Ever had a moment where you heard about someone who had an idea and made a bunch of money off of it, and you said to yourself, “why didn’t I think of that?”
We all have good ideas from time to time. The problem is, very rarely do we act on those ideas. Finding success as an entrepreneur can be broken down, actually quite simply, into three steps:
- Identify a need which enough people in this world have
- Provide a tangible solution
- Build a successful business model around this solution
Sounds easy, doesn’t it? Far from it. Let’s look at each of these steps and discuss some of the challenges you might face in your entrepreneurial journey.
Identify the need
What does it take to identify the need? One way is to start recognizing inconveniences. If something is inconveniencing you, chances are, others are also being inconvenienced by it. Ask yourself, why is this happening to me? Are there factors within my control which could fix this? If not, why not? What would it take for me to remedy this situation?
Julie and Brian Whitman appeared on ABC’s Sharktank in 2014. One day they realized that taking photos on your smartphone is great, until you want to have it printed. Having a digital image printed can be really inconvenient, so they decided to build an app. The app allows one to simply scroll through their camera roll on their phone and select their favorite photos. Once a month, automatically, subscribers are sent a photobook with up to 100 of their favorite photos in detachable 4×6 prints. The business was so successful, it sold to Shutterfly in November of 2014 for $14.5 million! The Whitmans experienced an inconvenience, they believed others had the same problem, and they came up with a solution on how to solve it.
It sounds so simple, but truthfully, some of the most successful entrepreneurs simply put some brain power behind why they are inconvenienced and how they can change it.
The balance you need to strike is identifying a need that is not too common, and not too rare. The more common the need is, the higher the likelihood that someone has tried to solve this issue in the past and failed. That is not to say that you can’t solve it, but the barrier might be too high. If the need is too rare, the solution might be simple to find, but it may not be a business opportunity since your potential target market might be too small.
Provide a solution and make it a reality
Successful entrepreneurs bridge the gap between the solution in one’s head versus a solution one can see and feel.
If you have an idea for a phone app, you likely don’t have to the ability to develop this, but perhaps you know a developer who can. Or you contract it out to a tech company. Building a physical product? Reach out to contractors who will hear your idea and create a prototype which you can use to pitch to investors.
Think about how much capital you’ll need to get this off the ground and whether or not you’ll need to raise capital or if you already have it. If you need to raise it, how you will raise do it? Will you go the pre-seed route? Will you borrow from a friend or family member? Will you try a site like KickStarter? Technology has made good startup ideas entirely possible through social media exposure and online investors.
This is where it could really be beneficial to talk to a CPA to get some advice. Proper planning is so important in the early stages of raising venture capital.
Be sure to have clear goals, project start and end dates. Consider how you will reward your investors and supporters, and how you will tell the product’s story in a way that will inspire people to back it. Think about how you will get the word out. Social media, word of mouth, or paid advertising can be great ways to get exposure.
Building a business around your idea
Perhaps the most difficult part of the process is, how to make your solution to the problem you’ve identified into a profitable business. It takes diligence, skill, certain personality traits, as well as countless hours of dedication and hard work.
During this stage it might be best to consult with an attorney regarding patents, licenses, permits, etc. You’ll want to perform a market analysis to determine who your competition is. You’ll want to determine which business structure best suits you.
Focus on your leadership and decision making capabilities. Focus on business planning. Put a 1, 3, and 5-year plan into place. Create a simple spreadsheet and make 3 columns of expected future revenues and expenses over the next 3 years. The 3 columns will be for your “expected”, your “hope-for”, and “best case” scenario. Find your breakeven point and be sure to put steps in place to track your progress and be sure you are on pace.
Consult with an accountant to ensure you have looked at all tax considerations as well as a book keeping process.
If you have no prior business experience, consider taking a business class at a local university — develop your business skill set. Having an attention to detail or being an extrovert can certainly help entrepreneurs. But if you don’t have that, consider who you’d hire with those strengths.
Successful entrepreneurs are the ones who do all three of these things well. Each one of these steps are difficult. This is why successful entrepreneurs are often some of the most well-off individuals in society, they were able to do something no one else could do.
Good luck in your business idea!
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