Testing for Success

As I said last post, testing your business idea is vital to see if you are on to a good idea. But how do you get feedback about your business idea without giving away the idea for other people to steal and use for their own profit? This can be tricky, particularly if you are on to something that you think is a big new idea. If it’s not very unique, then you’ll have an easier time getting feedback, but then you’ll need to ask yourself why anyone would buy from you instead of all of the other businesses out there just like you. In a future post, I will discuss how to make even seemingly mundane ideas seem like a new craze.

You’ll want to get feedback from whoever you can. The best person to get feedback from is a mentor, someone who has started ideally a few businesses before and knows the ropes. Mentors are great and getting you to think of about of those little details that you may have never considered. Plus, mentors are there for you to learn from their mistakes so you don’t have to make them. Mentors are available everywhere. In a way, I am writing this blog in order to be a mentor. I could, by the way, be interested in a more official mentoring position if you would find that useful, though I am sure there are many more qualified persons than myself unless you are really trying to get the perspective of a first time business owner like myself. You may have friends that own businesses. They will give you lots of free advice. If not, ask around. A friend of a friend or family member might also do the trick. There are also people will to be advisors for a small percentage in the company, typically 1-10%, depending on how much work they do. There is also a great program called SCORE that works with people starting businesses. I highly recommend that you check that out. There are also many online communities. For example, Bank of America has a great online community that is happy to answer any of your business questions. I’ve personally learned a lot from this forum. And there is no need to be a Bank of America customer! Check it out at http://smallbusinessonlinecommunity.bankofamerica.com/index.jspa

Friends and family are another great source. Though, particularly if you have an exciting new business idea, you’ll need to protect yourself. A non-disclosure agreement (NDA) is a good way to both protect yourself and show your friends and family that you mean business. It is true that some of your friends or family might get offended by your asking them to sign this. You need to be very clear that it is not that you don’t trust them, but in today’s crazy world you have to protect yourself. I even made my mom sign an NDA when I asked for her advice on my website. If I’m going to make my mom sign it, no one else is getting out of it. Be firm about this if your idea is new. The worst thing that can happen is someone won’t sign it and you won’t be able to ask their opinions. Too bad for them that they won’t be able to get the inside scoop.

A final feedback idea that I’d like to leave you will are surveys. If worded properly, surveys can give you a lot of information about what people want or like without giving away about your business. This is exactly what we are doing at webillions.com. Check it out. Hopefully, the surveys give you only the vaguest clue of what we might be doing, but nearly every survey is designed to give us valuable information for making a better product for our customers. You don’t have to do your surveys online, you can email them to friends or even pass them out at a local group meeting or your nearby high school.

In summary, there are so many ways to get feedback and test your idea before you have to put your money where your mouth is. Please, take advantage of at least a few of these ideas and you’ll find that it will make a great impact on how smoothly your business planning and success goes. Please feel free to comment on this blog with any feedback questions you’d like me to answer.

Will You Make Money?

Recently I discussed the ways in which you can make money off of your business, but now I’d like to discuss whether your idea will be profitable. Will you make money or lose it? I can’t overemphasize the need to research and test your business idea BEFORE you decide whether or not to start your business. Testing is particularly important if your business idea involves something no one has ever done before. If you have a new fashion idea, for instance, you need to make sure people like it before you spend a lot of money just to see it flop. In my next post, I will discuss some ideas about getting feedback about your business idea without giving it away so that someone can steal it and use it for himself or herself.

But even if what you have to offer isn’t particularly new, it’s important to look into the information that is available on the web. Research companies that might be similar to what you have to offer. Find out their target audiences, how they got started, any money information you can find (such as revenues, profits, market shares, advertising), and anything else that might be useful in deciding whether you can make your business profitable. Too many people skip out on this step and find out later that they never had a chance to see any real money. Restaurants (unless particularly innovative or in a location with no competition) often have this problem, for instance. A quick search on the web will give you the average revenues and profits for restaurants and the number may be a lot lower than you might think.

I highly recommend a quick calculation. Estimate how much money you can get from your product(s) and then how many you think you can sell in a certain time period. This is your expected revenue for this time period. I suggest starting with a year, because this will give you a good idea of how long it will take to start making money which is typically MUCH longer than most people (myself included) realize. Then, consider your costs. There is a lot of paperwork (which I’ll discuss soon) associated with starting a business which depending on where you are located can cost hundreds of dollars. Do you have to pay rent? Will you need to build an inventory? How will you advertise? Will you need a lawyer (this will also be discussed later)? Get a very rough idea of how much it will cost to operate for the same time period for which you calculated your revenue. Now, subtract costs from revenue. If it’s negative, that means you have lost money for that time period. That’s not necessarily a bad thing. Most businesses take some time before being able to return the cash. In the meantime, you need to make sure you can live off of negative funds for at least 6 months. I’ll discuss loans and other options in a future post.

Deciding Whether You Should Start Your Own Business

I’ve decided that in this post we need to step back a little. In past articles, I already got you thinking about what you want to sell and how you can make money, but you should really ask yourself another question first. Is starting a business really right for you?

It is not going to be easy. Money will certainly not flow in right away and it may never happen if you haven’t carefully planned out your business. Can you operate without money and the security of a regular job for 6 months +? Are you able to focus on the opportunity of your business rather than your current status?

In addition to the financial state of mind that you need to be ready for there are many other differences. You need to be willing to learn. There are many aspects that go into a successful business and no doubt that in at least one of these areas, you won’t have much experience. You may have to do some reading. You may want to consider finding a mentor, someone who has been through it already and succeeded and maybe even failed once or twice too. You can learn a lot from other people. Learning from their mistakes can save you a lot of time.

Are you willing to be responsible for an entire company? It’s not something to take lightly. The decisions you make will greatly affect the success of your company. Can you manage others? Different people have different motivations. Can you cater to these, changing your managing style depending on who you are dealing with?

Are you willing to work hard to make your business successful? It may even mean longer hours than you’d put into a normal job, but if you feel strongly about what you are working on, you’ll still love what you are doing.

There is no security and it may not pay well, but if you feel passionately about what you are doing, you will do well as long as you put a little thought into the details. A good idea is to try starting your business part time to see if it's really want you want to do. This is great time to do all of the planning necessary before you actually start.

The rest of this blog is about helping you consider some of the details I’ve run into.

Good luck on this important decision!

Brainstorming how to Make Money from Your Business

Everyone likes to make money. That’s likely at least part of your reason for wanting to start a business. It better not be your only reason or you are going to get tired of your business really quick. I can’t overemphasize the importance that you are passionate about your business. And if you don’t love it in the beginning, it’s certainly not going to get better later when all of the real work comes in. By the way, your reason to start a business also better not be because you want to work less hours, because that’s not going to happen either—at least not if you also want to make money.

How do you make money from this business idea about which you are passionate? There are two main ways to make money—products and advertising. So, to have a product based business, you’ll have to decide what your products will be. Will they be unique? Will you have to manufacture them? Or, will you buy them from someone else? Where will you store them? How much will you mark it up for the sell to customers? I hope what I am getting across is that there are many things to think about and it makes sense to think about all of them BEFORE you decide whether or not to start your business. If it’s not going to be profitable, it doesn’t really matter how much fun you’ll have—unless you have money to throw around. I don’t.

How about making money from advertisers? Basically you are making money off of getting eyes. In order to do well at this, you need a way to attract eyes to your site. The easiest way to do this is to offer free content, ideally tailored to a specific audience. Because, not only do you want eyes, you want the eyes of a specific audience. You can get a lot more from advertisers if you can convince them that your audience is more likely that the average bunch of people to buy their product. Keep in mind that it will take time to build the number of eyes looking at your site—maybe a lot of time. It’s likely to take at least 6 months to do this, including getting the content that will attract your eyes and to start getting the word out about your site. It will also take a little time to find the right advertisers for your site. However, if you can manage to do all of this and are OK with making no money for the first 6-12 months, the rewards can be large. You have no manufacturing to worry about, no inventory, perhaps not even an office space for rent. Theoretically, it can all be done at home.

You can always do both. If your product based site is getting a good amount of traffic, make some extra cash from advertising. Be careful what ads you put on your site. Having a bunch of annoying ads will just annoy your customers.

I will discuss a lot more about how to draw traffic to your site, the best ads, and the options for getting startup capital in future posts. For now, just take a little time to consider whether you can actually make any money from your business. Also consider how long it will take before you start making that money and if you can afford to wait that long. You don’t need to be an expert to figure out whether your business idea has merit. A little estimation will go a long way.

Choosing a Business Name and Domain Name

Choosing your business name is very important. It something you might want to spend days, maybe even a couple weeks, considering. You’ll want a domain name that is as close to your business name as possible, in order to help your customers recognize and remember your company better. That means, once you’ve thought of an awesome name, you have to make sure no one has taken it yet. You’ll also want to make sure no one has taken anything similar or a common misspelling of your name, which would cause confusion.

As far as names go, size matters. The best names are short, descriptive and easy to remember, spell and pronounce. That being said, a lot of great domain names have been taken already. It’s unlikely for you the one word descriptor of what you are selling available as a domain name. You might have better luck with two, but three is probably your best bet. For example, instead of shoes.com, you are more likely to find a free name if you combine words, like MickysFineShoes or HighEndFootwear. Consider the keywords that you expect would bring your customers to your site. These might be good words to consider having in your name.

I must say that I didn't take all of this fine advice while considering the name for WEBillions.com and it was a mistake. It's not very clear what our product is. It's not obvious how to pronounce it, WE Billions or WEB Billions (it's the later in case you wondered). It's also not the easiest thing in the world to spell, not to mention the possibility that someone forgets that it's plural. Again, the purpose of this blog is for you to learn from my mistakes and find out what works. Feel free to leave comments to this blog with your business name idea. I'll let you know what I think.

Once you’ve found a name that you like and is available on the net, license the domain name at GoDaddy.com or a similar service. Also buy variations on your name. You’ll definitely want yourname.com, but also consider .net, .us, and .org. If money allows, you may also want to consider buying any common misspellings of your domain name. You’ll understand the reason for this if you’ve ever mistyped Google.com or another popular site. You will find a confusing site, typically populated with a bunch of ads. This behavior is known as typo-squatting and it can make someone other than you a lot of money. It can also confuse and frustrate your potential consumer base. You don’t want them to get lost before they even get to your site because they can’t spell. If you are going to be that picky about your customers, you will lose a lot of business.

For how long should you get your domain name license? The longer, the better. If you can get a good deal, get a ten year lease. This will save you money in the long run, because you’ll be charged more to keep up a popular name later. People know you’ve put a lot of effort into publicizing that name and don’t want to change.

Picking Partners

Perhaps the most important thing you’ll do when starting a business is picking who you will have as partners. Sure, you could do it on your own. This would mean you wouldn’t need anyone’s approval on anything. However, having someone who cares to bounce ideas off of is very important. Your business’ decisions will be better thought out if there are multiple heads instead of just one. Diversity is key.

Another great thing about having partners is that it means you don’t have to do all of the work yourself. This may sound like laziness. It’s not. Starting a successful business is a lot of work even with multiple partners. Having partners means that you can specialize. There are many important aspects (well beyond the product) that go into a good business. I’ll go into this more in the future. If you have to spend all day figuring out how to make, get or store your merchandise, the last thing you want to do is also figure out how to sell it, or how to make sure you don’t go bankrupt. In fact, most businesses fail because there isn’t enough focus on one of these areas. If you have to do it all yourself, you are very likely to not have time to put the necessary amount of time into at least one these areas.

Another point when picking a partner is making sure you can get along with that person in the long run. You may be ready for long, hard hours, but what about your partner? Can your partner take care of projects on his/her own or is constant input required? Do you trust this person?

Deciding whether or not to partner with a friend or family member is a tricky question. Businesses are tough. Your business may not turn out to be successful. You don’t want to mess up your relationship. Consider if you think a serious dispute with your partner would affect your ability to be friends with them, both from your perspective and theirs. If they tend to get pretty emotional in a disagreement, you are probably better off choosing someone else. That doesn’t mean you can’t ask them for advice in the future.

On the plus side, it’s always nice to have some companionship when starting a business. There are going to be many days where you question whether you are doing the right thing and it’s always nice to have a friendly ear around when that happens.

The additional financial resources that a new partner may be able to bring to the table won’t hurt either. Though, partners don’t have to bring anything but their time. This all depends on the arrangement all of you decide on.

This brings me to my last point. Please, put the details of your partnership in writing. It’s not required by law, but it’s extremely important. Consider the following questions. Who gets paid how much and when? Who pays the costs and keeps the profits? How are decisions about hiring more people made? What happens in the event of a serious dispute or injury (hopefully not related)?

Picking a Product to Sell

Often thought of as the most important part of starting a business is picking a product to sell. Though picking a product that someone will buy is clearly a vital part of a business, it is not the most important. I will tell you more about what is in a couple of blogs.

Choosing a product with mass appeal is not as difficult as one might anticipate. To many, it comes in a flash of inspiration. Why didn’t I think of that before? But if you aren’t this lucky, there are ways to force your flash to come to you.

Products with mass appeal do one of two things: improve upon something that already exists or creates something new that people later can’t understand how they lived without (i.e. cell phones). Finding a product that does one of these two things is as easy as listening to your inner complainer.

Your inner complainer is a genius at coming up with ideas. When you find yourself asking “why isn’t this product made this way so we can more easily ______?’ For example, why can’t we make phones that are portable, so that we can call people even when we are on the go. Or maybe your inner complainer ask “why is this so inefficient?” It is then up to your inner problem solver to ask “how could I make this more efficient?” If you find a product that improves upon an already established product or solves a problem, you are on your way to starting your own business.