From Idea To Revenue

Beginning a new small business is often relatively easy. Breaking through to revenue can be more difficult; and sailing off into prosperity is an achievement few experience. What roadblocks should you look out for? Consider the following 5 topics to see whether or not your business is on the road to success or failure.

1.Find out if your idea is financially feasible?- Will your business be able to generate money? Having an accountant run a financial projection of future cash flows and expenses will help you determine if your new venture is worth pursuing. The time to do this is at the very beginning of the new venture. Looking at financial potentials can help you make educated decisions about investing cash and time into your new business.

2.Only sell what people want - DO NOT start with an idea, produce it and then struggle to find someone to buy it. A friend of mine told me, "Most farmers look at a plot of land and decide to grow a crop. At the end of the year they harvest it and look for someone to buy it. If I were a farmer, I would not put one seed in the ground until I knew that there would be someone to buy my crop."

Several years ago, I launched a business that sold unique products from all around the world. My investors would always ask, "Do people really buy this stuff?" As it happened, people did not buy that stuff�even after spending several hundred thousand dollars marketing it. It should be obvious that your product is needed or wanted. The more definite the demand for your products is, the easier it will be to raise capital for your company.

3.Create a Real Opportunity - My partners and I spent days in meetings with a wholesale plant grower. They were attempting to peak the interest of investors. Though everybody was conscious of the potential their growing technology could create in terms of profits, it quickly became apparent that their management team had not accurately identified the opportunity. Instead, we showed them that under their present infrastructure, they did not have nearly enough growing space to create a profit that was worthy of investments.

If they had focused on providing a specialized product to a volume retailer, then they would have an exciting business. As it was, they were not prepared to see the problems and consequently, they lost their investment groups. A normal private placement opportunity should generate a 100�400 % ROI in 3-5 years. Can your business do this?

4.Understand the limits of your knowledge - Frequently we build a business with family or friends or we go it all alone. I once heard the story of a gentleman who worked the cash register at a gas station who dreamed of developing an airline. He abandoned his job to chase his dream.

Let me simply suggest that your presentation to possible stakeholders would be way more rewarding if you could say, "Hello. I'm Bill the founder. And here is my CEO, Mark, who was formerly the Sr. Vice President of Northwest Airlines," than to say, "Hello. I'm Bill. I can effectively operate a cash register. Give me money to create an airline� please?"

Supplement your experience with people who are specialists in their respective fields. Hire the best people you can afford while at the same time, be keenly aware of the cost benefit ratio.

5.Determine your industry - Trying to introduce a new product outside the limits of an already defined industry will cause a plethora of social problems. In order to establish which category your company fits into, ask yourself; "If I placed an ad in the yellow pages, what section would I post myself under?" When you truly know the answer to this question, you'll remove a lot of difficulty in accumulating your market research, industry analysis, and marketing communication.

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Rod Alan Richardson has dedicated his life to teaching people to succeed in free enterprise through his Business Training Courses. Mr. Richardson also offers a free Management Training Newsletter.