Aug 21, 2011

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Posted Under: Tips & Tricks!

One question that many aspiring entrepreneurs ask me is how to identify if “it” is the idea that deserves further investment to execute or formally writing a business plan. As an entrepreneur myself and advisor/investor for many entrepreneurs and small businesses, I get to see both sides of the need of business plan. An entrepreneur typically falls for ‘I know what I’m doing’ yet fails to communicate it right, to others involved (Banks, partners, vendors, investors) and expects people to have the same understanding and excitement about the idea  as he or she does. Quite frankly, it’s like asking someone to read your mind and continue doing so… Creepy, of course!

Point is, a business plan is nothing but communication in writing, where you tell the reader everything about your business/ idea as clearly and in as much details as possible. Leaving no room for guess work!

Question still is, how do I know if it’s the right idea and if I should write a business plan or execute the idea?

Simple, any business idea that you come up with has to pass three questions:

1. Will I pay for this? Would people pay for this service/ product?

Always think of “will people pay for this?” first. Don’t assume that people need what you are creating, rather find out what people want and are ready to pay for and then create it. Put together your product/service quickly and put it on for pre-sale, and then promote the hell out of it. See if people are ready to pay for this product you have been thinking about. You can NOT sell what you can not PRE-SELL. If it sells, then this could be the idea to invest more time and money in. A quick and easy way to test your ideas is to put together a landing page or simple website with paypal button and all the details of your potential product and advertise it via craigslist or other free classified ads. Work on making money with your idea first, doesn’t matter how much, just find real customers to pay for your service or product, this takes care of the profitability and feasibility of the idea.

2. How quickly would this make me rich?

Is this an idea that you believe would make you rich overnight or in a few short months or with little or no work at all? Immediately scratch this idea off, if you answered yes. 10 out of 10 times such get rich quick ideas are stupid schemes that involve fooling the prospective buyers in some or the other way. Hurts your credibility even before you build it. Remember what they say – if it’s too good to be true, well it is. There’s nothing wrong with having an eye on the top dollar returns but the ideas like $29 ebook or $49 seminars promising you free money, or to help you earn thousands while sitting home doing nothing or finding just 3 motivated people to build your MLM empire and many more cousins of such ideas are the ones that you really have to be concerned about. Avoid what I call ‘dollar driven’ ideas. This question has more to do with how honest you’re with your own self and your entrepreneurial aspirations. Are you in for building a business or are you looking for easy money?

3. What would this business look like 5 years from now?

Look at your idea [product or service] from a scalability point of view! Could this eventually be multiplied and grown bigger with or without you? Is your product or service based on a current trend or fashion that will fade away sooner or later? Or is it based on a nuts and bolts opportunity in the market? This will help you understand the long term potential of opportunity. If you can vision a somewhat definite growth and scaling plan for future, this could be the idea to invest your time and money in.

So, your idea only deserves a business plan & execution, if it is feasible, profitable, scalable, and strictly NOT a ‘get-rich-quick scheme’.

Next post, I will talk about “The 2 Sentence Business Plan”!