I love working with entrepreneurs. Excited and enthusiastic, their energy is contagious as they talk about their next great idea. But sometimes I have to tell these amazing people that I can’t help them, because excitement and energy is not enough to make a business successful.
Usually it’s because their idea is only half baked. There is a good concept, but they haven’t done their homework. Typically the shortfalls occur in one of several categories:
- Not enough experience in an industry – There was the woman who wanted to open a shoe store because she loved shoes. Unfortunately, she had never worked in a retail store. My advice, spend a year working for someone else, and not a department store. You need to understand inventory management and cash flow before you try it for yourself.
- Not enough research – A man wanted to create a website to connect people with aging parents to contractors who could help make changes to the parent’s homes. This was a good idea, but it was designed in a vacuum, without talking to contractors about how they would bid on projects and work with people out of state who were paying their bills. He also hadn’t clearly designed his revenue model.
- No awareness of the competition – Someone came to us with a website selling high-end gift boxes to men. I really liked this idea. While there are lots of gift sites, we actually couldn’t find any specifically targeting busy, affluent gentleman. Cool product, cool niche. So what was the problem? Although the other sites are not focused on this segment, there is a service expectation established by companies like Birchbox. The entrepreneur hadn’t ever heard of Birchbox, which led us to believe he hadn’t done much research at all.
In most cases, a little hard work and time will typically resolve the issues. But entrepreneurs are impatient, and all too often I know they are leaving my office assuming I don’t know what I am talking about. Have I been wrong? Sure. Every now and then a business I thought would never make it does succeed. No one is perfect. However, after 20 years of reading business plans and talking to business owners, investors and bankers, I am right more often and I’m wrong.
If you have an idea for a business do your homework, learn about your industry, your competitors and your customers. Give your idea a chance to succeed by letting it finish baking.