CEO Sunday: Is My Idea A Business?
Written by Vince Leung, COO and Co-Founder of MentorMob
You’re an entrepreneur, or at least you think you are. You have the urge to build or sell some product or service. You want to be in control of the company’s destiny. You’re creative and think you can deal with anything that’s thrown your way. You can get people behind you and the idea. That’s great…now what is your idea? Most people think they have the next million dollar idea but is it just an idea or is it a business? Let’s stop here for a second to understand the difference between the two. As defined in our defacto source of knowledge, Wikipedia:
Idea – “ideas are taken to be concepts”
Business – “A business is an organization engaged in the trade of goods, services, or both to consumers…and administered to earn profit to increase the wealth of their owners”
So the key difference is an idea is standalone without any external factors affecting the success whereas a business is dependent on external factors (consumers) and must be sustainable by earning profit. This is an important difference. The idea needs to be run through the gauntlet to see whether it is a sustainable business, yes, sustainable. Remember Pets.com? That’s the definition of an unsustainable business. What we want to do with our business is the opposite.
What kind of things should you think about before deciding to take Step 0?
1. Are you solving a problem and how big is this problem?
2. What’s your solution?
3. How will you make money?
4. How will you market your product or service?
5. Who are your competitors?
6. How much money will you make?
7. Do you have the proper team to pull this off?
8. How much money do you need before you can start turning a profit?
If you’re astute, this is the format of a slide-deck for fundraising presentations. There’s a reason why investors ask these questions before they plow millions of dollars into your organization. They want to determine whether you have a business or just an idea.
Finally, you want to make sure the business is something you know about and are interested in. This will give you a leg up against competition and also help prevent wasting a lot of time and money going into a business you know nothing about. If nothing else, you’ll just enjoy work that much more.