The case for starting small with big ideas.
You think you have a million-dollar idea, or at least one that will be a compelling business. You feel it in your bones.
As tempting as it is to pour every ounce of energy and every last cent you have into launching this new idea—whether it’s a new product, a new service or even an entire company—hold back.
Start slowly, and let the marketplace determine how quickly or slowly you grow. Let its clamoring for your products or service support your growth.
After all, business expansion must be financially feasible to be sustainable. You don’t want to end up with equipment or payroll that you can’t afford. Starting with baby steps is a smarter way to work toward building a bigger small business. This isn’t always the most exciting story, but it’s also one that describes how many successful business owners started out.
And even better? It can be your success story, too.
Get Feedback, Minimize Risk
A while back, I had a client who came to me wanting advice on opening a family- friendly Mexican restaurant.
I had to ask him: How good are his recipes? His family likes his food, he said. Well, I like my aunt’s cooking, but it doesn’t mean she should open a restaurant. Back out he went and returned with recommendations from family and friends this time. Alas, he needed the opinions of those who couldn’t give a guacamole about his feelings.
It’s critical to test your market before investing a lot of time and money into a business. Gather a focus group of real people, not just friends and family, and see what they think about your idea.
Ask what they think the cost should be; that’ll help you determine your pricing and profit margin. Metaphorically, are you selling a $2 or a $10 taco? If it’s a $2 taco, will you be able to make enough profit to sustain business in the long run? Whether you’re selling tacos or software, getting objective opinions helps minimize risk.
Keep Slicing Your Idea in Half
Before investing a huge amount of time and money, try to build the smallest possible version of your vision. Meaning your restaurant idea becomes a food truck. Your food truck then becomes a booth at your local farmer’s market or a catering operation.
The idea is to start out as small as possible so you can test your products or services along the way. Then, once you know how, and if, the marketplace will respond, you can work your way up from there.
Two Things to Focus On
When starting any new venture, focus on selling the products and services that, A, you know the best and, B, that solve a problem. “What problem does your business idea solve?” is the first thing I ask clients.
It’s all the better if you are truly enthusiastic about what you do. Nothing sells a small business at launch like your expertise and your brilliant solution to a real problem. If, and only if, you’re profitably solving a problem for the masses will investors’ money change from their hands to yours.
Of course, enthusiasm isn’t enough to get a business off the ground. It must be tempered with the ability to accept reality and adjust accordingly when a plan doesn’t quite pan out as expected. Taking baby steps toward building your small business lets you be nimble and regroup when necessary with fewer emotional and financial consequences. You’ll have proof of concept on which to build.
By keeping overhead to a minimum, you’re more likely to recoup your initial investment sooner and use profit to fund sustainable growth.