Last year I wrote a bit about how to come up with business ideas and I believe a few of you did come up with great ideas but the problem is many haven’t executed a single one of those ideas. I am always telling people that ideas are cheap and execution is everything. Even that guy you think is a complete idiot in the office comes up with great ideas – what differentiates the great from the average if taking the first step.
Here’s how you can re-evaluate your idea.
1. Think Big
Personally, I like the idea of scale. Try to do something that can be BIG. If you produce a basic product that many people need then you have a large customer base to satisfy and a potentially very large source of revenue.
2. Start Small
Secondly, keep in mind that many big businesses started off small. Create "a small batch" of your first product and then roll it out. I use the term "batch" very loosely. For instance, when my dad started his bus company, Axa, he only ordered three buses; when it was established that there was adequate demand for the service he ordered 12 more buses taking it to 18 or so; then the next order took the bus count to 40. He thought big but he started small like any smart business person should.
The principles of small batches are espoused in "The Lean Start-up" by Eric Ries. In this book, Mr Ries, a successful young entrepreneur talks about a variety of businesses that have established a "minimum viable product" (MVP), and marketed that before going big into a business.
The MVP is the version of your product that has the fewest number of features and doesn't cost too much or take too long to produce so as to test the market.
Once the business is started, operational costs can also be minimised by not producing too much stock so that your money isn't tied up in stock. This gives you flexibility. In fact, Toyota's business model is based on this principle.
3. Minimise your labour input
What about businesses that depend on your personal labour? So you're a lawyer or a doctor or even a masseuse and your business idea is to start your own practice, can this be made scalable? Yes.
The beauty of this type of business is that start up costs can be very low indeed. All you need is an office; to begin with you can work out of your own home or rent a small space in town. The problem here is that when you don't work you don't make money unlike with manufacturing and selling where you can hire unskilled people and quickly train them to do some of the work for you.
With your own practice your plan from the outset should be to hire other well-qualified people that work under you and who earn a commission for business they bring in with you getting a cut of that revenue because it's your business. Ultimately, when your practice is big enough you should be able to step away from the day-to-day operations because enough money is coming in from the work that your staff produce.
One problem. Are the people you are employing of your calibre or higher? Your goal SHOULD be to hire smarter folk because the higher the quality of your work force, the more (and bigger) the business you will attract. In the long run these guys may leave to start their own practice but for the time that you have them they can be a real asset to your business: train them up and incentivise them to stay.
In summary, think of businesses that are a) scalable, b) produce small batches, c) employ high quality workers or train people up to a high standard. Then take the first step asap!
"I’d rather have one percent of the efforts of 100 people than 100 percent of my own efforts.” ~ J. Paul Getty
For 2 years until early 2014 I wrote a weekly personal finance and business column for Malawi's leading media house, The Times Group. The target is middle-class, working African women.
This is a reproduction of the articles that appeared in the weekend edition of Malawi News.
|Heather Katsonga-Woodward: On Business, Life & Everything In-Between||
On Managing Money