“I have a good business idea, but admit I haven’t got an idea about business!”
In reality, you seldom hear anyone actually say “I have a good business idea, but I haven’t got an idea about business!”.
However, it is true that many people who start up a business enterprise have no idea of how to run a successful business. People plunge into the deep end, perhaps influenced by what they read and hear.
The glamour of business
The internet and television give a highly distorted idea of what business is really like. TV has its Dragon’s Den, while the media glamorises entrepreneurs who have made millions from their great ideas. However, business is seldom glamorous and successful entrepreneurs are often even less so.
Concepts of the great idea and the overnight success are usually myths. Business porn might make for exiting reading and watching, but it does not represent the slightly sweatier reality.
A good business idea
Having some idea of how your business will operate is the first step for starting a business. An idea of how your business will be different or better than the competition takes you a step further. But, from my observation, many people start a business based solely on their knowledge of having worked in a particular business sector. Or, because they have a technical skill. Also, because they are convinced they can do it better than the boss.
So, they have an idea for business, but do they know anything about business?
Running a business is different from working in a business. Thinking you can do better than the boss is not the same as being better than the boss. Business is both a particular skill and requires a particular mindset. Also, having a business idea, even a great business idea is not by itself a sound basis on which to start a business.
An idea is just an idea; you need the business skills as well as the business mind to execute the idea.
The textbooks will tell you what the basic skills for running a business are. These include:
- understanding cash flow
- team leadership anf
The entrepreneurial mind
Likewise, the text books list the qualities of the entrepreneurial mind. These include the following:
- risk tolerance
- robust health
Most experts claim you can be taught business skills. However, most believe you or either born with the entrepreneurial mindset or you are not.
I agree with the latter, but I am not so sure about the former. Those who fall into the category of “I have a good business idea, but I haven’t got an idea about business!” might have an entrepreneurial mindset, but do have have the necessary basic business skills to succeed.
Born with the business skill
I have dealt with business owners for nearly 50 years. They have been both highly successful ones and those who have not achieved a great deal of business success.
Some writers believe that the business skills and the entrepreneurial mindset necessary to startup and grow a truly successful business are inherent (that is a part of one’s nature). However, others believe they are acquired (that is a part of one’s nurture).
I understand the dangers of generalisation. However, one factor that distinguishes the successful from the unsuccessful is the “feel” for business. That is, the inherent ability to recognise how to do a deal, how to buy the right stuff at the right price and how to make a profit.
Mark McCormack https://en.wikipedia.org/wiki/Mark_McCormack the American lawyer and sports promoter wrote a famous book called What they Don’t teach you at Harvard Business School. The gist of his book was that street-smart skills in negotiating, marketing, deal making, etc., were more important than merely acquiring academic MBA theory if you wanted to run and grow a successful business. He believed these skills were acquired partly through experience and were partly inherent.
In my view, the skills are more likely to be inherent or, more specifically, that people with the inherent business mindset are much more likely to be able to learn the business skills than those without.
Startups drive the economy
People are rightly encouraged to start up businesses, as a vibrant economy needs new businesses starting up all the time. In fact, the number of startups is both a driver of a strong economy and evidence of the economy’s strength.
However, startups are not for everybody. If business startups are to be successful, their owners need to have a good idea of what business is all about. They need to have a feel for the business world.
Business idea analysis
On this website we offer a free analysis of business ideas. The analysis is in two parts. The first part looks at the idea itself and the second considers the characteristics of the person who has the idea. The owner of the idea completes a questionnaire. A couple of the questions focus on basic business principles, such as gross margin and profit percentages.
It is surprising how many people have no idea about these basic principles. For example they have no idea how to price their product to make a reasonable return. In my view these people should never go into business.
Similarly, the mechanic, the electrician, the builder, the web designer who havn’t the feel for business and how to cost a job, should avoid being their own boss. By staying employed they will probably have an easier life and earn just as much money
The right sort of people
So what do we make of those who say “I have a good business idea, but I haven’t got an idea about business?”
Firstly, it is clear that many of the wrong sort of people often launch startups. This is evidenced by the fact that 65% of small businesses fail in the first three years.
However, many of the right sort go into business as well. The 35% that succeed represents hundreds of thousands of small businesses trading away happily and profitably, some of them going on to be successful big businesses.
This is the way a successful economy should operate – the successes more than compensating for the failures. The only negative is the impact of failure on the poor folk who own the businesses that fail.
For free help in analysing your business idea please go to: https://www.freeforumofideas.com/free-help/business-analysis-form/
For more on business ideas please see: https://www.freeforumofideas.com/blog/do-i-need-a-new-idea-to-start-a-business/
And for more on business failure please see: https://www.freeforumofideas.com/blog/attitudes-towards-business-failure/ and https://www.freeforumofideas.com/blog/the-effect-of-business-failure/
See also FAQ 2.4
and FAQ 2.6