What are the next steps when you have a great business idea?
You’ve had one of those lightbulb moments and are excited about a new business idea. How do you validate the idea as a viable profitable business? How do you get it going?
Is Someone Else Doing It Already?
The first thing to do is to Google it, and see who else is doing this already. In reality, few business ideas are truly unique. That can be okay. The difference is those entrepreneurs who actually take action on those ideas. However, you also need to make sure you can be at least 10x, if not 100x better.
So, if there is competition, how will you be better? Will you be faster, better quality, cheaper or just deliver far superior service
Why Isn’t Anyone Else Doing It Right Now?
If not one else is doing something similar, why not? Is it really that bold and unique of an idea no one else has thought of it? Or has it been so hard then everyone else who tried failed?
It’s important to know this. Then also understand how you can succeed where everyone else has failed.
What Are You Willing To Sacrifice To Make It Happen?
It’s great to be excited about your nice business idea. To become an entrepreneur you have to be incredibly optimistic to make the leap. Yet, make no mistake, it is going to take real work. There are going to be challenges and tough days.
In fact, the truth is that you will be facing new challenges every day. Most days will be tough. Your job as an entrepreneur is to take on these daily challenges and fight through for the good days. Those days can be worth it all, but you are going to have to work for and sacrifice for them.
Your business idea has to be so compelling you are willing to commit and give up some things. Know your line in the sand at the beginning. Will you commit a year of your life?
Will you be willing to sacrifice your time and work 100 hours a week on this to make it a successful business? Will you be willing to move to the other side of the country to make this happen? Will you bet all of your savings and credit on making it work?
How Big Is The Potential?
When you are thinking about the next steps when you have a great business idea ask yourself if this is this a part-time hobby sized business. Does it have the potential to be a small local business? Or does it have the wings to become a big fast-growth startup worth billions?
How big is the total industry? How big is your potential share of that? Below is a good example of finding a big market and how this should be increasing over time to be appealing to investors.
What’s the smallest you can start with? The easiest, most bite-sized MVP you can launch with? Then how big is the largest vision you can imagine for this venture?
Start with how big this industry is as a whole. Is $100M being spent on this each year? Or is it $400B? Maybe a few trillion? This shows you how big the total potential is. If customers only spend $100M a year on this type of product, this is probably never going to be a multi-billion dollar business.
Don’t forget to look ahead too. How big is this space likely to be in 5 or 10 years from now? What about 20 years? Is it headed for a cliff and in a declining phase? If so, you may want to rethink it. It will be hard to raise money. It’s going to be hard to find an exit if there is little room for growth when you may be ready to sell.
The opposite can also be true. What may be a relatively small space today, could be ripe to scale around the globe. In a few years, a 10% market share might mean one billion users.
New markets are being unlocked by other technology all the time. Or maybe your business isn’t even restricted to just this planet. Some types of tech businesses and the cannabis industry have really created whole new markets over the past few years. You could do that too.
However, it is also important to be realistic with yourself and your investors on what your share of this space could be. How many customers are in this market that you can really address? For example, real estate is a huge industry.
Most people want some type of shelter. Yet, only a tiny portion of them are going to buy homes costing $1M or more. Even fewer will do that in a given year, and in a certain state, like NY. In this example, you’ve filtered from maybe trillions of dollars and billions of customers to a few billion in annual revenue, and a few thousand potential customers.
Next, understand that you are unlikely to capture 100% market share. If you did, regulators would probably break up your monopoly anyway. Even if you could, most investors aren’t going to believe it, or bet their money and reputation on it.
The good news is that you can still be the dominant force with just a 51% market share. In some industries, you may only need a 1% market share to create a billion-dollar company. Know what’s possible, and convey it to others in a believable way.
Also respect that unless you’ve already raised billions in capital, it is going to take a while to hit those really big numbers. Even if your product or service is a wild hit, you’ve got to build out the team and infrastructure to be able to deliver and service them well.
So, never take your eyes off that big prize, but focus on the smallest segment you can begin dominating and the long hanging fruit in that niche.
How Much Money Will You Need?
How much money is it going to take to get this business started and get it to stand on its own two feet?
Many of today’s greatest corporations were started with just $1,000. Others have raised millions of dollars before they even started. Know how much you’ll need to get through to being profitable.
While money should never be an excuse not to get started on your vision, of all the hyper-successful startup founders I’ve interviewed on the Dealmakers Podcast, many recommend raising more than you think you need as early as possible. Capital raising is one of the biggest next steps when you have a great business idea.
Everything will cost more than you think and take longer to do than you think. You don’t want to run out of cash right before you make it.
There is also no telling what the markets are going to be like in a week, month or year from now. If it is easy to raise or borrow cheap money, or at least lineup credit lines now, do it. Then you’ll be comfortable and strong while others are struggling. That’s when you can swoop in and really gain traction.
Once you have an idea of this dollar figure, where will you get it from? Do you have it in extra cash on hand? Can your friends and family pitch in? Can you get a loan to get you going? Or will you need to tap outside investors?
If you need more capital there is crowdfunding, angel investors, startup accelerator programs, venture capital firms, and other funds. the slide below recaps this.
Consider a fundraising training course or connecting with a fundraising coach in order to understand the pros and cons of these different sources and how they work.
Whose Help Will You Need?
In terms of the next steps when you have a great business idea, remember that starting and running a business is a team game.
You have owners, coaches, managers, and those on the front lines. You simply can’t do it alone. You need help. The better help you can get, the better your chances of surviving and thriving. Make a list, starting hiring.
It’s just common sense that without the best team members in every role, you simply cannot have the best company and expect to beat out the competition and survive them.
The earlier you can invest in this all-star team the fewer mistakes you’ll make, faster you’ll grow, and the more another great talent that will be drawn to work with you, invest in you and buy from you.
While this might make you want to hire fast and be reluctant to fire poor choices. The most experienced will tell you to take the opposite approach.
Be more conscious of who you hire in the first place. Be fast to fire them if it isn’t working out. Otherwise, they can take your whole operation down with them.
As the CEO and founder of your own company, expect to spend as much as 30% of your time recruiting and interviewing help.
One of the most important things that you can do to make the best hires and keep them all moving in the right direction is to invest the time in writing down your company values and the most important elements of the culture you want to build.
One of your first hires may also be another executive, general manager or HR person who can shoulder most of the burden of finding, screening and onboarding your growing team. Don’t overlook marketing and sales help either. If you only hire great engineers and makers, you might not get anywhere. The ability to sell it can be far more important than what you make and can deliver.
Talk To Customers
One of the most important next steps when you have a great business idea is to get out and talk to your potential customers.
Validate that they have this problem and want this solution. Whenever possible, show them a prototype and ask for a financial commitment. All the thumbs up and even free users can be worth nothing unless customers are willing to pay real money for what you are selling.
Some of the ways to do this include:
- Knocking on doors
- Emailing and cold calls
- Focus groups
- Popup shops
- Live Q&A sessions on social media
Claim The Name
Act fast to reserve your business name, website domain name and matching social media handles.
You need to do this all simultaneously. Otherwise, it can be extremely painful and costly to find you can’t get these matching assets later. Or worse, they end up helping your competition.
When it comes to incorporating, taxes and privacy can be significant factors. If you are just planning a small local business, then you might get away with the DIY approach to incorporating your own company online with your Department of State.
If you hope to build a serious business, hyper-growth startup or to raise VC money, then you’ll want professional legal and financial guidance for structuring your shares and voting rights to attract investors and protect your founders and the mission as you go.
Part of the next steps when you have a great business idea is to get your business bank account open so that you can actually start accepting incoming money. Either from sales or fundraising efforts.
Some of the most desirable banks and financial institutions for helping to handle your money and business credit include:
- Capital One
Create A Pitch Deck
Invest the time to create a fantastic pitch deck. One that will act as an internal guide as to what you are working on and where you are focused on going and need to do next.
Then you can use this powerful document to recruit partners, the most talented employees, and best fitting investors.
Remember that storytelling plays a key role in fundraising and this will be big milestone in terms of the next steps when you have a great business idea. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
Below you will be able to find the most important slides broken down by the percentage of time that investors allocate to them based out on data. Make sure that you are nailing the most important slides.
Remember when thinking about the next steps when you have a great business idea that nothing really matters until you start selling and making money.
Yes, there are a few notable companies that seem to have gotten away without this important piece of the puzzle for a while. Some have been unprofitable for years. Remember these are the exceptions. Get out there, take action, sell, bring in cash and make real profits.
Things will always be changing when you decide to execute on the next steps when you have a great business idea. Lock onto the end game and big vision, but be willing to adapt on how to get there.
Grow Yourself As A Leader
Your role and the skills you need will change every 3-6 months. You won’t be doing your hobby work anymore.
You might find super interesting the video below where I cover in detail the next steps when you have a great business idea