Ercan Demiralay explains the next steps to transform your idea into a viable business operation.
If you have an innovative business idea you believe will thrive in a competitive array of start-up and established enterprises, then you’re probably wondering how you can turn it into a reality. It's the big question for all entrepreneurs, how do you convert your eureka moment? How to build a profitable business starting from scratch?
Perhaps you’ve had ideas in the past but they went nowhere. Many great business concepts ended up on hold because they weren't set out in a business plan, the need for funding was missed or they were implemented poorly. Maybe you took action in the past, but you didn't validate the idea and found yourself wasting time and money on something that was never going to succeed?
Turning an idea into a reality is never easy. It can be extremely challenging. According to US innovation guru Mark Payne, the ideas failure rate is around 90%. So here’s what you should consider to get your new business off the ground smoothly and successfully.
1. Create a business plan
One of the first places to start is to write a business plan. Creating this document in effect establishes the path of where you're looking to get to along with the action you'll take to get there. It details things like the structure you're going to operate through, how you’re going to raise funding and where you're going to channel investment.
You’ll use the business plan to define what your goals are, how you’ll attract customers and how you’ll go about achieving those objectives. Writing the plan will force you to think clearly and concisely about your business. It will make you consider multiple scenarios and how to act on opportunities or threats that might come your way.
Once you're trading, the plan is then your reference for how you're progressing towards your targets or whether you need to make any alterations. It'll also be a key component for those potentially buying into your business. Investors probably won't consider parting with their hard earned cash unless there is some evidence that the operation is living up to the expectations that were originally set out in the plan.
2. Forecast your finances
To ensure your business idea is feasible in the business world, you’ll need to set out a budget and forecast of your revenue. This will enable you to understand what you need to make on a weekly or monthly basis to cover the basic costs of overheads, and fixed costs such as rent and utilities.
The chances are that unless your business is very cash generative, you'll likely require an injection of funding. Remember you'll be starting out with either very few customers or, none at all, meaning your business won't be generating enough cash to fund basic costs and the next exciting opportunity.
By putting together a forecast you'll be able to predict when cash flow will be tight and thus when funding needs are likely to arise. It's a critical part of managing your business by understanding income and expenditure. Your forecasts will also form an essential component for investors and sources of finance looking at potentially funding your enterprise.
3. Raise finance/seek investment
Today there are more options for funding than ever before. Your choice will very much depend on what you need at the time, for example crowdfunding is a good source to raise finance but to also gain further validation from large groups of people that your business is a good one.
There isn't necessarily a right time for investment, but being able to demonstrate your concept has the potential to scale up and provide a return on investment is key. It’s also important to consider all of the financial options available to you. For example, why give away a part of your business if you're confident of servicing a term loan?
4. Decide on your business structure
Whilst the business structure you initially choose doesn’t have to be set in stone, it's best to carefully think through which option will work best for you both now and in the long-run. It’s important to ensure you’re not being short-sighted and you have your end goals in mind.
A top tip would be to talk this process through with someone who’ll be able to give specific advice on such matters. In the early days you're likely to be unaware of the impact your business structure is likely to have. For example, it will dictate your exposure to taxation once you're up, running and generating revenue.
5. Protect your idea
When in the planning phase, it's understandable to fear someone else may steal your idea that you've spent so long planning around. This is particularly relevant if you feel you're working on something innovative, unique or a radical development of something else. Check your concept isn’t already in existence and then look into these 3 options for protecting your idea.
With an abundance of elements to consider when starting-up a business, these are just some of the vital steps to turn your idea into commercial money spinning reality. Of course every business and concept is unique, so what you'll need to plan to get your idea off the ground will likely differ to other organisations and entrepreneurs who may be in your network.
The content of this post is up to date and relevant as at 26/10/2017.
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