How to Develop Your Business Idea
Those who start businesses may have multiple reasons for doing so. However, there seems to be a pattern of similarities among those eager to own and grow a business.
Some of the typical characteristics of an entrepreneur follow. Entrepreneurs tend to be risk takers, they are intelligent, independent, enjoy a challenge, want to grab an opportunity, wish to be in control of their destiny, and sometimes desire larger earnings potential than they may find in a traditional job.
The document that follows, Preliminary Enterprise Idea Development, is a resource that will guide you through some of the questions that must be answered in order to begin the process of starting a business.
Preliminary Enterprise Idea Development
A Checklist for Feasibility Analysis
Briefly describe your product or service idea.
What problem will your idea solve? (For example, will it save time, prevent injury, increase productivity, etc.?)
What generic need (food, clothing, shelter, health care, etc.) does it fulfill?
What are the demographics of your target market? (For example, gender, age, income levels, etc.)
Where is your target market(s)? (Is it local, statewide, national, international, etc.?)
How will you distribute and sell your product or service? (Retail store, internet, mail order, etc.)
How will you inform your market(s) about your product? (Advertising, press release, word of mouth, etc.)
What technology is required for market entry?
What resources will you need? (For example, capital, equipment, land, labor, expertise, etc.)
How are you qualified to develop your idea? (What is your level of education, relevant work experience, copyrights owned, patents held, etc.?)
Are there any barriers to entry that will keep potential competitors from entering your markets? (For example; patents, copyrights, expertise, capital investment, license agreement, etc.)
What legal requirements must be met to proceed? (For example, licenses, permits, certifications, etc.)
What sources of financing do you plan to use? (Banks, family loans, personal savings, sale of stock, Small Business Administration, small business investment companies, venture capitalists, leasing arrangements, trade credit, etc.)
What will make your business different from your competitor's?
What are your competitive advantages? (Unique business contacts, desirable site location, expertise, etc.)
Why do you think that your idea will succeed?
Entrepreneurship is a factor of production as is land, labor, and capital. The ability to tie together all of the components of a business into an effective production system is known as entrepreneurship. An entrepreneurial business may be defined as one that is innovative and capitalizes on the most recent technologies to propel the enterprise into exponential growth. This is somewhat different from a person who simply wishes to start a business to sustain a certain lifestyle. However, certainly a person who chooses to start a business has an entrepreneurial spirit regardless of goals.
Be sure to earnestly research and completely answer each of the questions in the Preliminary Enterprise Idea Development checklist. Of course, there is much more to do to measure operations and financial viability of the proposed business. One such measurement is the cost volume profit analysis.
Remember, if the plan does not work on paper it will not work in practice. Always be conservative with estimates of revenues and costs!
Richard J. Van Ness, Ph.D.