A great idea is the seed of a good business, but it can only grow to its full potential if it is cultivated properly. Most great ideas remain dormant because people don’t have the courage, resources, time and/or money to take action. And for those who take action, most are unprepared and thus find themselves spending their valuable time and money on a dream that simply goes off track.
If you follow certain steps, you can turn your vision for a successful new business into a reality. Here’s a start-up roadmap:
- Figure out the problem you will try to solve – You get excited with your idea and focus on the solution it will provide to your customers. But, you have to first focus on the problem which will be solved by your business. Amazon, for instance, solved how e-commerce was, at one time, expensive and inconvenient. Today, it has more customers (and sales) than its brick-and-mortar competition.
- Analyze your idea thoroughly – Evaluate it through all angles – its timing, potential customers, competitors, execution plan, payoff vs. risk involved etc. A rough business plan is a great way to make sure you’ve covered all your bases. Assess your idea based on SWOT – your strengths, weaknesses, opportunities and threats.
- Analyze latest trends – If you are looking at a new product or service, does it meet your clients’ needs in new, creative ways? Will it stand out or get lost in the chaos? Explore your idea to see how you can make it different and/or better from the rest.
- Feedback from friends/peers – Ask friends, business colleagues and other strategic people to assess your new idea. Welcome their feedback.
- Find your exact market – You need to actually figure out where exactly will your solution fit into the market and in the lives of people. You may have to relocate to a different place, if it sounds more promising for your new business.
- Prepare financial model – Create a financial model that focuses on how your product or service is created, marketed, and sold to an individual user. Doing this will give you more insight on how your business will function. Your model should also focus on the target sales to earn a profit.
- Find out sources of capital – Possible sources of funding are self-funding, money from friends and family, credit cards, or loans. Depending on the amount you need, a more helpful source can be angel investors and venture capitalists looking to back your mission for a percentage of profits.
- Create a minimum viable product (MVP) – A principle of the lean start-up method is to create an MVP to determine demand early on and discover what works and what doesn’t. Take your MVP to potential target customers, listen to feedback, and use insights to develop your original model into a successful product or service that fully caters to your customer’s needs.
If you have a bright business idea, register on TheGongzuo.com and bring the idea to us. We will keep all the confidentiality about your idea and will also suggest to improve and groom your idea on the basis of our expertise and experience.
Cash flow is one of the most critical components of success for a small or mid-sized business. Many a profitable business on paper has ended up in bankruptcy because the amount of cash coming in doesn’t compare with the amount of cash going out. Most business owners don’t truly have a handle on their cash flow.
How to improve cash flow?
- Collect receivables – Speed up the receipts and processing of receivables by requesting customers for electronic funds transfer. If they plan to pay by check, ask customers to preauthorize checks so that banks can draw against their accounts at timed intervals. You can also try offering discounts to customers if they pay bills quickly.
- Tighten customers’ credit requirements – Businesses often have to extend credit to customers, particularly when starting out or growing. But you have to do your research beforehand to determine the risk of extending credit to each customer. You should do a research and check reports on health of individual customer’s business and whether or not they are having cash flow problems.
- Increase your sales – If you need more cash, it seems like a no brainer to go out and try to attract new customers or sell additional goods or services to your existing customers. Selling more to existing customers is cheaper and you may be able to do this by analysing what they’re buying and why – information that may even lead you to increase your profit margin and, hopefully, generate more cash.
- Offer discounts – One option to increasing cash flow is to offer your customers discounts if they pay early. While this practice may impact your profit margin, it may help your management of cash flow by offering incentives to customers to make payments earlier than billing cycles typically require.
- Secure loans – Short-term cash flow problems may sometimes necessitate a business taking out a loan from a financial institution. Some possible types are credit lines or equity loans. Most of the time this type of borrowing accomplishes its goals, although during the financial crisis banks may cancel credit lines.
- Measure cash flow frequently – Ask yourself two questions to get a sense about whether your cash flow is under control or not – “What is my cash balance right now?” and “What do I expect my cash balance to be six months from now?”
- Prepare backup plan – No matter how much effort you put into perfecting your forecast, unexpected obstacles can throw your plans out the window. For this reason, you need to have a contingency plan for when money is tight to ensure your business is kept running.
- Don’t under-price your product/service – It can be tempting to lower your prices in order to offer your clients the best deal and stay competitive. Be careful not to under-price your products or services though. Make sure you are bringing in a healthy profit margin.
Cash flow is important for all businesses, but it is critical for start-ups. If you cannot manage your cash flow within the first year, you will likely not survive the second year. Register for free at TheGongzuo.com to stay afloat with the help of our investors and financial advisors. Our experts will guide you shape your actions going forward.