How to Develop your Business Idea
Many people rush into setting up a business, without really thinking about the steps that need to be taken, before they take-off. In the first of a multi-part series, Bedaya Centre tells us how to develop an idea, which forms the foundation of a successful business.
Basic elements of a business idea
A good business idea is market driven and it comes from the needs and demands of the end users who could be individual consumers (B2C) or businesses (B2B). Secondly, the market should be of sufficient size to satisfy the vision of the new start up. There may be a niche in the market but is there a business in the niche. Entrepreneurs also need to know if they can develop the business idea alone or need to bring a team together.
Importance of personality traits
The perennial question is whether entrepreneurs are born or nurtured. Increasingly there is a viewpoint that many people want to be entrepreneurs and that talent can be nurtured. Some recent examples include the entrepreneurship postgraduate certificate at Carnegie Mellon University at Education City in Qatar and the Technology Innovation and Entrepreneurship Programme run by Qatar Science & Technology Park. These are very practical programmes that take the participant through the complete business planning stage to securing the equity funding and launching the business.
Lots of buzzwords are mentioned on the personality traits of successful entrepreneurs. A sample include hard working, risk-taker, able to multi task, customer focused, attention to detail, team builder, able to plan, takes the long term view and so forth. Most entrepreneurs only have some of the characteristics often mentioned but fill in the gaps with the team they put together.
Passion vs. profitability
Passion is a great motivator provided it is founded on logic. If the idea is feasible the entrepreneurs should follow their passion; it will carry them through the many tough times. However, if the market is telling you that the idea is bad and no profit can be made it may be time to listen and change tack.
The market is the great unforgiving arbitrator. The business idea must satisfy the needs of a customer. Many products failed to satisfy the market. Some reasons for failures include
- No market research on the product or the market has been done.
- Most of the budget was used to create the product; little is left for launching, marketing, and selling it.
- The product is interesting but lacks a precise market.
- The product’s key differentiators and advantages are not easily articulated. The product defines a new category, so consumers or customers will need considerable education before it can be sold.
- The sales force doesn’t believe in the product and isn’t committed to selling it.
- Because the target audience is unclear, the marketing campaign is unfocused.
- Distribution takes longer than expected and lags behind the launch.
- Sales channels are not educated about the product and thus slow to put it on shelves.
- The product lacks formal independent testing to support claims.
- The marketing campaign is developed in-house by the manufacturer and lacks objectivity.
- The product is untested by consumers; only the company can assert its benefits.
- The website is the primary place to order, but the product description is unclear and the site isn’t fully functional.
However, entrepreneurs should not be afraid of failure. If you study the biographies of many of the today’s most successful business heroes, you will find a personal story of failure and recovery. It is not important that you failed but what matters is how you pick yourself up and learn from the experience
Do’s and don’ts
- Put the customer first all the time
- Listen to your customers
- Conduct quality market research
- Test the market before you fully launch
- Involve potential customers at the early design phase
- Provide the maximum value consistent with the sales price
- Believe your own marketing PR
- Underestimate your customers
- Assume “ because I can make a better mouse trap, the market will agree”
- Build your dream team with friends; you need people with specific talents to complement the team.