When I co-founded my first business, we were all in love with the idea. We luved it! Unfortunately – we were the only ones that did. We would show everyone and anyone how ‘pretty’ our ‘new baby’ was and everyone just wanted to understand how we were going to make money. We had no clue…..well maybe a small clue but we had not done our homework before entering the market.
If you have a great business idea – you must first be passionate about it. That is one thing we had going for us. The other key is you must love what you are going to be doing all day, every day in the business. And that we did. It was really one of the only reasons we made it out the other side of our drunk in love with our first product(s). When we got to product number 3 – we did all the steps suggested below to ensure not only did we luv it, but that the market did too.
Here are 11 steps to consider before bringing your business idea to market:
- MAKE SURE YOU LOVE IT – as mentioned above, you must be in love with your product/service offering. You must be ready and understand starting your own business is a 7 day a week endeavour. You must be ready for long, long days. Day after day. If you love what you do you will not notice. This will not even feel like work.
- KNOW YOUR CORE PURPOSE – be honest and clear why you are going to start the company. Is it to make money? Is it a lifestyle business? Is it to change the world in some way? There is no right or wrong answer here but you must answer this question and be clear with others on your team as to the purpose of the company. Why does the company exist?
- KNOW YOUR CORE VALUES – My core values are Happy, Hungry and Humble. Happy to come to work, happy to leave. Hungry enough to make a difference every day. And humble enough to want to learn every day. We hired people on my team with these exact core values and the team couldn’t fail as we were all there for the same reasons. What are your core values? How are you going to make sure the people on your team have the same values as you? If you do not know your core values or how to find them go to www.jimcollins.com
- KNOW YOUR BHAG – Jim Collin’s Big Hairy Audacious GoalTM – where are you going to be in 10-30 years? What is your Big Hairy Audacious Goal? Most people ask why do we need to do this? We need to know where the company is heading. We do not need to know exactly how to get to there but we need to know that we are going in that direction. This will help you and your team make great short term decisions for the long term. What is your 10-30 year goal for your business?
- KNOW YOUR 3HAG – what is your 3 year goal for the business? Where do you want to be in 3 years? This goal in time is close enough that you can reach out and touch it. Three years is not a long time. What you write down for this goal, you will need to figure out exactly how to reach that goal. Write down your 3 year goal.
- KNOW YOUR 1HAG – where do you want to be in 1 year? 12 months from now? Write down the 3-5 key priorities that must be accomplished in order to achieve the 12 month goal. Be specific – What, who owns it and when does it need to be completed.
- MAP THE ARENA – take a blank piece of paper or whiteboard – draw a box in the middle that represents your company. On the left draw all the parties that will be involved in getting the offering to market – to your customers. On the right – draw all the parties involved in supplying what is needed to create the offering. This will give you a great view of the arena you are playing in. It will drive a key discussion you need to have now. You will see how you should position and sell the product. Who you should partner with and who you should stay away from. Draw the Map. If you are having trouble getting started go to http://www.shannonsusko.com/chapter-2/
- KNOW HOW YOU ARE DIFFERENT FROM YOUR COMPETITION – everyone says know your competition. Obvious. You don’t want to compete head to head with your competition. Map the competition in your Arena Map and show where they are playing relative to where you want to play. The key here is to understand where they are playing and differentiate your position so you are not competing head to head. By mapping it - the picture will become clear.
- FOLLOW THE DOLLAR– this is critical. You must understand how you will make money. I know this is again obvious but you can get so drunk in love with your business idea that you forget to be very very clear on how you will make money. Quick and dirty way to start this is to follow the dollar being collected on the Arena Map and then follow the dollar being spent. On the left of the Arena Map you will be collecting dollars for what you sold and on the right you will be spending money on the supply chain. There should be money left over. Obvious – I know – but I must stress – take the time to follow the dollar.
- FILL OUT THE ONE PAGE STRATEGIC PLAN (OPSP) – Verne Harnish has a great tool on his website www.scalingup.com – download it. Fill it in to get started. This will bring clarity to you (and your team.)
- BUILD A 36 MONTH FORECAST – Most executive teams I work with when I asked or suggest they build a 36 month forecast think I am crazy!! That would be hard is their response. And yes it is hard to create a 36 month forecast. But it was not hard to come up with a 3HAG or a 3 year goal. As I noted above – you must know how you will get to your 3 year goal. Create a 36 month over month forecast starting with what cash you want to end up with at the end of each of the 36 months. Then, forecast profit, forecast revenue and then expenses. This is hard. You must make assumptions. This is the key – make assumptions and keep track of these. The assumption discussion is the key to the forecast. We always made an assumption that we could easily change or update. This 36 month forecast will allow you to see if everything you mapped out in steps 1 through 10 will allow you to achieve your goals. If it does not – go back to step 4 and work through it again until you get enough comfort and confidence to move on.
ConclusionThere are so many great ideas out there that do not come to market or even close. My second company almost became one of those statistics. In my first company we were so drunk in love with the idea of building a company and the product offering, that we didn’t do any of the above when we started it. We just plunged right in and burned a lot of cash and wasted a lot of time. We learned the above in year 3 of my first company.
My second company – we did do the full analysis suggested above in the beginning, followed by a more in-depth analysis and we gained confidence in our direction. We were so careful about our analysis – almost too careful. We did not have the ‘Rookie Smarts’ as we did the first time around but we still had the scars of the first company to continually remind us that doing our research would help us in knowing that our business idea would be profitable and flow cash!
Good luck with your analysis – don’t let a good business idea die because you haven’t done your homework!!