If you have an idea in your head about the next powerful mobile app that would change the world, you are hardly alone. After all, ‘winning’ business ideas are like butt-holes, everybody has one. That may have been phrased in such improper terms, but a little vulgarity and directness is needed when it comes to driving a key point home to business founders. You cannot just depend on passion. For your idea to turn into a multi-million or multi-billion dollar company, your idea must have traction.
Describing the idea clearly is where most would-be company founders fail. Oftentimes, they have this great passion for this amorphous and ill-defined idea in their heads, but when it comes to actually sitting down and reducing that idea into black and white letters, they are at a loss for words. This is why it is important to take the time to write down a business plan. A business plan will not only pour cold water on your excitement but it will actually help you look at your business idea with the cold hard lens of reality. By applying these filters, you will not only be able to get a realistic assessment of your idea, but you might also be able to sculpt your idea into something that can actually work in real life. There is a big gap between passion/excitement and reality. A business plan is one key element that bridges both.
Keep in mind the following tips in preparing your business plan:
1. Focus on the business model
The initial days, weeks, months or days or however long it takes should be focused on honing the business model. Does the business model make sense? The business model is what investors will invest on. They don’t care about the other aspects of the business plan as much as the core of the business plan. Therefore, you need to spend a lot of time researching and analyzing whether your business model will work. The key elements to making sure that you devote enough energy into this part of your business plan is to do a lot of competitive analysis, analogy and look at the history of companies that tried to do what you’re doing. If you think that your idea is completely new and nobody has done or thought about it before, think again. Chances are, people have tried your idea before and they failed. Your job is to figure out why they failed and come up with a compelling reason why your business model won’t suffer the same fate.
2. Focus on the competition
There is no such thing as virgin territory when it comes to technology industries. There are always competitors. The sad truth is many company founders look for direct competitors. If you go about it this way, you will obviously not find any direct competitors. You have to look for indirect competitors who are trying to solve the same problem. Once you are able to find your competitors, look at those competitors as possible guinea pigs for your business model. Figure out what they’re doing right and figure out what they’re doing wrong and try to fix it.