Do You Have a Million Dollar Idea? Test It.
1WeekKC is fast approaching (May 20 through May 27, to be precise). This signature week of entrepreneurship is your invitation to connect with business-building resources in Kansas City, network with other entrepreneurs and learn from some of the best in KC business.
One of those experts is Rebecca Gubbels, a rock-star consultant at the UMKC Small Business & Technology Development Center who tells it squarely and bluntly. She will be presenting at Start + Scale Business Day, a full day of connections, knowledge and networking that’s perfect for anyone looking to start or grow a business in Kansas City.
Below, Rebecca shares some simple tests that you can use right now to see if your business idea has legs.
Your business for dummies.
Before you invest a single dollar into your idea, sit down with your grandma and tell her all about your business.
If your grandma is busy doing whatever grandmas do, grab a buddy, your pastor or the lady next to you on the bus. It doesn’t matter who they are, as long as they’re a lay person in your particular industry.
Explain to that person what your business does. If they don’t understand, change your language until they do. Then write down what you said that they understood, and shorten it.
Next, and most importantly, tell this lay person how your business makes money. If they don’t get it, it probably isn’t going to happen. Making money isn’t magic, it’s business.
Too many entrepreneurs start their business at too large a scale and expect customers to show up. That’s a fast way to fail and lose a whole bunch of dough. Instead, think smaller.
If you want to open a restaurant, ask yourself, what’s smaller? A food truck.
What’s smaller? A food cart at a farmer’s market.
What’s smaller? A booth at a craft fair.
What’s smaller? Throwing a dinner at my house.
What’s smaller? Making dinner for a friend. Nice. Start there.
If you start small and then let the marketplace invite you to grow, you’ll learn a ton along the way and you may find out your dream wasn’t where you wanted to be after all. It’s a lot easier to pivot your business with low overhead and no baggage.
Talk to strangers
I’ve had this conversation way too many times, “What do you know about your potential customers?”
“Well, my mom said she would buy it.”
“Oh, yeah… who else?”
“Ummm, my brother is definitely in…”
You see the problem here, right? Find a non-biased person to run your idea by. A young person and an old one. A person very different than yourself. Run it by at least twenty people. If you can find fifty, go for it. One hundred, even better.
And after a bunch of strangers have asked you questions and tore apart your idea, it’s time to head into...
The expert gauntlet
Kansas City has an insane amount of resources to help you start and grow your business. I work for one of them, UMKC’s Small Business and Technology Development Center. KCSourceLink is your one stop shop. SCORE has great counselors and Women’s Business Center is ready when you are. Not to mention all of the wonderful events you can attend to build your network and learn from other entrepreneurs.
All of these resources can help you fortify your idea and give you perspective on what the road to success demands. My speciality is financing, which is huge and daunting for a lot of people, but with a little help and a good balance sheet, most people can figure it out.
Gaze into the future
The most important thing an entrepreneur who is looking to make sound financial decisions can do it to learn how to make a solid set of projections.
Projections are an educated guess about how your business might perform. A lot of people think that starting a business is a gamble, but it doesn’t have to be that way. Anyone can take actions to learn from customers and go build a business around that.
Conduct primary research by observing your marketplace and surveying likely customers. You can begin your secondary research at your local library, or by checking out trade journals and a little thing the kids are calling Google.
And then take everything you’ve learned and head back to your trusty neighborhood business counselor. It’s important that as you’re making these foundational decisions that you’re very honest about your risk tolerance. There’s no reason to take on more than you can handle.
Make money by spending money
All right, so your business is up and running and you’re thinking about spending some money to grow your business. You should never take on a debt unless you know you can take a dollar and turn it into a buck twenty.
For instance, if you’re going to buy a machine, you better save 20 percent. That’s oversimplified, but you get the idea. Every dollar you spend is an investment. If you’re not thinking that way you’re playing the wrong game.
This same principle applies to hiring. Don’t fill a position just to have that position. Make an investment in your company and that person by increasing productivity with every hiring decision.
Kansas City is a great place to do business. It’s big enough that you can move some money around, but small enough that people aren’t mean.
Go out there and give it a shot. I’ll be here to help when you need me.
For more great advice and insight from Rebecca, be sure to join us at Start + Scale Business Day, hosted by KCSourceLink, at 1Week KC. Also visit our learning center for more on how to start your own business.