuine and to discover some more.
At this point, some readers may have a question: What happens if I don’t have competitive advantages? For example, if I intend to replicate a successful business that works, can I just start my business? Well, the answer is resounding: no!
You can never copy a successful business as is. It is necessary to be creative and contribute new values because by reaching the market later than the other, we will not be able to take away market share by doing precisely the same.
Innovation that’s the magic word. The entrepreneur can start from what he knows, from what he knows, but he has to innovate every day to create something of his own, something with different aspects to what exists in the market.
14. What technical and financial needs do I require?
From this point, it moves from the idea to the company. Many entrepreneurs come to us with fantastic ideas that are technically and financially unfeasible. However, they cling to the project, and we have to help them realize that, for example, it is not possible to make a car that flies at a reasonable cost. It is time to analyze the resources you need to set up your business and know if you can get them.
This attitude is a mistake that pays dearly in the first months of the company’s life. So we recommend you honestly answer the following questions: What technology do I need to produce my product or service?
How many staff do I have to hire to develop the business? What part of the value chain can I outsource? Do I need any license? How much money do I need to start?
15. What will my income and expenses be?
It is time to do the math, or what is the same, translate all of the above into a financial plan with a forecast of the income and expenses necessary for the company to be profitable. But we recommend you be more exhaustive when doing this analysis because the predictions usually bear little resemblance to reality, and we tend to forget expenses and magnify income.
16. Do the numbers show that the business is profitable?
We have seen entrepreneurs tend to cheat on paper when making financial forecasts for their companies. Big mistake.
First, the belief that financing is more quickly obtained by falsifying the numbers is not valid. No bank or investor will be surprised when a company’s financial plan comes out negative the first year. Moreover, they do not pay too much attention to this data if the forecasts for the rest of the years show that the business can be profitable.
Secondly, if the accounts show that it is not viable to set up a candy store on the most commercial street in Madrid, why will we insist on it? Of course, going to the opposite extreme is unnecessary, making such pessimistic numbers that they throw us back at the first change.
It is about making a serious, realistic and coherent plan with the possible circumstances of our business (seasonality, sales peaks due to marketing actions, etc.).
And to get to this medium point, the best technique is to consider several possible scenarios.
As it is tough to estimate the income when you do not have previous years, you have to consider several sales scenarios, one with losses, another that allows you to cover expenses and another that makes the company profitable. This forces you to think, ‘what would happen if…’ and you anticipate the difficulties that may occur.
Also, remember that the financial plan is not set in stone. Instead the complete opposite. When the business starts rolling, some discipline will have to be imposed so expenses do not skyrocket. And, despite everything, the benefits may be much lower than expected. For this reason, the figures will have to be reviewed periodically to adapt them to reality.
If, you have answered affirmatively to all the questions and the numbers add up, the possibility of turning your idea into a company is very close. But there is one thing we don’t know: do you have the resources to mount it?
17. Can I assume the necessary costs to set up a business? Can I get financing?
One of entrepreneurs’ most frequent complaints is the lack of aid to start their businesses. Or worse still, the absence of financing. But who said that being an entrepreneur was easy? The undertaking is almost synonymous with taking risks, and the first person who must put part of his assets at stake to set up the company is its promoter.
It is impossible to finance a project exclusively with foreign capital. Investors value the total commitment of the entrepreneur, and the first thing they ask when they ask for their help is: How much money have you put out of your pocket to develop the project? Have you left your job to dedicate yourself full-time to your idea? Are you willing to mortgage your house to finance the business?
Today there is more financing than good ideas or projects to invest in. If you do not have enough capital to set up your company, you will have to look for it. How? Making a professional, coherent and solid business plan attractive to investors.
Suppose the management team is motivated, has clear ideas, offers a product or service that makes sense and is projected in the market, and shows that its numbers work. In that case, it may be able to raise the necessary capital. In his opinion, knowing how to move to get those funds is the secret. If an entrepreneur isn’t intelligent enough to do it, he’s failing at something because he’s not a commercial or finance director who gets everything given. He is a person who must make decisions and have the necessary skills to finance his company, convincing whoever gets in his way.
In other words, you must be the best seller of your business idea in front of banks, potential investors, strategic partners, key personnel… If you finally get that money, you will have made your dream come true. But before launching, a few last questions about your company’s future.
18. Is it an idea with the capacity to evolve?
Throughout this analysis, we have repeatedly been reminded that companies, like society, must evolve. And we’re going to do it one more time.
We have to be sure that our business can continue to be profitable if the circumstances change and look for all the possibilities to obtain money.
In short, we must ensure that our business idea will not be exhausted as a passing fad. It is essential to have a broad vision when you want to start a company.
If you intend to live from your company, you should not look for the hit but have a business vision in the medium term.
19. Does my idea have viability options in the future?
What will my company be in 10 years? This is what you should keep in mind when analyzing the feasibility of your idea. You must be aware that you will continually have to reinvent your business, just as large companies do.
Changes in the business model are natural and necessary. And on our way, we can find multiple circumstances that force us to carry them out: variations in consumer tastes, the appearance of new suppliers with lower prices,… The advantage for small companies is that they are much more flexible to adapt to changes. . So they take advantage of these circumstances.
20. What are my alternatives if the business does not yield the expected results?
Well, the time has come. You have all the ends tied up, and you must cross your fingers so that things develop as planned. But what do we do if it isn’t? Well, implement plan B that we will devise to conclude this analysis. Let’s get to the worst: your office has become the penthouse at 13 Rue del Percebe, and your debts are piling up.
The first option will be to try to redress the situation. Try to get your suppliers to extend your payment terms (perhaps you can convince them by showing them your list of future orders), request a loan (although this will immediately increase your monthly expenses, it may be the economic injection you need to calm your creditors and recover your position ), try to adjust the fixed costs of your company to the maximum (for example, establishing yourself in a business centre is much cheaper and more efficient than mere office rental).
If things don’t work out, you can try selling your business. A company with losses is not usually the most attractive for investors. Still, there may be aspects of your business that require their attention: for example, your client portfolio, your network of collaborators, your patents or developments, and your assets,…
In any case, try to avoid these unpleasant situations by anticipating difficulties and always keeping working capital in case of lean times.
We know that this capacity for forecasting is not usual when starting businesses when entrepreneurs tend to invest more than they should. But remember that it can be your salvation at the least expected moment. And one last tip: keep in mind that if you finally fail, it will not be the end of the world. Indeed you will have learned so much from your mistakes that your next entrepreneurial adventure will be a success. And, if you decide to return to work for someone else, the experience you will have gained will earn you points with your superiors. Cheer up, and good luck!
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