We live in a time of such incredible opportunity.
Think about when your parents or grandparents were working, and all the hoops they would have had to jump through to start a business. There was no Internet, so they’d need a bricks and mortar location, lease, stock, overhead, rent, signage…
Nowadays a $12 domain name and free website template and you can be up and running with a new business idea in under an hour!
Unfortunately, just because it’s easy to start an online business doesn’t mean it’s easy to succeed with one.
Maybe you’ve got dozens of potential business ideas or maybe you’re still looking for the right one; either way, you want to do some planning to ensure you don’t fall victim to the three biggest mistakes I see new entrepreneurs making.
Start by downloading my DIY Business Plan Worksheet, which will help you vet your potential ideas and narrow them down.
These mistakes could cost you
An idea is not a business. Neither is a blog or a Facebook page. Too often I see people get excited about an idea they have to start a business, and they dive right in without doing any planning or research.
They buy a domain name, hire a designer to create a logo, spend hours putting together a website… And then discover that nobody cares, nobody’s listening, or nobody wants to pay for what they have to offer.
Thankfully, there’s a simple way to avoid this heartbreak, and that’s by planning ahead to avoid these three big mistakes:
Mistake No. 1: Not Solving a Problem
Every business solves a problem from accountants to jewelry designers. But lots of new entrepreneurs aren’t clear on the problem they’re trying to solve.
In order to fully understand what you have to offer as a product or service, you must understand the problem you’re solving and whether people will pay you to help solve it.
Many times, the problem we think we are solving and the one our customers want solved are different. For example, a weight loss coach might understand that the key to lasting weight loss is fixing someone’s metabolism in the long term. But her clients aren’t searching for “metabolism” they’re searching for quick weight loss. She needs to meet them with the problem they want to solve.
On the other hand, a friend of mine was a mom and a food writer, so she decided to start a food blog for moms who want to feed their families healthy foods on a budget. She knew exactly what problem she wanted to solve. The issue, she discovered, was that moms on a budget are watching every penny, and it’s incredibly difficult to get them to pay even a few dollars for a product like an ebook — and even harder to make a living a few dollars at a time. She solved a problem, but there was no paying market for it.
Understanding the problem you solve also helps you understand who else is solving that problem and what larger conversation you are participating in.
Mistake No. 2: Not Defining Your Audience
When someone asks you who you help, do you have a succinct, well defined answer? Or do you say something like, “Oh, this is really for everyone!”
There’s an old adage that if you’re marketing to everyone, you’re selling to no one.
While it may be true that your product or service could be useful to anyone, who is it best for? Who do you love to serve? Who is most likely to buy?
By understanding who you’re serving, you’ll be able to communicate effectively with them and give them what they need.
Only a very few companies in the world — like maybe Coca-Cola and Google — are literally marketing to everyone. The rest of us need to define our audience.
Don’t get trapped by the idea that you’re limiting yourself by defining your audience; that’s false scarcity thinking. In fact, by making your audience smaller and more specific, you become more appealing.
Think about me, for example. My business advice would be useful to anyone who wants to start a business — male or female, young or old, physical products or Internet business. But I’ve chosen to focus on the people who naturally gravitate to me, and whom I love to serve: female entrepreneurs who crave the freedom of a successful business. My branding reflects it, my audience reflects it, and so do my customers.
Mistake No. 3: Not Having a Business Plan
As I mentioned above, a blog is not a business — because a blog does not inherently make money.
If, on the other hand, you sell advertising, affiliate products, ebooks, courses, or something else on your blog, then that is a business.
You don’t have a business until you are making money; and it’s really hard to make money without a plan.
Business plans don’t have to be lengthy or complicated. You just need to get crystal clear on exactly how you plan to generate revenue.
If my friend with the food blog had started with a business plan, she might have seen exactly how many $5 ebooks she would have to sell to make a living — and might have reconsidered her plan.
Business plans are used for a variety of purposes. You may want to have a business plan in order to attract investors, to get a loan, or to obtain a lease for a storefront. However I find that a business plan is often the most valuable because it forces you to get very clear and action-oriented in your new business (and prompts you to determine how you’ll make money).
THIS is the primary reason that I recommend creating a simple, 1-2 page business plan.
The goal of a business plan is to help you get very specific and very clear the various major aspects of your business. It should serve as a living document and guide you forward from business incubation, as you launch, and also as you grow.
I suggest your business plan include:
- A business overview: what problem you solve and who you serve
- Market analysis: who else is doing what you do, and how you will do it differently
- Product or service detail: exactly what you’re going to offer and at what price point
- A timeline with an action plan: how you’re going to make it all happen – and by when.
The power of a plan
You don’t need to get into the weeds, but the sooner you put together your plan the better. The best way to get where you want to go is to begin with the end.
By spending a little time planning your business before you take the leap, you’ll save yourself a lot of time, energy, money — and potential heartache.
Download the free DIY Business Plan Worksheet and keep it with you as you’re working on planning your first or next big idea. It may sound crazy, but just this little bit of planning can be the difference between a big success or a big flop.