So, you have a great business idea but not a lot of money to launch it. Your idea was the first step, but you have to take it further — doing research, developing the idea, pitching to investors, applying for small business loans, and more. You may have even filed the necessary documents to form your new business with the state, but now you’ve stalled and haven’t quite got it off the ground.
Even with funding, it’s a lot of hard work to start a small business, whether it’s a brick-and-mortar store or an online business. Statistics show that 90% of new startups fail, and 82% do so because of cash flow problems. Only 40% of startups even turn a profit.
That’s the bad news. The good news is that with the right plan, attitude, and entrepreneurship, there are opportunities to launch successful businesses. And why can’t yours be one of them? By following these steps, you’ll have a better chance of funding or selling your successful business idea.
Step 1: Document your startup business idea
Whether you’ve just come up with an idea for a new product or service or have taken the first steps in forming a new business, thoroughly documenting your business idea is a good practice.
If you are an electrician launching your own company, you can talk about your approach and how that differentiates you. For example, you might decide to cater to the rising demand for smart homes by focusing on installing smart lighting and security solutions. This can all be detailed when creating a business plan, which is a full outline of your business with a description of the products or services.
By completely thinking through your proposed business, including the market served, differentiating factors, real estate location, and more, you can get a complete vision of what you are proposing to do, helping you go forward with greater clarity in the next steps.
Also, by documenting your idea for your own business and having a witness sign it, you can prevent someone from stealing your idea since you have proof of its development and when you conceived it.
Step 2: Research your startup idea
An idea for a new product or service is just an idea until you’ve spent a lot of time doing market research to test its viability. Part of the market research is to look at what the competition is doing, see what you can offer that they don’t, or what kind of crossover there is. What do they do well that you can learn from, or what do they do poorly or overlook that you can take advantage of?
For example, a competitive survey might show that the geographical location you are thinking about for your electrician services business has a lot of other electricians working in it. Perhaps they are charging lower fees than you intend, or they have an extensive social media presence — something you haven’t thought about yet.
You also need to research the potential market for your services — the customers who will use your services. Of course, you can speak to people who you know in your intended demographic to get their feedback. But you should also do surveys that reach out to a much broader audience. It’s very simple to get started with tools like SurveyMonkey and Google Surveys for instance, and SurveyMonkey even has free and paid-for options.
With enough information, you can develop buyer personas of your potential customer types, so you have a complete picture of what drives their purchasing behaviors and likes and dislikes. For example, you might find that consumers have a particular distrust of electrician pricing, fearing large bills for any work done. This makes it clear that you need to be very upfront about your pricing, perhaps giving average costs for sample jobs, such as installing new smart light fixtures. To help start developing your buyer persona, you can start by asking yourself these questions.
Discovering there may be problems with business ideas can be dispiriting. But it’s lucky to find them early in the business development process, so you can refine the idea or pivot to a new one before you’ve invested heavily in the business.
Step 3: Develop your idea
With the feedback you’ve received, it’s time to refine your physical or online business idea, making it stronger. Perhaps you decide to look at a different area to open your electrician company or refine your revenue model to lower prices so that they are competitive with other equivalent electrician businesses.
Your research might have also shown that while the area of your business has a lot of professionals servicing the home market, there is a growing demand for subcontractors on large commercial jobs. This would force you to consider new ways to market yourself to this market.
As you look to find funding for your operation, and as you talk to potential customers, you’ll need to develop a full pitch and shorter elevator pitch, enumerating the benefits of your business and how it will work, including how you will use social media and valuable channels for connection, such as LinkedIn, Facebook, and Twitter. Elevator pitches are quite important, so make sure to read some advice on how to best craft an elevator pitch.
Step 4: Pitch your own business idea
Your pitch deck, or presentation, should have everything needed to get potential investors and lenders excited about your business. Once you have your presentation down, perhaps created with a free PowerPoint template, you need to practice presenting it. If you say to a potential investor that you need 10 minutes of their time, you better deliver your pitch in that time frame.
Among the examples of sales pitches that close deals is the one by Scrub Daddy founder Aaron Krause, who successfully pitched his idea for scrub brushes that change texture based on water temperature on the TV show “Shark Tank.” In less than two minutes, he wooed the celebrity entrepreneurs with a pitch that graphically demonstrated how the product works, with a deft explanation combining humor and whimsy.
While pitching your business idea may seem intimidating, practice makes perfect, especially if you really believe the idea is a good one. For inspiration, there are a lot of examples of winning pitches and advice on how to create winning ones online. For example, Forbes suggests that a good investor pitch deck include these components:
- Company overview
- Mission/vision of the company
- Market opportunity
- Business model
- Marketing plan
- The ask
Your pitch might focus on the fact that as a previous employee for an electrical services company, you have wide experience doing both large commercial and small home jobs. Without the high overheads of a large company, you can be much more competitive in your pricing.
Step 5: Fund or sell your idea
When funding your electrician business idea, you have a number of options you can pursue. You should start to raise money with the person closest to the venture: yourself. Do you have the entrepreneurship means to get the business started with your own resources, bootstrapping the operation? If you can, you’ll be able to hold onto the entire or largest part of its ownership.
The next thing to check is your friends and family. Would they be interested in investing in your business, perhaps exchanging this investment for a stake in your company? If you are lucky, you’ll have people in your inner circle who might just donate some cash to the cause.
Another possibility to check is whether you’re eligible for a small business grant. Federal, state, and local governments have programs that include low-interest loans, venture capital, and grants. You can start at Grants.gov to check your eligibility.
While you probably aren’t eligible for small business loans in your company’s first year of business, you may qualify for a microloan under the U.S. Small Business Administration (SBA) program. Small businesses can receive up to $50,000, with an average loan of about $13,000. While the SBA doesn’t lend money directly to small business owners, it sets guidelines for loans made by its lending partners. For the most part, SBA-guaranteed loans have rates and fees comparable to non-guaranteed loans.
If you have a solid business plan for your service or product idea, you can take your pitch deck and try to get investors. For example, angel investors look for early-stage companies that will yield a large return on their investments. There are several websites that can help you find angel investors, like AngelList and SeedInvest.
If your electrician business is ready to compete in the big leagues, you can also seek investments from a venture capital firm, which might also provide strategic assistance, introductions to potential customers, partners and employees, and much more. Before approaching a venture capitalist, though, it’s a good idea to ensure that their focus on the industry sector and company stage aligns with what you offer.
If you decide you don’t really have the time and interest to run a new business, you can also consider selling the idea to a venture capital firm after you copyright and trademark any original intellectual property. Or you may want to find a co-founder who brings some cash and shares ownership responsibilities with you.
Finally, you could try doing a crowdfunding campaign for your new business. Crowdfunding platforms, such as Kickstarter, Indiegogo, GoFundMe, and Fundable, let you make a case for funding. You can use your social media and e-commerce channels to help drive traffic to crowdfunding sites.
Get support for all of your small business ideas
Whether you have a business idea you want to launch or a business that’s stalled, you can get it going without capital if you make the right moves. So, do your research, refine your idea accordingly, work out your pitch to investors, friends and family, and other funding sources, and may the new business force be with you.
Keep in mind that ZenBusiness can help you every step of the way, from idea to opening, whether you get financial help from others or bootstrap it. Whether you need to set up bookkeeping, establish a web presence, stay on top of business taxes, and much more, the products, services, and expert support we have on hand can provide everything you need to start, run, and grow.