All new businesses start as ideas. It is the process of going from idea to business that can typically determine the success or otherwise of the venture. In this article, we will start looking at the key elements of a sound process for converting ideas into operating businesses.

Before we get into that discussion, let us look at the idea of business itself. Businesses exist primarily to solve customer problems. The typical businessperson, however, sees things a bit differently. In that typical person’s view, business exists to make money for that person.

While money-making is essential for the continued survival of a business, an exclusive focus on this aspect can lead to serious problems and even failure of the business. Businesses need customers, and customers come because the business provides a product or service that meets their need, and does it adequately.

And the more successful businesses satisfy customer needs not just adequately but in a manner that delights the customer. A delighted customer can bring more customers through word of mouth recommendations.

Translating an Idea for Business into an Operating Business

The businessperson’s first task is to identify the specific value that the business provides to the customer. Value does not mean the product or service; but the specific need satisfaction that the product or service provides to the customer. Thus, the value provided by an automobile is not the automobile itself, but the satisfaction of the transportation need of the customer.

Once the basic value is identified, the business has to identify a unique selling point (USP) to compete successfully in the market. Continuing with the example of the automobile, when only Ford Model T was in the market, the producer could focus on the transportation need. As automobile industry become more and more competitive, however, industry players had to identify other needs that their product met in a superior way.

For example, the BMW and Mercedes meet status and prestige needs more than just a transportation need.

With the value and the USP identified, it is time to work with the idea and develop a complete business model that articulates the business strategy and incidental business issues. The business strategy might be to create a product that meets status needs or one that is low cost (like the Model T). The business modeling process will then analyze the issues involved for creating a money-making business on the basis of this strategy.

The next step is to do a detailed research into availability of production facilities, skilled manpower and distributions channels, and develop cost estimates for putting everything in place. Additionally, estimates will also have to be made about operating costs once the business is operational, and compare it with possible selling prices and achievable sales volumes. Findings of the detailed research will be documented in a business plan.

In a separate article, we will look at business plan development and its implementation on the ground.

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