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From Idea to Business: I have an Idea, How do I Turn it Into a Business?
By Stever Robbins
Saturday, 18th June 2011
 
Many businesses start with a great idea, but a great idea isn't enough; you have to make it a great business. If you know business, that might be easy. But if not, here's an overview to find out what's involved in going from idea to business.

Building a business takes four things: a product or service, a business model, a team, and money. There is no standard order to gathering these, though they all affect each other.

For instance, raising money first makes it easier to attract a top-notch team, but you will have to give up more of your equity to raise the money. Having a prototype first makes raising money easier, but without money, prototyping must be done on a shoestring. The tradeoffs will reflect your judgment, willingness to take risks, and the circumstances that come your way.

One word of advice: beware "equity paralysis."ť I've seen entrepreneurs stall their business to keep as much equity as possible. It is better to own 10% of a $10,000,000 company than 80% of a $1,000,000 company. And if your idea needs to come to market quickly, giving up equity may make sense if it will buy speed.

You need a product or service
Most entrepreneurs start with a product or service idea. Make sure that your idea fills a real market need. Better technology rarely wins in the marketplace. It must meet a real need, and must be marketed in a way that the customers are willing to buy it.

In fact, you don't always need a new product category. Microsoft was a late entrant in window systems, spreadsheets, word processors, and presentation software. Yet they virtually own those product categories.

Without a product or service, it is harder to raise money or a team. But even so, some entrepreneurs raise money for a "search fund," where they take a year to find a business to buy or a product idea to develop from scratch.

If you plan on raising venture capital funding, you will find that products/services that alleviate customers' pain are easier to fund than products/services that simply make life nicer. In general, people buy immediately to eliminate pain, while they are less urgent and motivated to make things better. A leaky roof gets patched before a homeowner adds ornamental trim.

You need a business model....

© 2011 by Stever Robbins. All rights reserved in all media. Reprinted with permission.

Stever Robbins is a serial entrepreneur and a top #1 iTunes business podcaster. A graduate of Harvard Business School and MIT, he provides time management and personal productivity products and services through.

www.SteverRobbins.com
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