Business and Commercial Law

SO YOU WANT TO START A NEW BUSINESS??

Part II: Passion About An Idea and A Business Plan

Continuing our series on the steps to start a new business that began with an introduction in the firm’s March newsletter, we now turn our attention to specifics.

Starting a New Business

Starting a New Business

Perhaps the most critical element of any viable business is the entrepreneur’s passion to make the idea a success. Passion has several sub-components. You must have enthusiasm for the product and service and be in a position to put forth 100% effort to achieve your goal. The passion cannot be fleeting, existing for a day or a week, but it rather must be a passion where you believe in the product or service and are willing to invest your full energy in making the business a success. The passion for that idea must have an economic component to it. In other words, the goods or services must meet some existing need. That idea may be responsive to a consumer or a business need, social need or other needs. It can be a big idea or a small idea, but it has to encompass the entrepreneur’s particular interest and knowledge.

Some large companies like Tesla, Google, Facebook, Apple and Microsoft can create new markets and new needs. However, for the entrepreneur there should be an existing need or a market niche that provides you an opportunity to get started. Over the last several years, real world businesses must have an internet or cyber space component. I look at the business world as existing in several alternate universes. “Real world businesses” can be transformed into internet and cyber space businesses—effectively a parallel universe. By that I mean companies that transform the real world: Groupon with couponing and discounts, eBay with online auctions, Amazon for retail sales, etc.  The so-called real world has now been transformed, and you must recognize the growth of the cyber world with its ever accelerating pace. Unless you are part of that cyber and internet world, you are on the road to extinction.

Once you have identified the idea, you must have a physical manifestation of that idea in order to create a business opportunity. A concrete step to achieve that is a business plan. The business plan fleshes out your idea and takes it from a mere thought to identifying discrete, necessary action steps to implement the idea. Your effort is not just to have just a business plan or to have a business plan viable in the short term, but also in the intermediate and long run. The business plan carries out the idea by teasing out the specifics for your idea or product. It will identify such matters as the market, competitors, pricing and necessary action steps for the implementation of your passion.

Once you identify your idea, you then must then make an assessment whether your passion is great enough to prepare a business plan. If you have that passion, you should be able to write key parts of a business plan with some detail within a day. Unless you are willing to undertake the effort to prepare that business plan, you may wish to reconsider the extent of your passion and the entrepreneurial effort necessary in the future. There are free business plans online and there are free business plan templates. A simple Google search for a free business plan template lists multiple sites. Start with the U.S. Small Business Administration 8(a) Plan as an example. Or for $97 you can get a fill-in-the-blank template from www.growthink.com among others. Do not get overwhelmed. Complete what you can at this time. Remember the plan is organic and merely gives you a road map to grow your business and raise capital.

This business plan should be prepared by you. Beware of expensive advisors and costs in preparing an initial business plan. The business plan should never be locked in concrete because the world you will be entering changes too rapidly. Think of all the software updates for Apple, Microsoft and other companies. The initial business plan will be modified many times to address the changing world. It is a starting point and a road map for the future.

Once the business plan is prepared, you should keep it confidential until you are ready to discuss it with others and, if you do, you may even want a Confidentiality Agreement with that person.

You are now ready for “branding” of your idea. Therefore, the next essential element is to consider branding, which will be discussed in my April blog.

Lat J. Celmins
lcelmins@mclawfirm.com
480-994-2000