In my column this week in the Tennessean, I offer some more advice for the growing legions of accidental entrepreneurs.
The recession is creating more and more accidental entrepreneurs — those who suddenly find themselves out of work.
In my last column, I offered suggestions on how these accidental entrepreneurs can find ideas for self-employment. But not all of these ideas will prove to be viable business opportunities. Evaluating the “3 M’s” of an idea for a business can weed out those that are doomed to fail from those that have a good chance of success.
Is there a market?
The first step is to determine if there are enough customers willing to buy your product or service for you to make a living. Seek advice from people who work in the industry. Their knowledge can help you determine the market potential for your idea. Learn as much as you can about your potential customers. Talk to potential customers to determine if they will buy from you. Get to know your competition’s strengths and weaknesses. Focus research on how well they are meeting the needs of the customer. You should also investigate how well their businesses are doing during the recession.
Is there a margin?
Even if there is a market for your business, you still need to determine if it can earn you a living. The second step for evaluating an idea is to understand the basic economics of the business. How much will the product or service sell for and how much will it cost to produce the product or offer the service?
Do not try to develop a full budget — rather, you are forecasting the price you can charge and the basic costs associated with actually making the product or providing the service. Make sure that your costs include the salary you need to cover your basic living expenses. You may not be able to pay yourself from the new business right away, but it should be able to meet your needs before your savings have run out.
Is this for me?
The final step is to ascertain if the business is a good fit for you. As discussed in my last column, it is your passion that will carry you through the challenges of running a business. And it is your experiences, knowledge and skills that increase the chances of successfully launching and growing the new venture.
Evaluating the three M’s behind each idea for a new business will help increase your chances for success in a new career as an accidental entrepreneur.
Although you may feel that time is of the essence to begin to replace lost income, take time to ensure that the new venture you pursue will truly provide a real opportunity to make a living.
I hate articles like this! They tell you what you should do, but not direction as to how to do it!
“The first step is to determine if there are enough customers willing to buy your product or service for you to make a living.” Huh? How does one accomplish that!
“Get to know your competition’s strengths and weaknesses. Focus research on how well they are meeting the needs of the customer. You should also investigate how well their businesses are doing during the recession.” Boy this is easier said then done! Should we contact the competiton and ask to see their P&L? Urgh!!!!!!
Great ideas, Jeff. I would add one more: Have a core story. A strong core story will make it easier for potential customers to understand your business and will provide strategic focus for your activities. Companies with a core story know where they are headed and how their actions fit into the story.
Max Goldberg
The Radical Clarity Group
http://radclarity.blogspot.com
Sandra,
There are a lot of resources available to the budding entrepreneur. Look for your local Small Business Development Center, SCORE chapter, or Entrepreneurial Center. Look on-line at http://www.SBA.gov or http://www.SCORE.org. Most of their services are available at no charge.
Look also into entrepreneurial training, like FastTrac NewVenture from the Marion Ewing Kauffmann Foundation. We have had great success among entrepreneurs that have taken this 33 hour ($149 locally) course.
Good Luck.
Mark.
Here is another ‘M’ to remember when starting your own business… Marketing. Whether you use online tools like Biz Ad Splash or Facebook or advertise in your local newspaper, you must concider how you will market your new home based business.