Business Law

Have a new business idea or venture? Are you sure?

 
Every business starts with an idea or concept.  A mother having a difficult time reselling toys her children have out-grown develops a website for renting kids toys.  A man in mid-town Manhattan develops a bagel slicer that perfecting cuts bagels in half.  A track coach in Eugene, OR, makes running shoes out of a waffle-iron.  All of these ideas started simple and grew into exteremly profitable enterprises.  So, now that you have that next "big thing" which will improve our way of life and change the course of industry, how does one go from the "idea stage" to the "operating a business for-profit stage"? 
 
Forbes magazine wrote an excellent article on how to figure out whether your "great idea" translates into a money-making venture or whether you should keep your day job and not divest your 401(k) plan.  The article talks about six (6) questions an entrepreneur should ask to determine if the "great idea" is a viable business concept.  First question, is whether or not an entrepreneur has a compelling value proposition?  Simply put, can you convince total strangers to buy your product or service at a price above what it takes to make it – don’t "over-estimate" your originality, if you thought of the idea, chances are so has someone else.
 
Next, a budding entrepreneur should determine if there is a viable market for the new product or service?  The greater potential for growth, the greater potential there is to make money.  In a capitalistic society, a company’s ability to grow and make money will be more appealing to investors.  Covering your development costs in the initial stages of the business is the third question that needs answering.  Many venture capitalists and investment bankers contend that a majority of businesses fail because they are under-capitalized.  Don’t be frugal when trying to decide how much money you will need to startup your company – be honest and then add a cushion for those unexpected costs.
 
Can reaching your target market be accomplished in a cost-efficient way?  Many companies during the dot com days of the late 1990’s were flooding the marketplace with free trial software.  This kind of marketing, along with press releases, post cards, and mailings, can be extremely expensive and unpredictable, even for the most capital-riched startups – tred wisely.
 
The fifth question deals with your company’s ability  to sustain a competitive advantage amongst the competition.  As your "great idea" grows in popularity, other spin-offs will surely develop driving down price and demand.  Staying ahead of the competition is vital to the company’s survival in the marketplace, and will be the true measure of success.  Finally, how committed are you to "the cause"?  Good old-fashioned hard work, sweat, and toil are the main ingredients for a successful startup company.  If you are not totally committed to seeing your venture succeed, then don’t start down that path until you are ready to do so.  When the Spanish explorer, Cortez, got to the New World, he burned his ships to motivate his crew.  There is only one direction to go and nothing behind you will help you go forward.
 
To access the article by Ms. Melanie Linder of Forbes Magazine, click on this link:  Is Your Great Idea A Real Business?
 

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