Remember this? The Razr made Motorola, but could also break it.
I’ve received quite a few questions from readers about their entrepreneurial ideas and I noticed a trend. There seems to be more questions that focus too much on a product instead of making a business work.
Lilis wants to make clay knick knacks for sale and teach children how to make them. Nurhafiz wants to set up a fashion streetwear label. My friend Mark Choon makes fabulous glass engravings. In each example, they may a good product or service offering. The question that I have for them is if they have a plan that makes a plausible business.
A clear business plan is crucial for any business -traditional brick-and-mortar or Internet alike. Take Twitter for example. It’s a great product with a strong following, but most people agree that until it finds a clear revenue model (hoping for acquisition is not a dependable strategy) nobody in their right mind will call it a real business. Even big businesses aren’t exempt – Motorola, for example, banked too much on one product – its wildly successful Razr V3 – and has suffered for it.
Entrepreneurs can learn from this. Ask yourself these two questions:
1. Is my idea scalable? Can it grow, and how? For example, Mark admits that his glass engraving business is hardly scalable i.e. he can only sell as many as he can make.
2. Is my business sustainable? What happens if I lose my key supplier or customer? Will I lose my business if my product suddenly becomes outdated due to new techology?
Having answers to these questions can help you crystallize your ideas for a business.
PS: If you have more questions that entrepreneurs can ask themselves, do share with us here.