So you want to start your multi-million dollar lemonade stand. You’re loaded with your grandmother’s famous (or not-so-famous) recipe, your Red Rider wagon to cart around your supplies, and a big quirky sign that reads “DRINK MOHR LEMONAIDZ HERE!”. Who needs a college degree? The world is yours for the taking!
Wrong. Before you can start to be successful with your lemonade business (or any other for that matter), you should have a perfected plan of attack – a battle plan for assaulting the masses with your wonderful flavorful yum dum scrumptious grandma’s recipe. Or maybe you just sell audio-less greeting cards to blind people (maybe not your best plan). What you need is a business proposition. Yes, that’s it!
Contrary to popular belief, business propositions are used by more people than just the top techy suits or those with dragons carved into their beards. Nay, if done correctly, you too can benefit from one of those fabled five-pound gloss covered business propositions.
Benefits include knowing how much you can spend on your startup costs, who your core customers may or may not be (get out of here, you broke skateboarding rascals!), and being able to tell with reasonable certainty whether there’s a market for your My Little Pony Island Adventure independent film venture. But I digress! Here are some key steps to forming a basic business prop’ to get you started in the right direction.
STEP ONE: DETERMINE YOUR PRODUCT
(also see section IV, paragraph 9, subsection 87: what in God’s name are you planning to sell?)
A product is great. A product that benefits someone is even better. If your idea for a product you want to sell or go into business on behalf of isn’t out to better someone’s life in one way or another, it’s probably crap. Toss it in the garbage and move on. You’ve got better stuff to do.
If, however, you have a product or service that is for all intents and purposes a well-meaning, thought-provoking, masterpiece that benefits the human race, move to step two.
Please note before moving on to step two: if your product is by any chance a twenty-foot tall collection of bean bag creatures, you’re infringing on my copyright. Just know that I thought of it first.
Please also note that I didn’t actually think of it. My friend, who we will call Jerry, thought of it when he was really “tripping out like a unicorn on quaaludes”.
STEP TWO: DETERMINE YOUR AUDIENCE
You’ve got your product. It has the power to launch a fully grown alien queen out of your spaceship’s airlock to save the day and ensure there will be another sequel to your movie franchise. That’s fantastic! But what if your intended audience doesn’t own a spaceship to carry you to other planets or meddle in stuff that isn’t yours to meddle in? Well, you’ve failed step two.
In this step, you’ll want to determine an audience that you feel is most suited to your product or service. These will be your core bread and butter. If you can please them with your item, it’s relatively likely that you’ll do well. You may also want to think about positive changes that can be made to your product or service to make it even easier to market to your intended audience.
Note: your intended audience may be incorrect. It’s important to come back to this step after your business has been launched. If instead, you are finding that a different audience enjoys what your offer more, consider changing your business to fit your new audience more appropriately. They may thank you by sending you gifts that include but are not limited to: a cruise, a fully formed creature from the black lagoon, or just a “thank you” (whatever that is).
STEP THREE: CALCULATE YOUR STARTUP COSTS
Depending on what you’re looking to get into the business of offering, you could find yourself deep in a hole before opening the doors when you find yourself investing in startup costs without the necessary income to dig out. In this step, you’ll want to pull up a good ol’ fashion spreadsheet on Google Sheets (this is free for all Google or Gmail users) or Microsoft Excel (if you have it or wish to purchase it for this purpose) and start to tally up the expenses that it will take to get your business started.
Do you need a printer? Business cards? Maybe you sell t-shirts and you only have one printing press. These things matter when you’re looking to jump out into the world with your idea. This is because every penny of it will have to be paid back just to break even. And if you don’t break even or make more than what you’ve put into it, you’re just moving backward (much like Dobby when he became a free elf but was then subsequently killed only a few short novels later before he could truly enjoy whatever free elves enjoy doing. RIP you true gangsta, you).
The point is, a lot of businesses fail because their startup costs are too high and their cost to continue business is even higher. This brings us to step four.
STEP FOUR: CALCULATE THE COST OF CONTINUING BUSINESS
Much like step three, you’ll be using some sort of spreadsheet to determine how much you will need to load in continuously to keep the business running. Remember that if your goal is to start a business, you’re very likely jumping off a cliff and learning to create some sort of flying machine to bail you out before you hit the ground. Bonus points if you can create a machine that saves your behind and also flies like a space shuttle with a mission to the moon.
Once this is complete, you can move safely on to step five.
STEP FIVE: CALCULATE YOUR POTENTIAL INCOME
Even though your galactic lemonade stand has yet to hit the galaxy’s front page newspapers, you’ll very likely have some clue as to how much of it you can sell to the soccer moms of the planet Wal-Target.
I’m talking about demand – pure desire for what you’ll be offering. For example, if you’re planning to sell your grandma’s lemonade to golfers at a nearby golf course between holes, you can call the local course and inquire as to how many golfers they get per day. Assuming what you’ve got is the good stuff and not some cheap watered down toilet water, you might assume that on a scorching day (which you can look at weather reports to see the chances of) you could get at least a fourth of the players to buy into what you’ve got.
You get the picture.
STEP SIX: CALCULATE YOUR POTENTIAL PROFIT
At this point, you have a general idea as to who you’d be selling to, how much money you’ll have to spend to get it going, how much your inventory might cost, and how much you could potentially sell. If, when you subtract your costs from your potential sales you end up with a positive number, you may just have a business worth stealing – I mean running…
So make sure to send me an email about your great business idea so I can steal- I mean, talk to you about it and tell you how great it is.
STEP SEVEN: SCOPE OUT YOUR COMPETITORS
Your business idea may be great. But it can be pretty hard to knock a gorilla out with a ping pong paddle. That’s why step seven is here to remind you to check who else may be doing what you’re planning on doing. Price and quality can be beaten in a lot of circumstances but just because you can doesn’t mean you will. Know what you might be risking before you step to the plate.
Questions to ask here are numerous. What are the competitor’s prices like? How far away are the competitors? What are the odds someone will travel that far to save a couple bucks?
Also: see if they have any patents on what they provide. When daddy holds a patent, you can’t pass go without paying $200 (or, well… you get the idea). And if you’re going to be handling food, you’ll need to look into what the requirements are in your state. Do you need a food handler’s card? Or more?
In the end, it should look something like this:
Having your own business can be fun and very rewarding. A lot of hard work is required. And there’s a lot more to know than simply what’s been detailed here. But with this article, you should at least be able to look at it from a macro view and see whether or not there’s any chance of you moving forward with what you’ve got. Just remember: do your homework and don’t simply take the word of some dude who wrote an internet article about it. Running a business has countless risks. If you’re not ready to lose it all if it fails, you’re probably not ready to start it. And I guess you could say that’s my disclaimer.
A USEFUL TIP FOR GETTING STARTED:
Starting a business can be both time consuming and information heavy. To make things easier, and also to keep you motivated and on track, it can be a great idea to purchase a whiteboard to hang in your living space where you can always see it. Try covering it with all of your new business needs, appointment times with clients, sales goals, marketing reminders and much more.
Until next time,