The very first step in starting up a new small or home business is conducting the necessary research and development to successfully put your product or service on the market.
This is a must! Many a business idea has flopped because the owners failed to invest enough time, money, or effort into this stage.
Keep in mind, though, that the actual effort and amount of resources invested in this process will vary greatly depending on the product or service as well as the experience, knowledge, and skill background of the business’ founders. At the end of this initial step, you basically need to be able to answer the following questions:
- Is there a current or potential demand for your product or service?
- Who makes up your target market?
- Does the demand have potential staying power?
- What does the current competition look like?
- What are the anticipated production/operation costs? (This includes the average cost of any necessary supplies, equipment, and facilities as well as the cost to hire employees.)
Much of this information you can get online for free as I detailed in an earlier post, Are You Using These Free Online Tools to Conduct Market Research for Your Business?
For some potential business ideas, there may be a development stage where aspiring entrepreneurs will need to investigate materials or methods of production, conduct trial runs, and/or build prototypes. This will cost money. Here are several suggestions as to where to get this seed money, even where poor credit is an issue:
- Ask family, friends, or other peers (via peer-to-peer lending or crowd funding sites) for a small loan.
- Put your own money aside.
- Take on an invested business partner.
- Turn to an outside investor, such as an angel investor who focuses on the kind of business you are attempting to start up. To find an angel investor try searching investor directories such as Go Big Network and Angel Capital Directory.
- Look for a sponsoring business incubator program. For incubator programs and the like, you can check with the National Business Incubator Association or with your local Small Business Development Center, as well as any local universities (since they often have business development programs), and state or city run economic or business development departments.