Top tips on starting a business
You've got an idea for a new business. Alas, ideas are a dime a dozen. Here's how to turn your concept into a moneymaker.
Let's say your idea is an online service that matches mentors with proteges. If match.com and eharmony.com make millions matching romantic partners, why not a service to match those seeking a mentor with those wanting to be one?
The first step in developing any new business is to research the competition. Start with Google. In this case, I Googled phrases such as "mentoring organizations" and "mentoring services." And then "adult-to-adult mentoring" and "mentoring between adults." Not one led me to the kind of matching service I had in mind.
Using my Web browser, I typed in "mentormatch.com," "mentormatcher.com," and "mentorfinder.com." Nothing.
That made me nervous. If my idea is so good, why is no one doing it? So, if I were seriously pursuing MentorMatch, my next step would be to phone the directors of some mentoring programs and ask why they hadn't developed an online matching program.
I wouldn't bother asking them to sign a nondisclosure agreement. Often, they won't sign, or doing so would make them suspicious of me and likely to withhold information. I believe the risk of having an idea stolen is small. Rarely will someone go through much effort to implement an idea that's not his or hers. Worst case: If it's stolen, I will, with no work, have gotten one of my ideas for improving the world implemented. There's no shortage of good ideas. I'll come up with others.
If I uncovered other mentor-protege matching services, then what? I'd incorporate their best features into MentorMatch. I'd enroll as a mentor or a protege at the best competitors' sites to experience them firsthand. I'd ask fellow site users for suggestions on how to improve the service and put the best ideas into MentorMatch.
If MentorMatch still seemed promising, I'd develop a simple prototype with the aid of a programmer who had worked on creating a dating website. I'd recruit two dozen friends and colleagues, perhaps using Zoomerang.com, a site that allows you to conduct online surveys, and have them try the prototype. "Tell me the truth," I'd beg my guinea pigs. "Do you really like MentorMatch? How would you improve it? How much would you really pay to use it? Better I should know now that you think it's worthless than after I've sunk a lot more money into it."
If my friends genuinely liked the prototype, I'd develop an improved version and then try to sell it to sites that already had career-related traffic, like monster.com, careerbuilder.com, or usnews.com/career.
But what if I wanted to start a business selling a product—say, handmade pottery? I wouldn't just sell my own pottery. That might force me to produce pots nonstop, leaving no time for all-important sales and marketing. Besides, I wouldn't be able to offer a wide enough selection.
So, first I'd find a few other potters who produced good quantities of commercial work and would let me sell their pottery on consignment. We'd split the sales price 50-50. Most artisans hate sales and marketing, so it shouldn't be too difficult to find willing potters.
Next, I'd pilot-test vehicles for selling: eBay; a website I'd create; and wholesaling to pottery stores and websites. I wouldn't invest much in any approach until I had evidence it worked.
To prepare to sell on eBay, I'd read Lissa McGrath's 20 Questions to Ask Before Selling on eBay. To create and host my site, I'd use Yahoo Store (www.store.yahoo.com) or an eBay store (www.ebaystores.com). For tips on how to get a site to appear high on Google and Yahoo! searches, I'd consult searchenginewatch.com/webmasters. To drive traffic to my site, I'd buy pay-per-click ads from Google but watch out for click fraud (competitors undermining your business by constantly clicking on your ad so you owe Google a fortune).
To identify bricks-and-mortar outlets, I'd look up "pottery" in my local yellow pages. (Delivery costs are lower if I stay local. If I'm successful locally, I'll expand to more-distant stores. ) I'd Google "pottery" to find websites that sell pottery. In making deals with those sites, I'd agree to "drop ship"; that is, the site would forward orders to me and I'd fulfill them.
I'd monitor which sales channels and products were profitable and, two or three months later, drop the unproductive ones and increase my investment in the moneymakers.
Takeaways
- Start by researching the competition. Googling, a few phone calls, and perhaps in-person visits can yield plenty of information fast and free.
- Don't worry too much about others stealing your idea. Usually, the benefit of getting their reactions to your idea is worth the risk.
- Don't be deterred if you find similar businesses. Adopt the best features of your competitors. That will make your business concept best in class. If you implement and market it well, you'll do fine.
- Test your idea inexpensively.
- Don't be quick to open a bricks-and-mortar store. You'll probably end up making more money by selling on eBay and your own search-engine-optimized site and wholesaling to other sites and stores.
- In two to three months, cull your least successful products and sales and marketing approaches, and increase your investment in the winners.