A lot of entrepreneurs come up with what they think is a great idea and before testing their idea, they just start spending money. This is definitely the wrong approach. Slow and steady wins the day. If you have an idea and have fully developed it; then it is time to test it. “How do you do that?” you ask. It is quite simple. You go and find people who are or have been in a similar business and you ask for their opinion on your small business idea. And then listen intently to what they have to say.
A lot of people make the mistake of NOT doing this and they are the ones that go on to make those $10,000 mistakes. If you take the time to test your idea before putting your idea into motion and spending money, you will be able to catch yourself from making a big and costly mistake and also allow you to refine your concept before putting it into place. Find those people who will give you an objective opinion. They will have already made the mistakes you’ll make if you don’t listen to them.
So ask: “I am thinking of opening a ‘Something’ shop in ‘Somewhere ville’, what do you think?” I am sure they will have some questions and you better be prepared to answer them:
What products are you going to carry?
How much are you charging for them?
Who do you see as your competition?
What hours are you going to be open?
What experience do your employees need to have?
How much money do you think you’ll make?
Who are you customers?
They’ll challenge your assumptions and may make you feel a tad uncomfortable if you aren’t prepared. That is good. You want that. You want to be put into a position where you have to justify your decision to go into small business.
If it appears as if your initial idea may be a little “sketchy” in their opinion, go back and tweak it and then re-present it to them. Now what do they think? Every time you have to go back and change a few things, you are working through your concept and it is your concept on which your business plan is built. If people don’t embrace your idea because maybe the idea really doesn’t have ‘legs’, do not be scared to walk away. You can always come up with another idea. It will send you back to the drawing board and save you having to complete the business plan, as well as spending a whole bunch of money. Whew. Sorry about that. I can’t stress how important this stage is in building a business plan for small business.
Once you have settled on your concept and tested it, only now are you ready to do the real work. You have to take your idea and build a financial forecast and marketing strategy to see what sort of money you are going to make – yes, before you have even signed a lease or hired an employee.