Business Rx: Four steps to take before starting a business
Each week in Business Rx, we typically feature entrepreneurs growing their businesses. But what if you just have an inkling of an idea … or the dream of working for yourself? You have to start somewhere, and knowing where to begin can be daunting.
The Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business focuses on this early-stage innovation process from the back of the napkin to the first million dollars. Beginning today, 40 University of Maryland students hope off on the right foot during Dingman’s “Jumpstart” program. Successful Washington-region entrepreneurs, investors, lawyers and business leaders plan to give participants a realistic look at the startup environment and walk them through critical first steps to building a new venture, including how to brainstorm ideas, build a strong team, test the waters and roll out a marketing plan.
Even if you’re not participating in an intensive weeklong startup program, you can still develop your business ideas with a few initial steps that will help you get things off the ground:
Phase 1: Ideation
The ideation process is the first step in any entrepreneurial venture. Start out by broadly by observing trends, assessing a problem and segment all the way down until you determine a niche. Look for abnormalities in current processes, notice changes in trends. How do you do this?
·Keep up with the news so you know the trends and what people are worried about.
·What problem do people need to be solved? Are lots of people looking at/concerned with the same thing?
·Go to the mall and notice where the lines are.
·Where there is a problem, there is an opportunity. Identify the smaller cluster opportunities around big trends and figure out what impact you can have by addressing the problem.
·Figure out if your problem requires a must-have or a nice-to-have solution (are you replacing a flat tire or selling high-end rims?)
As they say in entrepreneurship, ideas are a dime a dozen — it’s the execution that matters. So you need to figure out the best way to put your idea into action to really differentiate your business. This is especially critical for saturated markets, such as restaurants, hair salons, etc. Find your niche.
Phase 2: Assessment
Not all ideas make it to the market; in fact, most do not. Exploiting significant trends to build a feasible business model requires careful analysis of several factors like market size, impact areas, window of opportunity, growth rates, etc. Figure out what you can bring to the table — resources, knowledge and skills, and great network. How big is the problem? Is it big enough to support a compelling business?
Phase 3: Implementation
This is where you see what sticks. Test your business ideas in the most inexpensive way possible.
·Design an inexpensive rollout in several phases. Plan your rollout strategy with minimal technology and capital requirements. If your business idea is for a new Web platform, recruit a student or a software developer in India to do a quick mock-up. If you’re making a new product, design a prototype that has the function you want to offer, but may not have the fancy package you ultimately envision. Test functionality with your friends, relatives and peers. Don’t wait until your product is 100 percent perfect; build 80 percent and let your customers tell you what the other 20 percent should look like.
·If you’re going to fail, fail early. Should you find that the problem you are trying to solve isn’t very acute, or that your solution isn’t what customers want, or maybe your price is too high, you can always go back to the drawing table and redesign the process.
·Don’t invest too much. Rethinking your strategy is always easiest when you don’t have much invested in the existing process. It’s a lot cheaper to do this early on — before you’ve invested too much money and time on a full rollout of your business.
Phase 4: Iteration
A successful venture never stops developing. The business model has to be continually reviewed, improved and scaled to keep ahead of the competition and adapt to the ever-changing marketplace. Continue to pay attention to trends. Take heed from the Blockbuster vs. Netflix example — Blockbuster failed to innovate away from the video rental store model and paid for it, while Netflix saw a trend in online digital rentals of movies and is continuously adapting. The lesson: Companies that adapt survive. This is critical for all businesses — not just startups.
Looking for some advice on a new business, or need held fixing an existing one? Capital Business and the experts at the University of Maryland’s Robert H. Smith School of Business and its Dingman Center for Entrepreneurship are ready to assist. Contact us at firstname.lastname@example.org.