The Idea Is Only The First Step
Tuesday, April 12, 2016
by Kelly Weaver, Small Business Development Center Regional Director
Having a great business idea is the springboard for getting your business off the ground, but it is only a tiny fraction of what makes a business start up work. To quote Thomas Edison, “Genius is one percent inspiration, ninety-nine percent perspiration.” The same could be said of a successful business. Many would-be entrepreneurs underestimate the work is takes to launch, create and maintain a successful business.
Sometimes, people have a great idea and think that alone will get them the support and financing they need to start the business. If they can just sit down in front of a lender and tell them about this great business, surely the lender would see the promise and be ready to make the loan. When mention is made of management, marketing, and financial projections, these people can be frustrated about the all the “paperwork” they are being required to complete.
It is also said that you must be passionate about your business to be successful. It is true that enjoying what you do is very important and will keep you going through the tough times that inevitably come. However, passion alone with not make the business successful. You need to be able to manage the business which sometimes means spending more time on things you don’t particularly enjoy and less time doing the work you love. You also need to confirm there is a sufficient customer base for your business (beyond you, your family and friends).
What it boils down to is basic business planning. Whether you have the capital or are seeking financing for your business, a business plan is one of the best investments you can make in your business. It will make you think about each function of your business from production, marketing, sales, staffing, financing, etc. It will make you quantify your startup expenses and your ongoing revenues and expenses in some detail. You will identify your target market and also look at the competition that your new venture will face.
The plan also becomes your selling tool in working with the lenders. The mere fact that you have put some effort into business planning will gain you credibility with most lenders. Having thought through your business in advance, you will be much more knowledgeable once you begin the business. Hopefully, this planning will help you avoid some costly mistakes up front. As your business gets off the ground, the plan now becomes a benchmark and helps you see how the business is performing against your projections and if some adjustments need to be made.
And what if the business plan reveals that your great idea isn’t so great after all or that, as passionate as you are, only a few potential customers exist for your product or service? Well, that plan can also provide a significant return. You will have protected the cash and time you would have invested in the business along with your good credit rating and your sanity by not getting involved in a venture that may have been doomed from the start.
Kelly Weaver is the Regional Director of the Small Business Development Center in Aberdeen which offers free, confidential business consulting to start up and existing businesses. She can be reached at (605) 626-2565 or firstname.lastname@example.org. The Center is hosted by GROW South Dakota.
Category: GROW SD