5 min read
Opinions expressed by Contractor the contributors are theirs.
Good companies start with a good business idea. This basic principle has inspired dozens of generations of hopeful entrepreneurs, fueling them with the promise that one good idea and lots of work is all it takes for anyone to become a billionaire. Unfortunately, this equation has another aspect: the fact that all good companies need a good idea to start does not mean that a good idea is the only thing they need to start.
Related: The Essential Ingredients for Startup Success
Countless companies have been created from great ideas, to collapse under their own weight, to fall victim to competitors or not to pick up speed from the start. Why is it?
1. Good ideas are not necessarily unique.
A “good” idea has the potential to make money in a given environment; but that doesn’t guarantee that someone else isn’t already out there who has developed their own version of this idea.
A little competitive research in advance protects you from this possibility; if you find a competitor with a similar idea, you can either opt out before being overly invested, or differentiate your idea enough to make it standalone. Of course, you should always act with caution: once your idea has become a full-fledged business, a distinct competitor may emerge to threaten your business. Competitors can be – and will be – vicious. Keep this in mind when you flesh out the strengths and weaknesses of your idea.
2. Timing is extremely important.
As Idealab founder Bill Gross explained, there are many factors that explain business success, and the most important seems to be timing. A good idea that appears before the market is ready for it may fail despite its enormous potential. Imagine a technology that consumers are not ready for, like Google Glass or even a television sitcom whose humor is ahead of its time.
Both ideas, although strong and with great potential, are overwritten. Likewise, an idea that arrives too late – once consumers have had enough or moved on to another trend – will not have the same impact. Synchronizing your company’s exit from this sweet spot is crucial to success.
Related: 4 fundamental strategies to launch a successful e-commerce start-up
3. “On paper” does not always translate into real life.
Hopefully, if you have a good business idea, you also have a good business plan. Business plans allow you to specify the details of your business, who will buy your product when you plan to launch it, and when you will become profitable.
In theory, numbers can support your plans. Your idea may seem to really work. But real life doesn’t always work as it “should” on paper. Your customers may not be as interested as they appeared during your market research. Your cost base may not be as tight and predictable as when you were developing your plan. These unpredictable factors will always be a danger, even at best.
4. Circumstances change.
Business environments never stay static. New technologies are constantly being developed, trends come and go, and economies oscillate between periods of consumer spending and periods of frugality and fear. The circumstances in which your business will emerge will certainly be different from those that you will face only a few months after its existence.
Successful businesses are not the ones that took an idea, adopted it, and then kept it static for years. They were the ones who took an idea and allowed it to change and develop as new circumstances emerged. Truly brilliant business ideas are flexible enough that talented and insightful entrepreneurs can develop them over time, depending on changing circumstances.
5. Execution is as important as planning.
It comes back to the idea that “on paper” is not exactly reality. Remember that a good business idea only applies to people who are able to execute it. If you have a masterfully designed workflow, you need a sufficiently qualified operations manager to supervise it. If you have ambitious financial goals, you need a controller with enough experience to help you reach those goals.
Building a team is an important part of the process, and without a strong team on your side, even the best business ideas can lead to failure. Human resources should be one of your main priorities.
If you have a great business idea and want to start your own business, don’t let all these reasons dissuade you. Starting a business is difficult, and succeeding is even more difficult. But if you enter it with the right expectations and a reasonable vision of development, you will not be a victim of the misconceptions that have disturbed so many people.
Related: 7 Ways Founders Show They Can Run a Startup