Let your mind wander for a bit. What are you keenly interested in? What are your hobbies? Maybe there is a business opportunity here. Let the following stimulate your thoughts:
• Listen to your friends and business associates. Simply keeping your eyes and ears open is one of the best ways to find a new business idea. Listen to the people you respect. Ask them for their ideas. Is there a service or product they need that they aren’t getting?
• Think about your education and experience. What are you good at doing? Maybe you have a knack for selling to customers. That opens up huge opportunities. You aren’t limited to what you are selling now — think about what else you could apply these skills to.
• Have a look at what others are doing. The Internet is great for this type of research. Don’t forget to look at what is going on in other countries as well. Maybe the answer is a variation of what you are currently doing rather than a major change.
• Keep current on news and trends. Maybe your business can offer a product or service that is not available yet but will be in demand in the future. For example, there is an aging population in North America, and a large number of baby boomers are approaching retirement. What are they going to need?
Research, Research, Research
Once you’ve decided what it is your business will do, it’s time to determine whether anyone will buy or use what you are offering. This may sound obvious, but in many cases of business failure, the owners skipped this step. They invested a lot of effort trying to build a business before they discovered nobody wanted the product or service.
The result is a lot of wasted time, energy, and money. It can often mean the ball and chain of personal debt after the venture fails.
You need to look at potential customers and the competition, and you also need to consider how demand for the product or service will change in the future. This is easier if you are currently working for a company that is in your chosen industry already. Just keep your eyes and ears open. It’s much more challenging if you are entering an industry you have little experience in.
In either case, start by exploring the many free sources of information: industry trade journals, government agencies and departments, your local board of trade or chamber of commerce, newspapers, and magazines. The Internet makes this task much easier than it used to be, but don’t forget to visit the library and ask for help. I am always amazed at how helpful librarians are — it’s surprising what you can find out merely by asking. (Self-Counsel Press has also published a number of helpful books, including the “Start & Run” series, which gives specific information for people thinking of starting a variety of small businesses.)
One thing to consider carefully when determining the potential demand for a product or service is whether you are going to sell to businesses or to individuals.
If you are going to market your services to businesses, start by analyzing the market of your competitors. Are the clients in a solid industry? If your clients are on shaky financial footing, you run the risk that you will not get paid. Research the industry and the companies within it before deciding to service it.
If you are going to sell to individuals, the best way is easy and cheap: let your friends, family, and associates know what it is that you have to offer and sit back and see if anyone asks for it. If they do, you’re onto something. If they don’t, it’s not the end of the world. Do more research by asking why they aren’t interested: it’s free information from people who usually give their unbiased opinions. That type of information is invaluable.
Learning from Hollywood
Because I have the entrepreneurial itch, I’m always on the lookout for it in the people and events around me. It can be truly inspiring when you see it.
I found a great example, literally the night I wrote this section. It came as I was watching a movie — one of my favorite pastimes.
The movie was In Her Shoes, based on the novel by Jennifer Weiner. It’s an engrossing tale of two completely different sisters who eventually learn to appreciate one another. What caught my eye was that both sisters have the entrepreneurial itch. Rose (Toni Collette) is a workaholic lawyer who happens upon a business as a “freelance dog walker.” No real research done at all — she is walking a dog that was left at her house, and people who know the dog’s owner ask her how much she charges. She sets up a deal with a kennel to refer clients to her in exchange for half of the fees. It helps her create a life she actually enjoys after she quits her stressful job.
Maggie (Cameron Diaz … wow!) is a scatterbrained party girl who visits her grandmother Ella (Shirley MacLaine) in Florida on a whim. She ends up helping one of Ella’s friends buy a new outfit for a special occasion. Another woman asks Maggie if she would do the same for her and offers to pay for her help.
“Do you think there’s other women down here who would?” Maggie asks Ella. “Are you kidding? Scads,” is Ella’s response. Maggie says she’s thinking of “doing it like a business.” Ella’s response? “Well, that’s an excellent idea.” Maggie admits she isn’t good with numbers, to which Ella replies, “Well, I’m good with numbers. I could help. If you like.” “Yeah, sure, that’d be good,” Maggie says, and a business is born. Within days, the lineups start — Maggie is busy full time and finally has a direction to her life and money in the bank. I love movies with happy endings like this!
While you’re researching the business you want to start, you should also keep the following questions in mind:
• Do you enjoy doing the work? It is a lot easier and more satisfying if you choose something you enjoy doing. Don’t make your decision purely for financial reasons or you may find yourself giving up before long.
• Will you be getting repeat business? If your services are needed only once or infrequently, you will constantly need to bring in new clients to maintain your current profitability. That means you’ll spend a lot of time and effort marketing your business. It is much easier to run a business where your clients will need your services over and over again.
• Is there a franchise available? If you are interested in getting into a business you know little about, you may wish to consider purchasing a franchise. These businesses already have a proven record, so your chance of success increases dramatically. I’ll explore franchises in detail in Chapter 12.
• Could you volunteer at another company to gain experience? My first employee became my first employee because he called and offered to work for free. This posed little risk for me, as all I had to invest was the time it took to train him. He was good at his job, so after only a few weeks I started paying him for his work. This may be something for you to consider if you don’t have much experience in your new business.
The Business Plan
Once you have decided what product or service you are going to offer, it’s important to continue the planning process. Put your thoughts down on paper in the form of a business plan. This does not have to be a 100-page document. It could be an informal summary of your intentions for the business that fills less than a dozen pages.
A business plan is also not set in stone. Most of the people I know who created a formal business plan did not stick to it. Many did not even bother to update it after they got the business up and running. The point is that it’s the best place to start. The more time and effort you spend documenting what it is that you are trying to accomplish, the greater your chances of success. You may even find, during this process, that you come up with a better idea than the original product or service you had decided on. Or you might see additional opportunities arising from your original idea.
Besides describing how you intend to market your product or service, the business plan should include the following information:
•