I was helping a friend last night with the planning for a family business that would utilize their skills and give them the freedom to travel and would leave them financially set when they were ready to retire.
They have been working on this project for several years and had not been making much headway so I was invited to pich in and see what advice I could offer.
The description of their business planning seemed remarkably like what appears in the pages of Entrepreneur Magazine, but on a smaller scale. They had done a skills inventory, some financial planning, and they were carefully working on the details on how all of this was going to come together.
He is a talented engineer and she is an experienced program manager so they have a fair amount of technical horsepower to apply to almost any problem.
The one thing that kept sticking them was deciding on a product or service that they would produce or provide. They have been wrestling with this issue ever since they started planning a business.
I wanted to give my friend three basic questions that he and his wife must answer before they make any further plans:
1. What do people need in the way of goods or services that isn't available in adequate quantity or quality?
2. Which of these needs can you satisfy with your currrent skills and resources?
3. Can you generate enough demand so that you can cover your expenses and generate positive cash flow in less than three years?
We actually ran hard aground trying to grapple with the very first question and it is not surprising considering their family backgrounds.
Neither he or his wife or any family members have ever run a small business. They have always been employees so they never learned how important it is to recognize what customers need and satisfy it.
The successful entrepreneur is always on the lookout for opportunities to satisfy a need. A business startup that is created to satisfy an identified need has a better chance to succeed than one which hopes to sell products or services by persuading people to buy. If you find the need, product creation can be a matter of hitting cost and reliability goals.
If you are going to start your own business, keep your eye out for goods and services that people need. Once you find a need that you are interested in satisfying, then you can start your business planning in earnest. You will be able to estimate market size and a host of other factors like product lifetime, and price points.
If you start with finding needs to fill, your business planning will pick up momentum quickly. If you start with organizational details, your plan may never get off the ground.
The successful start ups I was associated with were created to satisfy a clearly defined need and they evolved as the need evolved.
Once the need is identified, business planning becomes simpler because it is focused on satisfying the need efficiently and profitablly.
If you cannot bring yourself to ask people what they need and want, you will be better off working for someone who can.
Find a need. The rest will follow.