Is it time to pack in the 9-5 and start being your own boss? Entrepreneurship is thriving and it’s a great time to launch a business. If you are ready to take the plunge, there are a few things you need to consider before branching out on your own. You could have a brilliant idea but if you don’t have the skills to implement it then it’s a non-starter. Equally, you could have a brilliant skillset but if the market isn’t there then you’re not going to make money from it. You need to be strategic when starting your own business. Ask yourself three questions: 1) What do customers want? 2) What do investors want? 3) What can I realistically deliver?
Spend a few months going for walks or drinks down the pub and allow your mind to wonder free exploring different markets, products and customers. For a little structure, use this checklist and save yourself time by obeying the do’s and don’ts.
- Large market and growing market:
Think about a large market which is still growing and if it is recession-proof, even better! For example, the value of the global virtual reality hardware market could be as high as $62 billion by 2025. Conversely, creating an enterprise for female snake owners aged 21-30, will not allow you to scale (excuse the pun). A small market will not attract investors or generate sustainable profits. However, do not try to be everything to everyone. A lack of focus is unattainable. It makes it difficult to market your product and your customers won’t understand the value you deliver specifically to them. So, target a large and growing market and then be specific within that market about what you offer.
- Solve a Problem – be the morphine not the aspirin:
If you have a headache you could survive without the aspirin, if your leg was cut off you might not survive without the morphine. So, try to create the equivalent of the morphine. Understand what frustrates people, what are their challenges in life or work? What do they want solved?
- USP or Disruptive Technology:
Investors love tech! Why? Because tech allows you to scale. Now not every entrepreneur needs to be in tech – what a boring world that would be! But if your goal is to become a unicorn ($1bn company) then you will need tech to scale. If you can protect your tech then even better! This means patents or airtight copyright. But patents are hard to obtain so do not let this be a deal breaker for you. Think how you can do something better, faster, cheaper or more fun!
- Profitable Market:
You could have the best idea but if customers can get it for free elsewhere or it’s not enticing enough to spend big bucks on it then you won’t make a profit. There’s a saying, “there may be a gap in the market, but is there a market in the gap?” Create a financial model to understand your costs and how much you can charge for your product or service, test the price you set (not with your mum or spouse! With real potential customers) and determine whether it can be a multi-million-pound business. Personally, I don’t believe you have to be revenue generating immediately (unlike some Investors want) sometimes revenue focus can squish growth, but equally think about how you could make money from it fast enough to please investors.
Some do’s and don’t to help guide your business idea evolution:
- Think big: Big markets, big profits, big ambition.
- Be free: Don’t limit yourself to realism – making it happen comes later and you’ll pivot 10 times before the final version anyhow!
- Problem solve: Go talk to people – friends, corporations, bartenders, retail assistants – anyone who will give you the time. What problem do they have and how could you solve it?
- Become obsessed with an idea for the sake of it. You may go through 10 ideas before you settle on the one with potential. Leave your ego at the door.
- Go any further forward with the idea until you’ve spoken to over 100 potential customers.
- Worry about sharing your idea. First, people are more obsessed with their own ideas than yours. If someone likes it they will either want to join you or buy you, they don’t want to go to the trouble of building it themselves. Second, you need to share it to get team members, customer feedback and investment. Third, and no offence intended, but your idea will not be that original. There will be a form of it somewhere. Secrecy is not the key to success.
Bear in mind, these tips are designed around budding entrepreneurs who will need to seek investment and want a multi-million-pound enterprise. Some of you will simply want to cover your bills and pay for that holiday in St Bart’s. If that’s you then you don’t need to be investor focused and you can cater to smaller markets. Think through why you’re doing this and where you want to go. If you’re doing it for flexibility, freedom and work-life balance, then a life-style business, consultancy or e-commerce can satisfy your goals. If you’re doing it because you believe you can create something better than what exists and want to take on big corporates, then you need to have an investor mindset and a customer focused strategy.
If you have started your company and are looking for growth funding, then please contact the Kent Investors Network at www.kentinvestorsnetwork.co.uk.