Posted by 2014-08-16 18:25:00
Title: Hi. I don`t know where to start for my situation but I know I need to start somewhere. I stumbled on...
Let me give you some very frank advice right from the start - everyone has an idea or two that will improve a product or process. You need to ask yourself whether that improvement is significant enough to solve a major problem. If so, are people willing to pay for that solution, and if so, how many?
Often, the best first step is to see if you have a niche business with a small subset of customers (where you can make nice money for yourself) or you actually have a lot of customers who will have no issues paying for what you are offering. Be VERY realistic about this because these are two different business models. Talk to strangers where you can explain your improvement and see if they get excited about it. Dont purposely select the positive reactions and dumb down the negative ones. If you do get some positive opinions, take a piece of paper, and write down what your REALISTIC revenues and costs are.
The next step is to find a mentor - one who has deep business experience, and if you are fortunate, relevant experience. Choose someone you trust and who will provide you with very frank advice and ask you tough questions. If you can answer the tough questions, you have overcome a big hurdle.
If you need upfront money, then you will have no problem finding investors if you can not only articulate what your value proposition is (what problem you are trying to solve) but you have properly evaluated the market size, how you plan to make money and when you will see a profit. If you are too aggressive in your projections, people will run for the hills because you have rose-coloured glasses on. A common mistake I see is that individuals assume that their revenues will increase after year 1 (or much sooner) with no associated increase in costs. Does it seem realistic that with no additional selling or marketing expenses, customers will flock to your improvement? I think not. I, myself, have thrown away a very high number of ideas because there simply was not a high enough profit margin for me to get excited.
Once you figure out how much money and time it takes, double or triple it because this is the stark reality of start ups. If you can ramp up revenues and associated profits up to cover the extended timeframe, you may have a winning business. Once again, if it does make sense, then investors will have no issue giving you money.
Sorry for being so realistic, but there is a reason why over 90% of businesses fail. If you have a winning idea and realistic business case, you should be able to find financing through family and friends (angel investors) and possibly BDC. Depending upon your age, Futurepreneur Canada may be an option. But each one of these will depend upon you having a solid and realistic business plan.