What comes before starting a new business?
This is not a post related to the magnificent Stephen R. Covey’s “First Things First”, the gold standard book for time management. This is a brief description of what to do just before starting a business, a task many entrepreneurs often forget.
Making money with a new business is not having a nice product or service to sell and start selling it. Most of the times, just having something to sell does not make it a viable business venture. A business is definitely not only a good product to sell, there is much more, and the entrepreneur has to take all the steps before assuming he or she has the business of the year in their hands.
A business project becomes a real business when a complete circle gets closed. that means a product or service to sell exists, a market is ready to buy what you sell and actually a substantial group of buyers are buying your product or service in such quantities you make more money than you spend on it.
The whole idea about writing a business plan has a single purpose, to clarify all the components, steps or stages that go from the starting point to the finish line. Even if most of the assumptions made to write the business plan become outdated or inaccurate, a business plan is extremely useful as a tool that helps us create model out of our heads and therefore pushes us to find strong data that eliminates guessing and incorporates facts.
But writing a business plan is by far not the very first thing to be done. Since writing a business plan requires data the most recommended task is to test the whole business concept first. Start by creating a living small scale model. Buy some units of the product you want to sell, show it to some people, ask for insight, deliver samples in exchange for reviews, try to sell some units among your acquaintances in a cold call, sell under informal situations to test at the extreme how people react to the product. Invest some time and money to fully test the product with some real potential buyers and gather all information you can. For example; How much are people willing to pay? Which are the concerns people show regarding the product? Could you sell the units you planned to sell? Did people find the price reasonable?
Create a full and complete testing environment to evaluate the product. You will have to invest some real money and time there, and that is why it is so valuable the experiment. One of the easiest way to do this is by organizing a sale event, like a garage sale, or rent a flea market space for a day, there are lots of ways to test the real “potential” of the product or service. Its better try to sell it in small scale before even thinking about writing a business plan.
If you create a small scale business experiment, by the time you write the business plan, you will have a full understanding of all details involved, and writing the business plan will not be like writing fiction, but rather gathering strong data from the real world.
As more and more people start or consider starting their own business, it is important that they understand the core steps that are required to launch successful ventures. One of the first things to do is to test the business concept.
First thing first, always.