Quite often we encounter entrepreneurs with ideas about starting a business or expanding their current business. Some of them have an idea of what they want to do but don’t know how to do it. Others are simply clueless and think they know but in reality are a danger to themselves and their potential business. Of course there are also those who are completely lost and don’t even know how to express their ideas. Those that we mentioned are the three basic categories of a multitude of potentials but regardless of who they are we normally ask them two basic questions:
- Where is the money?
- Where are the clients?
Where is the money? This seems like such a simple questions yet somewhat hard to answer. Also, sometimes people try to answer the same literally when in fact it the question relates to a lot of other factors. For example where is the money may refer to:
- Planning. Do you have the idea of what you want organized or do you need assistance with this basic idea? Wise is the person who realizes their limitations and knows when to look for assistance. You do not need to know it all but by all means you need to know where to find the answers if you want to be successful.
- Location. Do you have a location or do you need one. Even if you have one; what changes you need to implement your idea and how much is it going to cost?
- Marketing. Do not underestimate the cost of marketing as this will affect just about every area of your operations. For example, do you need new marketing material such as cards, flyers, signs, web site, social media presence, search engine optimization (SEO), social media presence, etc.
- Operational Expenses. For the purposes of this discussion operational expenses refer to employees and supplies directly associated with your customer and the service or product you wish to offer. In other words, do you have money for payroll and or to buy the products you plan to sell?
- Overhead. Normally we relate to overhead when thinking about issues such as utilities, building and insurance. A way to classify overhead expenses is by looking at those expenses that you will have to pay regardless of whether you see a customer or not.
Overall, when considering money and a new idea do not expect this idea or concept to start paying for itself immediately. So where is the money really refers to the ability to create or the potential of having the necessary funds to pull your idea from concept to execution. Where are the clients? Many ideas have failed because the entrepreneur in question neglected to consider and understand its potential customers. Considering clients is very important because these are the people who will produce the money you need to succeed so; what do we need when considering where are the clients?
- Learning Curve. Learning curve starts with something as easily as; does your potential clientele know about your services or products? Do they appreciate the value of the same? Knowing about the services or products is not enough if they don’t see a need for the same.
- Accessibility. How will they buy what you offer? For some businesses is critical to know the demographics of their immediate area as local customers may not be interested in your business while others may consider it too far to travel for it.
- Pricing. Pricing itself encompasses costs of operations, profit margins and customer perception. In healthcare for example, I have patients that refuse to pay a two dollars co-payment for a medical visit but will pay hundreds of dollars for an aesthetic or cosmetic visit. So your product must be presented and priced properly to justify the price you are asking but also to cover your costs plus profit.
- Timing. We all know about seasons but do you know how the seasons will affect your business? We personally have created several business lines that had to be put on the shelf for many years only because the market wasn’t ready for consumption. We have also learned that preparing the market before releasing a new product or service can have an exponential effect on the success of your business. Hence, what is the best time to reach out to your potential customers and how do you plan to do it are key aspects of a new business launch.
- Competition. Is there another business similar to you? If so; what makes your idea unique and why should customers pick you rather than your competitors. You can also look at this from the standpoint of; what makes you different? It is important to not only understand your competitors but also why is it that clients are picking them out.
Ideally we recommend everyone to develop a business plan when thinking about a new business idea but at the very least always consider; Where is the money? Where are the Clients?