You’ve had that light bulb moment, a business idea, some sort of potential service or product you believe there will be demand for and which will ultimately make you money. Despite it being full of potential and very exciting, it’s important to understand that an idea is aspirational, a possible starting point on your entrepreneurial journey.
We say ‘possible’ because sometimes great ideas don’t translate into viable business models. For that reason you should perhaps be wary of your natural confirmation bias based on the excitement you're likely to have for your concept. It's easy to get very carried away in our own thoughts.
Instead there are a series of things you should review to get a better feel for whether your concept has the potential to translate into a business that can scale and make money. Then it's a matter of delivering it.
A business idea is a vision of a product or service that identifies a problem for an audience and provides a solution they are willing to pay money for, potentially on a recurring basis. If there is sufficient demand then the idea has the potential to become a profitable enterprise.
Disruptive innovation has been attributed to the fall of many well-established businesses in various markets. It’s the concept of creating growth through transformational change.
If your business idea is to be disruptive then it will need to make use of the latest technology to develop a new business model to exploit old markets in unconventional ways. Generally disruptive innovation tends to occur either in:
You may have one idea, or several, that you believe could make great businesses. However, it’s a case of belief, you won’t know you have a viable business until you have evidence that demonstrates demand for your concept whereby people are prepared to spend money to purchase it.
Start-up idea validation is in itself not a guarantee of success. That said it will provide you with data and indicators as to whether you have a business that is worth investing your time, effort, and money into. Undertake research to ascertain answers to the following:
1. Does your idea solve an issue they face?
2. Is this part of a significant challenge or problem in their personal/professional lives?
3. How much they will pay for it?
4. Has this solution been attempted before?
5. If it hasn’t been attempted in the past, why is there not an existing solution?
Coming up with a business idea is only just the beginning. Whilst it needs to be innovative and profitable, often it’s the decisions and actions around how to implement the idea that have a far greater bearing on whether the resultant business is a success or otherwise.
The business world is littered with cases of what appeared to be very forward thinking models but ended up as business ideas that failed. Some of these include:
Consider exactly how customers will purchase your potential product or service. Is it something they will do over and over again, based on recurring revenue business models, or is it likley to be a one off transaction (non-recurring)?
A recurring revenue business model can be very attractive because you can then see how revenue will be generated moving forward and better predict future profitability. There are 7 recurring revenue models to consider implementing:
1. Auto-renewal subscriptions
2. Sunk-money subscriptions
3. Renewable subscription
4. Sunk-money consumables
5. Simple consumables
6. Long term contract
If you’re confident in your idea, having validated it through research and testing, then you’ll need to write a business plan in which you set out your vision, goals and what you intend to do to achieve them.
The aim should be to complete this prior to starting out, because the early days of trading can be very hectic and complex. Your plan will be the document you refer back to, here’s what it needs to contain and the steps to make it a reality:
The hard work of writing a business plan is worth the effort. Most fail and there are some traps you don’t want to fall into when writing yours. Here are some common errors to avoid in your business plan:
In a world of mass connectivity, the theft or accidental “adoption” of concepts and intellectual property is a likely scenario that can’t be ignored. Stealing business ideas is a more common issue than you may think. As a would-be entrepreneur, you need to consider how to best protect your concepts by putting safeguards in place.
Areas to look into include patents, trademarks and copyrights. The legal process of getting these in place can be long and time consuming, potentially taking years. Therefore whilst developing your concepts it would be wise to look into the following:
Some of the great business ideas, such as the concepts behind behemoths like McDonalds and Facebook may be more attributable to those who implemented the concepts as opposed to those who came up with them.
Having an idea is one aspect, and sometimes arguably the easier part, of entrepreneurialism. Translating blue sky thinking into a viable business is an altogether different and infinite challenge. Who takes credit, the visionary or the driving force, has been the subject of many high profile legal disputes and here are 3 examples to learn from:
Heinz released the Dip & Squeeze ketchup packet in 2010 however, David Wawrzynski claimed he presented the idea to them prior to that.
The fast food store was the concept of brothers, Dick and Mac McDonald who were content to expand to a handful of locations. Ray Kroc believed it could scale far bigger resulting in a battle for control of what became a mega franchise.
Mark Zuckerberg was hired at Harvard by the Winklevoss twins to help launch their dating website. Mark then worked on his own, similar idea, “The Facebook” resulting in a legal claim that Zuckerberg stole ideas and delayed their project.
The content of this post is up to date and relevant as at 25/04/2019.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.