This is not a how-to guide, more a study in the beginnings of a business.
How does a business start? How does it grow? What drives some to succeed and some to fail?
What is a business?
We all understand what a business is, but how is it defined?
A search among different sources will give you a range of different definitions. Chambers dictionary list it as defined below:
business noun 1 the buying and selling of goods and services.
This highlights the common theme among all the definitions, buying and selling. It doesn’t matter what the end product of the company is or what service it is that they supply what matters is that someone wants to buy it.
The aim of any business, no matter how lofty a mission statement they may purport to follow, is to make money. They need to provide something that other businesses or customers will part with money to have access to. It’s important to remember that not all businesses will have the aim of a profit. A charity can be run as a business, they may give away all the money they receive or spend it on helping others, but they still need to be able to have that income stream to be able to operate.
How Does it Start?
I’m not going to get into depth about the formation of a business in a legislative sense, whether a limited company, partnership or group, that information is for another time. I want to focus on the concept of a business itself.
A business always starts in the same place. With an idea.
This idea must have a market value. Without a market value the idea is just that, an idea. The market value is the amount that people would be willing to pay for your idea, whether a physical product or an intangible service, it must have value.
These ideas can come from anything. Many come from people already working in an industry seeing a specific gap in the market that they could fill. Some come from the archetypal inventor, creating in his garden shed something that the world has never seen before. Many of them will leave you with the same reaction, “Why didn’t I think of that?”
From Idea to Business?
The hardest part of the business is this part. How to get your wonder product or idea from your thoughts to existence and profit?
This is the key part that can make all the difference between a successful business and a failure. Research. The successful businesses know that they will make a profit before they even start, it may be several years down the line but they know it will work.
Finding out the target market, the competition, the price points, the costs incurred to provide the service or product, advertising, overheads and working out margins to produce a profit without pricing yourself out of the market. All of these things need to be done and done well before even beginning the process of setting up a functional business.
This is why creditors or investors would require a full business plan before helping a business start up, no matter how good the idea itself is. Getting that idea to a functional point requires an enormous amount of effort and dedication.