Step Two: Hone Your Brilliant Business Idea
Everyone has good ideas, but we are so often at a loss as far as how to use them. You'd be surprised at how many letters I get that follow the same theme: People who know that they bake the very best sweet potato pie in the country, but they just don't know how to market it. That's why I thought it was so important to share Julie Clark's story with you. As the founder of The Baby Einstein Company, Julie (pictured above) turned her idea into a company with over $20 million in sales.
Julie, a former teacher, shot the first Baby Einstein video in her basement because it was something that she wanted for her children—an age-appropriate way to teach art, classical music and poetry. From there, she hit a New York trade show, sans booth (because she couldn't yet afford it) but with video in hand, and she made sure it got into the right hands—a buyer from the children's store The Right Start. Her enthusiasm, clear vision and persistence sold the first copy, and her distinctive idea ensured that sales continued to climb. "I think it's a good example of how, with limited resources, you can still do something successful," says Julie.
Julie's since sold The Baby Einstein Company (to Disney in 2001) and moved on to a new project, The Safe Side, through which she produces children's safety videos in partnership with John Walsh of America's Most Wanted. Her story sounds simple, but within it are a few must-dos if you're going to turn your brainstorm into a business.
It takes seven steps to make your dream a reality.
It can be in your head (many successful businesses were started with a non-written business plan), but I prefer it on paper. There are many resources on the Internet for writing a business plan. I like the ones at the Small Business Administration's website, sbs.gov (a great source for funding as well, which we'll talk about in Step Three).
Make your idea unique.
One of the best things you can do as a business owner is to try to come up with an idea that really is completely new. If you replicate another company's creation, you're going to be hard up to generate a demand for your product. Why? Because there simply isn't a need for it—the market for that product has already been satisfied, and since the other company has likely been around longer, chances are they already have a bigger customer base. It's okay, though, to improve on an idea that is already in the marketplace. Julie Clark didn't invent children's videos—she saw a hole in the existing lineup and developed something to fill the void.
Know your product inside and out.
If you can't explain what exactly your business does and why it will be successful in one or two sentences, then you need to go back to the drawing board. First and foremost, you need to be clear and specific as to what the business is about. Once you've come up with something that makes sense, practice pitching your idea to your friends, family, even your mirror, until you can effectively answer any question that's thrown at you. It's the best way to work out the kinks.
Figure out how long it will take you to make money.
Part of knowing your product well is knowing how much you'll sell it for, how much it will cost you to run administratively, how much of an investment you'll have to make (and whether you can afford it out-of-pocket or if you need to raise funds) and how you'll pay yourself back. If you're not absolutely certain, that's okay. Make your best guess.
Do your homework.
Many new entrepreneurs shy away from market research, thinking it will cost them buckets of money that they don't have. Don't make this mistake! You can do research for cheap or even free if you get creative. For instance, talk to people in a mall or another public place that attracts your potential customers. You can develop surveys via a low-cost Web service like SurveyMonkey.com. And you can scour phone books for similar businesses in other cities.
Pinpoint your market.
Julie Clark knew that her video would primarily appeal to college-educated parents who were looking for engaging ways to jump-start their children's education early in life. She went to that trade show with one store in mind—and she didn't leave until the video went home with someone from The Right Start. Julie knew she'd have a better chance of selling to them because their customers matched her video's target consumers.
This is a key rule—whether you have a product that will be sold in other stores, or you're starting a service or retail business of your own, you need to get it to the kind of consumer who will buy it. This is where your market research, and your common sense, comes in—it might not be a good idea to open a lawn mower shop in the heart of New York City's Midtown, for example.
Know your talents—and your limits.
Recognizing what you're good at is key to being a good business owner. Julie Clark was great with the video production, but she turned the financial duties over to her husband. A lot of people try to do too much themselves. One important thing is to recognize what you can't do, and then get someone else to do it for you. Take this advice in stride, though—remember that the more employees you have to pay, the less money you'll have coming in. When Julie sold The Baby Einstein Company, she only had five employees on the payroll.
Now, it's time to find your funding.