What are the next steps when you have a great business idea?
You’ve had one of those lightbulb moments and are excited about a new business idea. How do you validate the idea as a viable profitable business? How do you get it going?
Is Someone Else Doing It Already?
The first thing to do is to Google it, and see who else is doing this already. In reality, few business ideas are truly unique. That can be okay. The difference is those entrepreneurs who actually take action on those ideas. However, you also need to make sure you can be at least 10x, if not 100x better.
So, if there is competition, how will you be better? Will you be faster, better quality, cheaper or just deliver far superior service
Why Isn’t Anyone Else Doing It Right Now?
If not one else is doing something similar, why not? Is it really that bold and unique of an idea no one else has thought of it? Or has it been so hard then everyone else who tried failed?
It’s important to know this. Then also understand how you can succeed where everyone else has failed.
What Are You Willing To Sacrifice To Make It Happen?
It’s great to be excited about your nice business idea. To become an entrepreneur you have to be incredibly optimistic to make the leap. Yet, make no mistake, it is going to take real work. There are going to be challenges and tough days.
In fact, the truth is that you will be facing new challenges every day. Most days will be tough. Your job as an entrepreneur is to take on these daily challenges and fight through for the good days. Those days can be worth it all, but you are going to have to work for and sacrifice for them.
Your business idea has to be so compelling you are willing to commit and give up some things. Know your line in the sand at the beginning. Will you commit a year of your life?
Will you be willing to sacrifice your time and work 100 hours a week on this to make it a successful business? Will you be willing to move to the other side of the country to make this happen? Will you bet all of your savings and credit on making it work?
How Big Is The Potential?
When you are thinking about the next steps when you have a great business idea ask yourself if this is this a part-time hobby sized business. Does it have the potential to be a small local business? Or does it have the wings to become a big fast-growth startup worth billions?
How big is the total industry? How big is your potential share of that? Below is a good example of finding a big market and how this should be increasing over time to be appealing to investors.
What’s the smallest you can start with? The easiest, most bite-sized MVP you can launch with? Then how big is the largest vision you can imagine for this venture?
Start with how big this industry is as a whole. Is $100M being spent on this each year? Or is it $400B? Maybe a few trillion? This shows you how big the total potential is. If customers only spend $100M a year on this type of product, this is probably never going to be a multi-billion dollar business.
Don’t forget to look ahead too. How big is this space likely to be in 5 or 10 years from now? What about 20 years? Is it headed for a cliff and in a declining phase? If so, you may want to rethink it. It will be hard to raise money. It’s going to be hard to find an exit if there is little room for growth when you may be ready to sell.
The opposite can also be true. What may be a relatively small space today, could be ripe to scale around the globe. In a few years, a 10% market share might mean one billion users.
New markets are being unlocked by other technology all the time. Or maybe your business isn’t even restricted to just this planet. Some types of tech businesses and the cannabis industry have really created whole new markets over the past few years. You could do that too.
However, it is also important to be realistic with yourself and your investors on what your share of this space could be. How many customers are in this market that you can really address? For example, real estate is a huge industry.
Most people want some type of shelter. Yet, only a tiny portion of them are going to buy homes costing $1M or more. Even fewer will do that in a given year, and in a certain state, like NY. In this example, you’ve filtered from maybe trillions of dollars and billions of customers to a few billion in annual revenue, and a few thousand potential customers.
Next, understand that you are unlikely to capture 100% market share. If you did, regulators would probably break up your monopoly anyway. Even if you could, most investors aren’t going to believe it, or bet their money and reputation on it.
The good news is that you can still be the dominant force with just a 51% market share. In some industries, you may only need a 1% market share to create a billion-dollar company. Know what’s possible, and convey it to others in a believable way.
Also respect that unless you’ve already raised billions in capital, it is going to take a while to hit those really big numbers. Even if your product or service is a wild hit, you’ve got to build out the team and infrastructure to be able to deliver and service them well.
So, never take your eyes off that big prize, but focus on the smallest segment you can begin dominating and the long hanging fruit in that niche.
How Much Money Will You Need?
How much money is it going to take to get this business started and get it to stand on its own two feet?
Many of today’s greatest corporations were started with just $1,000. Others have raised millions of dollars before they even started. Know how much you’ll need to get through to being profitable.
While money should never be an excuse not to get started on your vision, of all the hyper-successful startup founders I’ve interviewed on the Dealmakers Podcast, many recommend raising more than you think you need as early as possible. Capital raising is one of the biggest next steps when you have a great business idea.
Everything will cost more than you think and take longer to do than you think. You don’t want to run out of cash right before you make it.
There is also no telling what the markets are going to be like in a week, month or year from now. If it is easy to raise or borrow cheap money, or at least lineup credit lines now, do it. Then you’ll be comfortable and strong while others are struggling. That’s when you can swoop in and really gain traction.
Once you have an idea of this dollar figure, where will you get it from? Do you have it in extra cash on hand? Can your friends and family pitch in? Can you get a loan to get you going? Or will you need to tap outside investors?
If you need more capital there is crowdfunding, angel investors, startup accelerator programs, venture capital firms, and other funds. the slide below recaps this.
Consider a fundraising training course or connecting with a fundraising coach in order to understand the pros and cons of these different sources and how they work.
Whose Help Will You Need?
In terms of the next steps when you have a great business idea, remember that starting and running a business is a team game.
You have owners, coaches, managers, and those on the front lines. You simply can’t do it alone. You need help. The better help you can get, the better your chances of surviving and thriving. Make a list, starting hiring.
It’s just common sense that without the best team members in every role, you simply cannot have the best company and expect to beat out the competition and survive them.
The earlier you can invest in this all-star team the fewer mistakes you’ll make, faster you’ll grow, and the more another great talent that will be drawn to work with you, invest in you and buy from you.
While this might make you want to hire fast and be reluctant to fire poor choices. The most experienced will tell you to take the opposite approach.
Be more conscious of who you hire in the first place. Be fast to fire them if it isn’t working out. Otherwise, they can take your whole operation down with them.
As the CEO and founder of your own company, expect to spend as much as 30% of your time recruiting and interviewing help.
One of the most important things that you can do to make the best hires and keep them all moving in the right direction is to invest the time in writing down your company values and the most important elements of the culture you want to build.
One of your first hires may also be another executive, general manager or HR person who can shoulder most of the burden of finding, screening and onboarding your growing team. Don’t overlook marketing and sales help either. If you only hire great engineers and makers, you might not get anywhere. The ability to sell it can be far more important than what you make and can deliver.
Talk To Customers
One of the most important next steps when you have a great business idea is to get out and talk to your potential customers.
Validate that they have this problem and want this solution. Whenever possible, show them a prototype and ask for a financial commitment. All the thumbs up and even free users can be worth nothing unless customers are willing to pay real money for what you are selling.
Some of the ways to do this include:
- Knocking on doors
- Emailing and cold calls
- Focus groups
- Popup shops
- Live Q&A sessions on social media
Claim The Name
Act fast to reserve your business name, website domain name and matching social media handles.
You need to do this all simultaneously. Otherwise, it can be extremely painful and costly to find you can’t get these matching assets later. Or worse, they end up helping your competition.
When it comes to incorporating, taxes and privacy can be significant factors. If you are just planning a small local business, then you might get away with the DIY approach to incorporating your own company online with your Department of State.
If you hope to build a serious business, hyper-growth startup or to raise VC money, then you’ll want professional legal and financial guidance for structuring your shares and voting rights to attract investors and protect your founders and the mission as you go.
Part of the next steps when you have a great business idea is to get your business bank account open so that you can actually start accepting incoming money. Either from sales or fundraising efforts.
Some of the most desirable banks and financial institutions for helping to handle your money and business credit include:
- Capital One
Create A Pitch Deck
Invest the time to create a fantastic pitch deck. One that will act as an internal guide as to what you are working on and where you are focused on going and need to do next.
Then you can use this powerful document to recruit partners, the most talented employees, and best fitting investors.
Remember that storytelling plays a key role in fundraising and this will be big milestone in terms of the next steps when you have a great business idea. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
Below you will be able to find the most important slides broken down by the percentage of time that investors allocate to them based out on data. Make sure that you are nailing the most important slides.
Remember when thinking about the next steps when you have a great business idea that nothing really matters until you start selling and making money.
Yes, there are a few notable companies that seem to have gotten away without this important piece of the puzzle for a while. Some have been unprofitable for years. Remember these are the exceptions. Get out there, take action, sell, bring in cash and make real profits.
Things will always be changing when you decide to execute on the next steps when you have a great business idea. Lock onto the end game and big vision, but be willing to adapt on how to get there.
Grow Yourself As A Leader
Your role and the skills you need will change every 3-6 months. You won’t be doing your hobby work anymore.
You might find super interesting the video below where I cover in detail the next steps when you have a great business idea
FULL TRANSCRIPTION OF THE VIDEO:
Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about the next steps when you have a great business idea. When you’ve had one of those lightbulb moments, perhaps one idea that came to mind and you’re super excited about it. You can’t get it out of your head, that is the time where you know you have something interesting going on and where you know that you need to take action and perhaps validate it.
So one of the first steps that you want to do is do some research. When it comes to the research, you want to go on platforms like Google. You want to take a look online because, just like Mark Cuban says, “At least 100 other people have thought about that same idea that you’re having, so you want to go on websites online and take a look at who is doing it directly or indirectly.
You also want to take a look at who maybe has done it in the past; maybe people that have failed – why did they fail? What was the reason? There are other websites like CrunchBase where you can actually go by segment and take a look at who is specifically tackling that.
I think that Google is great, for example, to take a look at some press articles, see how people are talking about some of the competitors, and perhaps the business model on the approach in which they are actually using to tackle that idea. Perhaps if you can do it faster and better than the people that are out there, perhaps there’s a good way for you to actually have a place in the market.
The next part is, what are you willing to sacrifice? Let’s face it. If this is something that you’re going to go at it, you’re going to have to sacrifice at least five to ten years of your life, and that’s something that you need to be willing to commit. You need to be passionate enough to really tackle this idea, and that’s going to include missing birthdays, perhaps not being able to be with your friends as much as you wanted. But, again, you really need to understand that this is going to be a marathon that you’re going to be embarking on, and you need to be willing to take the risk and to go all out to make it happen.
The next thing that you want to ask yourself is how big could this be? Let’s face it, the last thing that you want is to get into an idea, go all in, and then all of a sudden, the market is super small. If the market is small, not only is it going to determine the potential outcome of you in the event like this company gets acquired in the future but then also it is going to determine their potential attractiveness toward investors.
Typically, investors, especially when we’re thinking about hypergrowth investors like venture capital, private equity, they do not want to be involved with businesses where the market is under 1 billion dollars. So, you want to make sure that the market is big enough and that it is going to justify all the sweat, all the tears, and all the incredible amount of time and effort that you’re going to have to put into this over the course of time.
The next part is how much money will you need? Let’s take a look at it. Basically, it’s all about developing a minimum viable product. It doesn’t need to be beautiful. It doesn’t need to be perfect; it needs to work, period. It needs to work. You need to put it in front of other people. You need to get people’s reactions.
You need to get them to give you feedback so that eventually, you’re able to optimize based on what they’re telling you because the last thing that you want is to go on assumptions thinking that you’re putting something beautiful out there, and then all of a sudden, you put it out there, and it’s a complete flop. So, for this reason, you need to understand how much is that minimum viable product going to cost you, and then take a look if that is something feasible and if that is something you can actually do.
The next thing that you’re going to need to ask yourself is, who are you going to need for this? Essentially, it’s all about execution. The ideas are just 5%; 95% is the execution, and it’s all about surrounding yourself by the right people. Essentially, what you want to know is, what am I going to need, let’s say for the next 18 to 24 months on the execution roadmap? And essentially, what are the profiles of people that you need to be surrounded by in order to achieve those different milestones that you’re going to have on that roadmap.
So, for example, if it’s a technical service or product, you want to make sure that you have technical people. If it’s something in retail, you need to have retail experts. So, just make sure that you have the right expertise, the right knowledge, and the right guidance helping you along the way because, as I have mentioned several times, it’s all about having the right people on the right seats of the bus. And essentially, if that’s the case, you will find your direction toward success.
Now, obviously, at the beginning, you’re not going to be able to have a lot of cash potentially to really be able to go out and hire a recruit. Maybe one thing that you could do is to use something like stock options, maybe like some equity where you can compensate the lack of cash to incentivize some individuals to come in and help you in executing this.
The next part is, you want to talk to customers. You want to be able to get as much data as possible, and you can do that on a qualitative basis or a quantitative basis. Qualitative basis is, you want to go knock door-to-door. You want to make as many phone calls as needed. Send as many emails as you can to people that you think could be potential customers of this and just get their feedback. Maybe there’s a set of questions, like five to ten questions that you develop, and you get to see certain patterns when they are replying to those questions, and that’s going to guide you a little bit more on the execution on being able to bring that idea to market.
The other thing that you can do is the quantitative data that you can get out of potential customers. Maybe one thing that you can do to validate the idea is to do a bunch of landing pages where you’re putting different types of approaches, different types of positioning, or different types of packaging. Essentially, you’re going to see out of those landing pages how the potential customer is actually interacting, and some of that data is going to be super valuable when you go out and execute because you’re going to know that what you’re doing is something that people were indirectly asking you about.
The next thing that you want to do is you want to claim the name. Let’s face it. Finding a domain, a website that is available is going to be almost impossible. You can go into Go Daddy, you can go to Go Daddy Auctions, and there are even websites like, for example, Who.is where you can type in the URL, and it’s going to tell you who owns that domain. Maybe it makes sense to write an email directly to that individual and see if they’re willing to sell the domain.
Then, once you’ve secured the right brand, the right name for this, you want to go into social media; secure those pages, too, and really start creating that name for the potential service or product that you’re bringing to market so that you have that safely already on your end, and nobody else is going to take it away from you.
The next part is, you want to create a pitch deck. Let’s say 15 to 25 slides where you’re capturing the essence of the story and putting it out there, not only for your own guidance but to present to others that you want to enroll. That could be investors, potential customers, or potential talent that you want to surround yourself by. A pitch deck is a great way to go. We’ve actually developed a great pitch deck template that you can see underneath, so make sure that you click on that link and take a look at it.
Finally, you need to start selling. You need to get out there. You need to sell the product. You need to sell the service. You need to get all the feedback that you can, and again, it’s all about iteration. You need to iterate. You need to optimize. You need to constantly make it better, better, and better. The only way that you’re going to do that is by getting in front of people and selling it.
So, with that being said, hopefully, you like this video. Make sure that you click the subscribe button below. Click the Like, as well. Leave a comment, and again, don’t forget to check out the fundraising training that you can see on the link below, as well. There, we help from A to Z, every step of the way when it comes to fundraising, live Q&A sessions, templates, agreements, a community of other founders where they’re helping each other; you name it. So, make sure that you take a look at it, and thank you so much for watching.