One thing I have learned about myself as an entrepreneur for over 20 years is that I often get excited about a new idea and when I was younger I would rush off and start working on the idea right away – now that I have the benefit of experience I know that can be a huge waste of time and money without the due diligence before committing.
Now I look at a number of ideas and ensure that I spend the time working through all the ramifications to me, my life and my pocket before I commit to large amounts of effort and funds.
That’s my advice to you – do your homework first before you write a full business plan and start fund raising.
Homework to me means a lot of research, some test marketing and perhaps a simple prototype of the idea to get feedback from the ‘market’.
It’s very hard to write a convincing business plan without real experience of your product or service in the market, that means research about your competition (yes you do have some, in one form or another) and what potential customers will think of the idea.
The deeper and wider the research the better – it’s no good showing a few friends and when they say they like it then rushing into production – you need statistically significant results that you can convince others (investors, partners, family, yourself) that the idea has a real opportunity to create a successful and profitable business.
The research also needs to have enough detail to help you define the basic building blocks of a business plan i.e. the price of the product/service vs. volume and profit. What form will the market except the product, is this a new way of selling the product that makes it more attractive? Are there niches in the market you can dominate? Are there things potential customers don’t like about your competition you can take advantage of? The questions go on and you need as much data as you can get.
Often I found from working with MBA Students at the London Business School they don’t spend enough time or effort in this early phase (nor did I when first started!) as either they were just itching to get moving or they thought they had enough data to be going on…it’s often hard work getting all this info. early in a venture and it’s tempting to skimp on it. My advice is to force yourself to be objective and get the maximum amount of data no matter how long it takes.
Nowadays I am much luckier and so are you – John Mullins and the London Business School have formalised this process in a book and course they teach to LBS MBA students.
In his book “The New Business Road Test” John Mullins sets out how to overcome my previous weakness in detail, I suggest you grab a copy and it will give a great platform on which to decide if you actually want to proceed with your idea.
Visit the website here: http://www.pearson-books.com/roadtest
Another very important part of this process is to fully understand yourself and what you really want out of life and your business. Once again, I would jump into a business without thinking through how this would affect my life, what it would be like working 15 hours a day, what would life be like two years into the business, how i would finance and staff the idea…all these things often made me regret my rushed decision later on in the venture process when it was too late to change…
I deal with this in another blog in more detail.