Maybe you are on the threshold of starting something new, but you are not sure if it could be a viable business. Maybe it’s just a thought that pops into your head every once in a while, one that just won’t go away. You are getting that entrepreneurial bug. You are thinking about starting a business.
But don’t go ditching that day job just yet. Here are five things to consider before starting any sort of business.
1. Point of View
This is an aspect of business that people often don’t think of right away. You make a thing or provide a service and you want to start selling it. But articulating a clear point of view is essential to help you differentiate what you are selling from what everyone else is selling. What makes you and your idea unique in the marketplace?
Discovering this might take an outside perspective, so don’t be afraid to ask friends, family, business allies – anyone you know and trust that will give you an honest assessment. Sometimes when we are so close to an idea, it’s hard to know what makes it or us unique.
Understanding your point of view is not a concept that can wait. Being able to articulate your unique selling proposition or what makes you stand out from the crowd – this is the stuff that will make or break a business.
2. Business Model
How are you going to get this product or service to the people who want it? Is it a subscription model? Is it an experience or event? Or will it be hanging on the shelf at Target? How does someone purchase it and what are they getting for their money?
Before your customers fork over their money, you need to know where your money is going. This will help you determine the right pricing. Do you know what it costs you to make this product or deliver this service? Is there a way to scale production? Is each piece custom or one-of-a-kind? How long does it take you to make the product or deliver the service? All of these things go into the pricing equation. It’s important to calculate the full costs of time, materials, and overhead – and make a profit above that cost!
4. Reaching Your Ideal Customers
Competition is real. Is someone already doing this or something similar? Is the potential reach of your idea national, regional, or local? You’ve got to be able to understand your ideal customers, connect with them, and understand their needs at different stages of the buying journey.
The case study that best exemplifies this point is Tesla. Tesla did not go with a dealership model for selling cars, but tried something similar to Apple, where they sold products through company-owned stores and online. This model seems to be breaking down for Tesla now as they try and scale. Auto manufacturing is one of the most cut-throat businesses in the world. The dealership model is the standard sales model for a reason. When you manufacture a product and then own the retail side as well, you hit a choke point as you try to scale – especially if you release a product like a technologically advanced car that requires a lot of service.
5. What’s in a Name?
My favorite part of the process is the name. There are so many aspects of a business that hinge on the name. The website, the logo, a tag line – all of these are impacted by the name.
When you have a baby, it is customary to have a name picked out and ready to go. That name is going to be with that child forever. A name is important.
This business is going to be your baby. The right name is critical to a lot of the infrastructure and decisions you will need to make later on. This is another area where counsel from friends, family, focus groups – formal and informal – can be a big benefit. Interestingly, our marketing firm, McLellan Marketing Group is the one who named our business. They took time to understand who we are and what we are trying to do with our business. The name and the business are now turning into a brand. I am forever grateful for the careful consideration we and they put into our name.
Every business is unique. These five points are just the tip of the iceberg. You will have many big and small decisions to make as you consider and ultimately launch a business. But these five things are crucial to consider in order to build a thriving business.