Your biggest business challenge this week: money to start my business idea
Capitalizing a new business is one of the largest challenges to overcome.
However, most entrepreneurs focus too much on this factor. They think that their business idea is so foolproof, all they need is some money to bring their idea to market and the business is guaranteed success.
In fact, that is very rarely the case.
Only one in 10 new businesses survives a decade. The failure rate is the highest in the early months and years.
Although a primary cause of business failure is often attributed to “lack of capital,” the real reason is that the failed businesses ran out of time. They ran out of time because most of the new businesses burned through their available money trying to figure out a viable, sustainable business model.
The moral of the story is, before you go seek capital for a new business, be sure you have a proven business model. Take your idea and make a prototype. Do some tests with real customers. Make some sales or get signed letters of commitment to purchase your product or service once you have it ready to sell.
The key to success in business is selling something people want to buy. That is true whether you are tying to start an enterprise B2B company or a local retail business. The only way to ensure that the money you are seeking is going to build a business that sells something people want to buy is to prove that idea before you invest the big amounts of money.
To accomplish that goal, one task I recommend, developed by Dr. Rob Adams, is the 100 Customers Test. Talk to 100 prospective customers first, before you do anything else. You will learn more talking to those customers that you will by obtaining and spending just about any amount of money in the early stages of your business.
Prove your idea and your business model first, then seek and inject capital to scale the business model.
If you need money to prove your business model, start by talking to 100 Customers first. That will cost little to nothing and will almost certainly guarantee that when you do build a business, it will be selling something people want to buy.
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