Tuesday, October 27, 2009

The Idea & the Execution

via Quick Sprout by Neil Patel on 10/26/09

your idea sucks

Do you have a business idea that you want to pursue? If so, you are probably wondering if it is going to work and if it is going to make you a ton of money, right?

I am sorry to be the bearer of bad news, but the chances are, neither I nor anyone else is going to know whether your business idea is going to work or not. So instead of asking people what they think about your idea, here is what you need to do:

Start the business

If you are really passionate about your idea, you need to go with your gut and start it. Now, this doesn’t mean you’ll necessarily succeed, but you’ll never know if you don’t try it out.

If you just keep on asking people if they like your idea, you are going to get mixed results. Most people won’t know the industry you are trying to get into, so they won’t know if your idea is good or not. And even if they are in that industry, they could be wrong.

By no means am I saying that you shouldn’t ask people for advice, but take it as a grain of salt. Sometimes you just have to do what you want to do.

Save your money

When you are starting your business money will be tight, so you shouldn’t get fancy when it comes to laying the basic groundwork. For example, there is no need to hire a high priced attorney to incorporate your business when you could just go to Legal Zoom and spend $149.

Once you start making money you can go back and pay a good law firm to work on your incorporation. The point I am trying to make is that there is no need to spend thousands of dollars on things that won’t help your business make money… especially when you first get started.

You should reserve all of your cash for things like infrastructure, supplies, employees, and potentially marketing if you have enough cash. And most importantly, always keep a good portion of your cash on reserve for the unexpected.

Prove me wrong

I said your idea sucks, right? Well now that you have started your business you need to prove me wrong. And the only way you can prove me or anyone else wrong is by making money.

This doesn’t mean you have to be profitable, but instead you have to have meaningful revenue numbers. For example, if your company brings in $1,000 a month, that could be meaningful revenue number as long as your monthly expenses aren’t exceeding $5,000 month. On the other hand if your company brings in $3,000 a month and your monthly expenses are $30,000, that isn’t a meaningful revenue number.

If you are having trouble getting to revenue, I don’t know what to say other than to try harder. I wish I could tell you the secret sauce that will cause your business to boom, but I don’t know it. The secret sauce is different for every business.

The best advice I can give you is to look at your competitors and see what they are doing. This should give you a good understanding of what you need to do to make money. Just don’t copy everything your competitors are doing because what works for them may not work for you.

Don’t get ahead of yourself

Hopefully your business idea is working out and making money, but if it isn’t, don’t stress out. Pick yourself up and keep trying other ideas until something works.

If you are making money, pat yourself on the back because you’re half the way from not having a shitty business idea.

You now need to get to profitability. The two main ways you can do this is by either cutting your costs down (which could be a bad idea) or by figuring out creative ways to make more money.

I typically favor the second option and spend time on sales, marketing, and business development deals to get my companies to profitability.

Whatever route you decide to take, the best advice I can give you is to stop dreaming. What I mean by this is that you’ll tend to spend a lot of your day imagining what will happen if you get more sales, did more marketing, or even locked in a business development deal. You may even dream about what you’ll do with the money you’ll make.

Dreaming is a waste of time and all it will do is cause you not to reach your goals. If you really want to achieve your goals you have to act on things and work hard. And once you get to a point where your business is flourishing you still can’t dream because everything isn’t in your control. Things like lawsuits and recessions can crush your business and cause you to go broke.

Conclusion

I know this blog post is a bit basic compared to most of my blog posts, but I really want to get you to stop asking people for input on a business idea you may have. Just because someone was successful in the past or went to a good college, it doesn’t mean that they’ll know a good business idea if it stares them in their face.

For example if you asked me what I thought about Facebook, Twitter, or even Hulu when they first came out, I would have told you that they would fail. But I was wrong and I probably will be wrong when it comes to predicting thousands of other business ideas.

Remember, just because someone is in the industry you are trying to enter, it doesn’t mean they’ll know what’s best for you!

Posted via email from Ranjan's posterous

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