How To Start A Business: Research Stage
In the first article of this series, we looked at how to fine-tune your business idea to match up the needs of your target audience. We also delved deeper into how as an entrepreneur you can identify the market gaps that will inform your business idea and how to take advantage of the information around you and turn it to your good. In this article, we will look at various ways to further refine your idea and come up with a solid plan for your business.
Refining your Business Idea
The idea of your business has to be unique. That said, not everyone who has a great idea ends up building a great product. As such, you have to refine your business idea as not all ideas will be feasible considering modern technology and even market conditions.
To refine your business idea, it is imperative that you start by first of all researching whether the business can be implemented and if so, how much it would cost to implement it. It is illogical just to come up with an idea and then jumping into full-scale development. So, how do you refine your business idea?
Make your idea so clear that you can clearly state it or describe it in one single sentence. Remember, as you are defining your business idea, it has to have an objective. To help you with this, we have designed a very simple but effective template to guide you;
“My business-[insert the name if you have]-will develop-[insert the offer or the product or service]-to help-[insert your target market]-solve-[insert the objective of the business]-with-[insert your unique value proposition].”
Do not just think about your idea, write it down, and when writing, make sure that you are as specific as possible. Defining your business idea will help you understand the very essence of your business. It will help you expound on your offerings. It is also when you define your business idea that you will note the deflection points and really avoid them. Remember, it takes a lot of effort going in one direction only, imaging trying to go in different directions all at once. This is critical especially when you are self-funding, you should avoid distraction as much as possible.
While defining your business idea, it is important that you find your core business function. This is the main reason why you want to start a business. It is the product or service that will add value to your customers. From the idea, go adding the supporting business functionalities. These are the things that will help your business start and stand up. Once you have identified the core function of your business, the next step should be to build your user experience around it.
At this stage, it is important that you also know truly who your target market is. You need to clarify why you need to work with these customers. What makes them ideal? What attracts you to them? While defining your target market it is important that you also make it clear how you will provide value to these customers and how best you will communicate this value to these customers in order for them to pay willingly.
Write your plan down
Now that you have the idea already in place the next thing you need to do is ask yourself a few simple questions in regard to your business; what is the purpose of your business? What is your end game? Where will you get the funds to start a business?
To answer these questions critically, you need a well-thought-out business plan. Many small startups often fail even before they start because most owners rush into the business without first pondering all these aspects of their businesses. During the ‘defining stage’ of this refinement process, we talked about knowing your target market; this is where we go deeper with the target base. You need to identify the people who want your products. If you cannot find any evidence that your products are needed, then there is no point in starting the business in the first place.
So how do you come up with a great plan?
Market research is key! One of the most important things you will do during the ideation phase refinement is conducting thorough market research on your field. Market researches are key as they reveal more about the demographics of your target market. Market research should be broad and all-inclusive. They should involve conducting surveys, holding focus groups, and taking advantage of public data.
Why should you even bother with market research?
Two things- if you want to find out more details about your target market, the data you collect using market research is crucial. Through thorough market research, you will be able to know and understand your target market’s needs their preferences, and behaviors. The other thing about market researches is that they are an important tool to help you evaluate your competitors. Through the data you collect using market research; you will be able to do a competitive analysis that will help you spot the market opportunities and threats.
Some of the small businesses that are winning have differentiated products from the competition. This is important and will have a profound impact on your competitive landscape allowing you to drive your unique value proposition to the customers.
An exit plan is also important. You should consider it…
While making your business plan, it is important that you also consider your exit plan. Business does not operate in a vacuum and at times there are forces that will force you out of the market. You should be prepared for this. It is important to look at the future from all angles.
Where are your finances?
Starting a business will need the money and in the ideation phase, you need to figure out where you will get that money. This is where you will figure out where and how you will raise the capital needed to start the business. Will you borrow the money? Or do you have some stacked-up cash that you can tap into? If you are employed, will you leave your current job to focus on your start-up? It is important that you understand the full magnitude of your startup costs.
Most small businesses that are just starting out will fail simply because they have run out of money before turning any profit. During the idea refinement stage, it is not a bad idea to overestimate the amount of capital that you will need before you even begin the business.
It is good to also keep your expenses at a minimum. A lot of entrepreneurs tend to overspend while starting a business. You need to figure out beforehand the type of purchases that you need and that will make sense to your business. Additionally, monitor everywhere you will need to spend your cash and by how much. Once you have done this, look at the various channels that you can use to save up your cash.
Do not just develop an idea and throw it on the market. refine every idea you get using a mix of open idea exploration, structured documentation, market research and also getting real feedback from people. Refine your idea and model and adapt your product based on the needs and wants of your customers.