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Think
of a great idea. If a great idea comes to you, evaluate
if it is realistic. Think of cost, manufacturing time, and
popularity. Ask and record if people would actually buy the
product. If you don't have an idea yet, it is a good start
to think of your target market first. Then brainstorm a list
of things like places they shop, things they like, and things
you like. Narrow the list down to about three items, keeping
cost, manufacturing time, and popularity in mind. Find the
easiest, most realistic product.
Or, think
of a terrible idea. Really, you can't tell if a business
idea is great or terrible until you try it in a real marketplace.
Years later, the successful ideas are "obviously" good, but
when they first began, most people rejected them. Google is
one of the most famous examples—"Search is done. Does the
world need yet another search engine?"—but many less-spectacular
successes have strong arguments against them. There is always
a good reason against a good idea. It doesn't really matter
how good your initial idea is, because you're going to change
it, anyway. "Investors invest in people, not business plans.
Early-stage investors know that great people can make a mediocre
idea work, but mediocre people can't make a great idea work."—Don
Dodge.
Write
a business plan. Include details and descriptions, and
plan everything out realistically. Take your time and evaluate
your product at each section. The sections of a good business
plan include:
Product
description: develop your product. What will it look like?
What materials will you need? Make your product eye-catching.
Market
Analysis: Who is your market? Where do they shop? Where
are they located?
Competition:
Who is your competition? What are their strengths? How
will you beat them?
Marketing:
How will you market your product? What kind of image do
you want to display? Where will you advertise? What is your
tagline? What is your packaging like?
Sales:
Where will you sell? How will you get your customers to
buy? When will you sell? What is your estimated sales forecast?
Manufacturing:
How do you make your product? Explain this in detailed
steps. What materials do you need to make your product? When
and where will you manufacture? What is your COGS (cost of
goods sold)?
Finance:
how much money do you need to start your business? What
is your gross profit?
Or,
don't write a business plan. A business plan is a work
of fiction, anyway. If you don't have much experience in business,
or the market is new and unknown, a business plan might be
a waste of time, or, worse, a path to self-delusion. "In all
my years in startups and all my work with VCs I don't ever
recall seeing a written business plan. The fact is that investors
do not read them."—Don Dodge. Plan just enough to make your
first sale. The main thing is to make at least one customer
happy, and complete the entire cycle of "make product, sell
product" as quickly as possible. Then you will have a business,
and then you might be in a position to understand some problems
of the sort that extensive planning can help solve.
Pitch
your idea to Venture Capitalists to get money to start your
company. If you have a good idea, they will love to invest
their money in your company. Make a PowerPoint presentation
explaining why your product is the best, including each part
of your business plan in the presentation. Tell them how much
your estimated gross profit is and how much percentage of
that they will earn in interest.
Or,
don't look for or accept funding. Striking a deal with
venture capitalists is a long, tiresome, difficult, and dangerous
process. In the early days of a business, it can be a catastrophic
distraction. "Distraction is fatal to start-ups."—Paul Graham.
Many VCs are not set up to make you successful. A wonderful
success for you might be to earn $80,000 a year doing work
you love. Starting small and pleasing a small number of customers
at first is a high-probability way to get there. A VC will
not allow such a success to happen, because a VC's strategy
is to become a billionaire by rolling the dice on many low-probability
but potentially gigantic-returning businesses. The price you
pay for taking on a VC is control: control of your dream.
If you can get the business started without spending a lot
of money, that might be your best route.
Sell.
Sell and distribute your product. If you're getting revenue,
then you're in business. You're testing your theories about
the market, you're finding out what really works and what
doesn't, and you're getting fuel for more ideas and improvements.
If you're not getting revenue, then it's all in your head.
Hang
out with entrepreneurs. By meeting entrepreneurs socially,
you gain contacts and hear about opportunities. More importantly,
you learn how entrepreneurs think. You pick up their attitudes,
their nose for opportunity, their willingness to explore every
idea and its opposite (they know that often both work), their
contrarian nature, the great diversity in their styles.
TIPS:
Make
sure your business plan is perfect before moving on; this
will make your business run a lot more smoothly. Here are
some advantages of a perfect business plan:
Success
is completely assured. Entrepreneurship is no longer a
gamble when the spreadsheet tells you in advance precisely
how much money you will make.
You
can hire someone very cheaply, perhaps even a virtual
assistant in India, to run the business for you, since the
plan spells out exactly what to do.
WARNINGS:
This
is a lot of hard work, so be ready for long manufacturing
hours and craziness.
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