The Rapidian

Knowing If Your Small Business Idea Can Be Profitable: Guidance for the Little Guys

Friday, June 06, 2014


For the progressive thinkers and innovators out there, a gap between reality and fantasy is largely at play. Many people with excellent ideas don’t have the same level of execution power as people within the financial industry—they aren’t inundated with financial contracts all day, they aren’t privy to financial reports of entire industries to see whether their idea within a given niche is truly workable, and many times, ideas that spring from the entrepreneurial mind are simply not profitable in current markets. So how do small business owners and/or those who are seriously considering jumping into business ownership find out if their idea is just a wild hair or the next big thing?

 

 

One core concept to keep in mind is your passion for what you want to bring to the marketplace. Whether it’s a new spin on hotdogs or something you truly think has never been done, if your passion for it is real and you have the mental and emotional stamina to never stop believing in it, chances are, you probably have something worth working for on your hands. But to be sure, ask friends and family to be frank and up front with you. You don’t want to be the next Soap-On-A-Rope or pet rock, but then again, there’s no shame in starting a business offering one type of product or service and changing course later—as long as you realize you may likely need to do this and have something lined up before grapes begin to wither on the vine.

 

If you have the passion part down pat, that’s a great place to start, but next, you’re going to need some capital. Where you get this capital matters; who invests, why they invest, what they expect to get in return, and how you plan to make that happen even in the lean times are all important factors you must consider. You know yourself, your family, and your circle of friends. If it’s common practice among those in your microcosm to give one another a hand up, take advantage of that potential avenue, but don’t exploit it. And for those who don’t operate within circles where people loan one another money or simply don’t have it to give, don’t despair.

 

Now more than ever, microloans are ruling the world of capitalism and small business, and on top of that, many lenders giving out both micro and small loans are looking at potential small business owners just like you in a different light than they did even 10 years ago. Today, even for some of the big names like Wells Fargo and Bank of America, loans are being thought of in more unique ways. Lenders are making decisions about loans based on more than credit scores; they are looking at your online reputation, your personal and professional references, your LinkedIn page, interactions you’ve had on other social platforms, and more. It isn’t just about last year’s tax return anymore—it’s about lenders looking at you and asking, “Why should we believe in what you’re doing?” When they ask this question, your answer must be concise, clever, and vibrant. Anything short of that has the smell of yesterday’s news on it, making it very unattractive to potential lenders and/or investors.

 

If you have the first-mover advantage, keep a lid on it, and continuously hone your ideas on not just how you will bring your products or services to market, but let the ideas you have about them evolve. One thing is for sure in the world of small business: in the world of commercial finance, if you’re standing still, you’re actually moving backwards.

 

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