South Park’s infamous underpants gnomes thought they had business ownership all figured out. As they told the boys, their business plan consisted of three simple steps:
- Step 1: collect underpants
- Step 2: ?
- Step 3: profit
Yeah, they probably could have used a mentor. Maybe a full-blown incubator.
Good thing most entrepreneurs are smarter than the underpants gnomes. But that doesn’t mean everyone who starts a business is guaranteed to succeed. Most don’t. And even those that do eventually achieve escape velocity face a long, tough slog beforehand.
If you’ve got a great idea (hopefully not stealing underpants) that you’re serious about turning into a profitable business, follow these four simple, well-worn steps that have served countless entrepreneurs in the past. (In case you were wondering, Step 5 is profit.)
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Table of Contents
Protect Your Intellectual Property
Whoever coined the phrase, “Imitation is the best form of flattery,” never started their own business. Here’s the hard truth: every great idea is vulnerable to theft. To protect against intellectual theft, you need to secure your intellectual property. Conduct a thorough patent search using Google Patents or another low-cost resource to determine whether your idea infringes on any existing patents. (Tap a lawyer or intellectual property expert if you’re not sure what you’re looking at.) If you’re in the clear, apply for patents on any mission-critical ideas or technologies, and trademark any brand names or processes that you plan to use for your business.
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Test Your Concept
You might think your idea is great, but what if no one else does?
“The last thing you want to do is invest your life savings — or your investors’ — into a concept that isn’t actually supported by the market,” says Scott Vollero, an international entrepreneur who built a small auto parts recycling company into a multinational business.
Market-test your idea with a small production run or beta trial, collecting feedback from as many participating customers as possible. If your idea isn’t well-received, oh well — walk away and start fresh. And if people do like what you’re offering, well, maybe you’re onto something.
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Create a Detailed Business Plan
Once you’ve validated your idea with an initial market test, it’s time to draw up a detailed business plan. And detailed really is the watchword here. Leave no stone unturned and no theoretical question unanswered — because, if you want to raise outside capital at any point in the future, your investors sure won’t.
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Tap Your Network for Funds & Talent
You’re going to need manpower and money to get that plan off the ground. Start close to home: ask friends and family members for small investments, on terms as favorable as they’re willing to shoulder. (It’s generally not a good idea to give away too much equity at the start, as it’ll hopefully be worth more down the road.) Ditto for talent: look to former colleagues and friends-of-friends for help getting off the ground.
Do you have a great idea? What are you doing to turn it into a legit business?