We all can come up with a business idea; we all can identify ‘gaps in the market’ and then think we have the perfect product to fit and fill them. However, even when you come up with such an idea, and then get to work creating a business plan and scouting out supply lines and potential office venues, you’ve got to stop and think to yourself: how hard will this idea be to pull off?
Because a business idea needs to go through some rigorous testing before a person should try and make it a reality. After all, you’re going to be starting a small business of your own, and that shouldn’t be done on the fly! You’ve got to consider what’s really going to go into making your product a reality, and whether or not you’re capable of achieving it.
How Much Manpower Do You Need?
It’s just you in the fold at the moment, and that’s going to make building your company a hard thing to do. After all, you’ve only got 24 hours in a day, and most of them are going to be taken up networking, negotiating, and navigating. That’s quite the responsibility when you’re new and inexperienced in this!
You’re going to need to take on one or two people to help out. Either hiring them temporarily or outsourcing can be a great way to save money, but how long will you need these contracts for? This can be a very tricky thing to work out.
What Facilities Do You Need?
Next, you need to think about the practicality of your business idea. Namely, what kind of facilities you’re going to need, where they need to be located, and how you’re going to pay for them.
Indeed, managing the logistics alone may take up half of your current budget. For example, if you’re thinking about opening your own home based bakery or catering company, you may need to hire a trucking company that’s capable of transporting such goods, for health and safety reasons. What’s that going to cost you?
What Baseline Profit Do You Need to Reach?
Then it’s time to think about your turnover. How much will you need to make to break even every single day? Because a business is unlikely to make a profit at all in its first couple months of operating, and that might tank you completely if your idea is an expensive one.
To work this out, you need to figure out your monthly expenses. Then come up with a price point that makes you at least a 20% profit per item – what are you left with? It might not be good news.
Some business ideas are much harder to start than others, and that’s something you need to come face to face with. After all, the idea could still be worth doing, but what’s it going to cost you along the way? And how likely are you to meet with success before going bust?