Advice: Starting Something New – A ‘How To’ Guide

OK, so why am I giving you a run-down of how to start a new business or launch a new product or service – when the economy is all over the place, and business and consumer confidence is falling like a lead balloon…?

The answer is actually simple: the next wave of new businesses and new product and services are usually born during periods of economic slowdown, since it is *during* these times that all the half-thought-through ideas fall by the wayside, leaving only the truly remarkable remaining.

So… don’t despair – in fact, get your thinking cap on, and see what new product or service or solutions to everyday problems lies waiting dormant within your brain!

Pencils ready? Commence:

Step One: The Concept

It all starts here: with the tiny seed of an idea. Perhaps it’s extending your current business into a market of a competitor; perhaps your ’something new’ is to find a synergistic product or service that you can promote alongside your current range, but that cross-sell each other, and boost your total sales figures.

Perhaps your idea is more solutions-based: is there something that you do often that could really benefit from being done smarter? Is there something that you do often that you would like *not* to have to do…? Is there the need for a physical product to be invented to solve that problem, or a sequence of processes put together to form a new way of solving an existing problem?

Step Two: The Acid Test

Spotting something new is a really hard thing, but once you think you have something, test it out: do a search for something like it on Google; ask your staff/employers if they’ve heard of anything similar; and investigate who else might be offering that same product or service in your marketplace.

Now, given that we’ve reached this far, the next step is to be super-critical of your idea, and begin to look for obvious flaws.

It’s a thought process only, so there’s no need to go go into your back shed and begin building anything! This stage takes almost as long as coming up with the idea in the first place, but the aim here is to let your new idea mull around your brain, and keep hitting it with new thought scenarios: how will I tell people about it? how would want to use it? how much might they be willing to pay for it?

These are actually the biggest questions to ask. Other questions, like “how do I build it?” are actually the easiest to solve later on – and they’re also easier to make compromises on if you every need to. But you certainly can’t compromise on putting your idea to your own self-analysis early on.

Step Three: The Name

There’s a fundamental pardox when you begin looking at names for your new idea – a rose by any other name *might not* smell as sweet. That is, your brilliant idea really needs a good name, or otherwise it may not sound as good as some other idea that does have a brilliant name, but might have a terrible concept. It’s a busy world of marketing messages out there, make sure your name is a good foundation for communicating what your new ’something’ is all about.

In my earlier articles, I’ve documented how to go about choosing a name for your new business or product. I’ve also given you reasons why you should also purchase a domain name (your web site address) in the same process. Two must-reads.

Step Four: The Financials

This is where the rubber hits the road. At this early stage, what we’re mostly interested in is mapping out how our little idea works, and trying to minimise the unknowns.

That said (and with thanks to Donald Rumsfeld): there are known knowns, and there and unknown knowns. [He then went on to say that there are also known unknowns as well as unknown unknowns. Wow. Inspirational.]

Our plan is to use some basic number-crunching software like Microsoft Excel or Apple’s Numbers, and rather than taking wild guesses about such variables as the size of our market, or our profit per item sold, we will reduce each variable into smaller and smaller pieces – each one more manageable than the one before – so that each smaller variable has a smaller margin of error that our ‘wild guess’. When you average out the smaller margins of error, you get a substantially more accurate forecast than your first ‘wild guess’ – and you also begin to get a inkling of the ‘unknowns’ of your new idea.

Without going into too much detail, the actual process is to *not* use just one value as any firm figure to use in your calculations, but to make a separate table that weights an average. For example: rather than saying the number of widgets I can make per hour is “4″, make a table that has: Small widgets per hour: 9, Medium Widgets per hour: 4, and Large Widgets per Hour: 2. Then add another column to show the ratio of Small to Medium to Large Widgets that you’re going to make: say 20 to 10 to 5 (with a total of 35). Then a weighted average is: (9 x 20/35) + (4 x 10/35) + (2 x 5/35), all divided by three. The average is therefore 2.2 widgets per hour. Good to know. Sorry about the maths. (Remember BODMAS?)

The hardest part then is to try to model how your profit/time/whatever applies to your market. You’ll inevitably over estimate the potential size of your market, and be over eager in your estimations of your customers’ uptake of your new idea. The best plan is to make ranges (or spreads) of assumptions here, so that you can come back later on to refine your financial model.

Steps Five, Six and Seven

We’re running out of time and room – so to be utterly brief, the final three steps are: Prototype your idea (trial it!) before you commit lots more time or money; then Go Live; then constantly assess your idea, refining it as required. More on those topics later!

Two words: DON’T PANIC.

It’s not rocket-science by any means: critical thinking and naming techniques and financial modeling are the tools of the trade for ’serial entrepreneurs’ – but if you’ve never come across them, there’s only good to be gained from using them.

The *best* thing to do in these up-and-down times is not to batten down your hatches, but to get ready to work smarter: at least to work smarter than you have in previous years, and, -ahem- definitely to work smarter than your competitors!

AB out