No matter how good the idea or how big the dream, passion and detailed planning are critical components of starting a new business. That was the message from Michael Wilson, who recently presented one in a series of Small Business Administration workshops dedicated to guiding aspiring entrepreneurs through a process of turning an idea into a viable enterprise.
Wilson is chief operating officer of CM Institute of Leadership, a company the specializes in leadership development and corporate training. On this day, he volunteered his time to work with a small group of people with dreams of owning their own business.
“I am passionate about helping small businesses get started and grow,” Wilson said. “When you work for somebody else, the harder you work you get the same salary. When you run your own business, the harder you work the more money you can make.”
The best business idea may not be worth much without the proper development of a business plan. “You have to define your skills, focus on your products or services, find a competitive advantage and understand your industry,” he said. “In other words, you have got to have a business model.”
The first step in the process, Wilson said, is to define what you want to do and whether you have the knowledge and skills to pull it off, and move ahead with determination. “A lot of people have dreams about starting their own business, but there’s one problem that often stands in their way, naysayers. You need to overcome the naysayers. Never use the words if, maybe, try and so on, stay confident and strong.”
Good ideas can become bad ideas unless the individual understands the market. “We start a business with our passion, but sometimes we don’t pay attention to the market,” Wilson said. “It’s like wanting to open a snowboard business in the Valley, the idea just doesn’t fit the market.”
And new entrepreneurs need to assess what competition a business might be up against. “Never say you don’t really have competition,” he said. “If there are no competitors in your field, you might need to re-think your idea if no one else is in that field in your market.”
But once competition is identified, that can be a valuable resource for developing a business plan. “Study your competitors. You can evaluate or improve things that your competitors do. Be a customer, visit them and understand what they do. And you can collaborate with other businesses, even your competitors.” In researching competitors, start-up business owners can gather information on pricing, features, sales, profitability and market strategy.
Of course, even the best business model is worthless without customers, and that is another key factor in the research needed to prepare to start a new venture, or even expand an existing operation.
“You really need to focus on what does my customer look like,” Wilson said. “You want to really laser focus on your customers.” Demographic data that can help paint a picture of typical customers can be found through a variety of resources, including U.S. Census data, trade associations, civic and community organizations, and the internet.
Wilson suggested the American Community Survey, compiled by the U.S. Census Bureau as an excellent free source of information. Hoovers is another well-known demographic research company, but there are fees to gather certain data from its website.
Even armed with adequate financing, and good research and market data, a new business owner needs to take a hard look at themselves before jumping headlong into a new venture. In addition to having the knowledge and expertise in the field, the individual needs to asses whether he or she has the personal drive, work ethic and temperament to succeed.
Wrapping up all that advice into one neat package is a solid business model. Without a plan, it’s easy to get off track and make mistakes. “You have to develop a process for every single thing you are going to do,” Wilson said. “That’s creating a business model.”