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So a friend on another mailing list asks 'I have this really good business idea, what do I do next?'
I reply
> > All of that depends on what you're trying to do.
> > Who you're trying to do it for, how fast you're trying to do it,
> > and who you'd like to pay you money for it and how.
He lows as how that makes a certain amount of sense, would I mind adding a tad more detail. Below is what I sent back.
OK. So, let me recommend the following, then: Sit down and write down the answer to each of the following questions. (And yes, writing it down is really important, not just answering them).
Who will use this?
Who will buy it?
How much could it be worth to them?
How will they find out about it?
How much do I want them to pay me for it?
Who will they buy it from?
How will I accept that money from them?
How long will it take them to pay me once they've decided to buy it from me?
What service or support do I need to provide to help them decide to buy it?
Can I charge them for that service or support? How much?
What service or support do I need to provide after they buy it from me?
(You knew this one was coming...) Can I charge them for that service or support? How much?
Who do I need to hire to help me create, design, and test this?
Who do I need to hire to help me build and sell it? [a note for programmers - 'build' in this sentence means 'make additional copies,' not 'program' - 'create, design, and test' means 'program']
How are they getting by today?
Who else could they buy it from instead?
Why would they buy it from me instead of from that other guy?
What do I need to do to protect my business (plausible answers include 'patent my device,' 'lock in my customers contractually,' and 'deliver a unique service' - that last answer is rarely practical, btw)
How much of it do I have to build before they will pay me to finish building it?
How much will that cost?
How fast can I learn if anyone will pay me for it?
How large a purchase is one customer likely to buy from me at one time?
Once you have answered those questions, you now have a very rudimentary business plan. (Lucky you. In Hollyood, everyone has a script. In Silicon Valley, everyone has a Business Plan). In particular, you can now answer the question 'is this a good idea,' or, rather, 'is it possible for this to ever make money, IE, bring in more revenue than is required to create, sell, deliver, and support the product.'
Then you can ask the next set of questions; I've included the correct answers to these in italics afterward.
Do I need to Incorporate [Yes]
Do I need a business license [only if you intend to accept payment]
Where do I find someone to pony up the capital to start doing this? [depends on the size of investment and how someone can get their money back later; even if your real answer is 'I will eat ramen for two years to bring my creation to life,' you still need to answer the question 'how will I get money back out of this later]
You won't need a business license until you either pay people or accept money from people. There are other licenses that you will need depending upon where you're conducting the business.
No, I have never spent millions of dollars of investors money.
I have spent tens of thousands though, so watch out.
Spending millions required hiring an outside CEO in early 2000.
I reply
> > All of that depends on what you're trying to do.
> > Who you're trying to do it for, how fast you're trying to do it,
> > and who you'd like to pay you money for it and how.
He lows as how that makes a certain amount of sense, would I mind adding a tad more detail. Below is what I sent back.
OK. So, let me recommend the following, then: Sit down and write down the answer to each of the following questions. (And yes, writing it down is really important, not just answering them).
Who will use this?
Who will buy it?
How much could it be worth to them?
How will they find out about it?
How much do I want them to pay me for it?
Who will they buy it from?
How will I accept that money from them?
How long will it take them to pay me once they've decided to buy it from me?
What service or support do I need to provide to help them decide to buy it?
Can I charge them for that service or support? How much?
What service or support do I need to provide after they buy it from me?
(You knew this one was coming...) Can I charge them for that service or support? How much?
Who do I need to hire to help me create, design, and test this?
Who do I need to hire to help me build and sell it? [a note for programmers - 'build' in this sentence means 'make additional copies,' not 'program' - 'create, design, and test' means 'program']
How are they getting by today?
Who else could they buy it from instead?
Why would they buy it from me instead of from that other guy?
What do I need to do to protect my business (plausible answers include 'patent my device,' 'lock in my customers contractually,' and 'deliver a unique service' - that last answer is rarely practical, btw)
How much of it do I have to build before they will pay me to finish building it?
How much will that cost?
How fast can I learn if anyone will pay me for it?
How large a purchase is one customer likely to buy from me at one time?
Once you have answered those questions, you now have a very rudimentary business plan. (Lucky you. In Hollyood, everyone has a script. In Silicon Valley, everyone has a Business Plan). In particular, you can now answer the question 'is this a good idea,' or, rather, 'is it possible for this to ever make money, IE, bring in more revenue than is required to create, sell, deliver, and support the product.'
Then you can ask the next set of questions; I've included the correct answers to these in italics afterward.
Do I need to Incorporate [Yes]
Do I need a business license [only if you intend to accept payment]
Where do I find someone to pony up the capital to start doing this? [depends on the size of investment and how someone can get their money back later; even if your real answer is 'I will eat ramen for two years to bring my creation to life,' you still need to answer the question 'how will I get money back out of this later]
You won't need a business license until you either pay people or accept money from people. There are other licenses that you will need depending upon where you're conducting the business.
No, I have never spent millions of dollars of investors money.
I have spent tens of thousands though, so watch out.
Spending millions required hiring an outside CEO in early 2000.
