5 Step Guide To Starting The RIGHT Business
Updated: Apr 25, 2018
We're going to be looking at the five steps to choosing or starting the right business!
Now I myself have started numerous companies and invested in numerous companies and I'm going to take you through the five steps that I look for whenever I'm starting or investing in a new company.
Number one - Is the product or service in demand?
Now that might seem like very very obvious however a lot of people you hear them say “Oh I found real gap in the market here, nobody's doing this!” Probably the reason that no one's doing it it's because no one wants it, so when you hear someone say oh I’ve found a real gap in the market chances are they've just found or created a product that there's no real need for. Now there are exceptions to the case,I'm not saying that that never works but traditionally I like to look for something that people already want and people are already buying because what that allows you to do is it allows you to look at other businesses that are doing the same thing to see how successful they are and you can emulate them. You can try and copy them and take on bits and pieces that work, you can look at lots of different companies and take the ideas that you think will work to make your product or your new business a real success. Number one really important is the product or service is in demand and that rule requires research before you get started.
Number Two - Is there a good profit margin?
There's no point running a business where you get loads and loads of customers and you put loads of work in and loads of effort in if you're not making very much profit. At the end of the day running a business is all about making profit so you need to have a look at how much you can sell your product for, what are the costs for that sale to market it and to actually deliver on the product and make sure that you've got a chunky profit margin. I normally want to be looking at around about 50 percent ,it's kind of a minimum really in order to make a profitable business. Now there are companies there are profitable companies that make a massively lower margin than that but the problem is if you're making a much much lower margin you're having to sell that product in a lot more bulk and it can be a lot more work and a lot more effort and for me personally I like to make sure there's a healthy profit margin for any company product or service that I offer.
Number Three - Can you replicate the business?
If you want to grow a business you need to be able to replicate it, as one of the brilliant things about McDonald's and the reason it's so successful is because they've got a brilliant format and they've just been able to replicate it again and again and again and again. One of the biggest problems with people that run their own business is they do everything, they do all the work, they do you know absolutely everything and they can't replicate it because they need another them! How many times have you heard someone say “oh if only I had 48 hours in a day!” NO if only you had business you can replicate you can get other people to do the work and that is the truth of it. What you need to do is you need to create good systems that run themselves and then you can get people in to do the work. You shouldn't be doing the work you should be creating the systems to make your work replicatable that's not even a word I created a word replicatable! You need to be able to replicate your business it’s really really really really important!
Number Four - You don't want it to be too easy to copy.
You don't want a business that's too low barrier to entry because then what's gonna happen is when you replicate it you're gonna get these people coming in there working for you and they're gonna think, hey I can just do this myself so sometimes when there's a lot of money you've got to put in the first place or a lot of red tape or you've built a really dominant brand it's hard to copy that can actually be a really really good thing.
Number Five -Are you passionate about that company?
Here's the reason why, if you're not passionate about it when the going gets tough chances are you're gonna quit! If you're passionate about your company it will keep you going when times are hard and when things aren't going well. So when you are passionate about what you're providing, you need to believe in your products, believe in your company and be passionate about it as a business and that is step number five guys.
I hope you found those steps really useful. I use them to this day whenever I'm buying or investing in a new company and I would recommend you doing the same.