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.)
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.
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.
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.
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?