2020 revealed new opportunities to either start a new business or add a new product or service line to an existing business
Despite the COVID-19 crisis, or perhaps because of it, more new businesses started in 2020 than in years past. Plus, many existing small businesses reinvented themselves, which can feel a lot like starting from scratch. We’ve put together a guide to help you start out on the right foot, whether you’re new to the game or just trying something new.
1. Test your idea
If you’re launching a new product or service for customers, run the idea past friends or colleagues in your industry. Then, check out the local competition and, if possible, survey potential clients. Fine-tune your idea based on their feedback and evaluate whether the need you’re filling is likely to exist in the long term or if it’s a short-term response to the current crisis.
For example: You notice that a lot of people in your neighborhood have adopted dogs during the COVID-19 shutdown and get the idea to launch Rover’s Treats, a business that makes homemade, artisanal dog treats. You pressure test the idea with dog owners and friends. And you decide the business has potential to grow after the crisis is over since adopting a dog isn’t a temporary move. Keep this example in mind as we talk about building a business in a crisis.
2. Create a plan
Your next step is to build a business plan. (Wells Fargo offers a tool to help with this.) A structured plan can be helpful even if you’re just adding a new element to an existing business. As you plan, start working on some of the logistics of your new venture.
- Determine your ideal customer. It can help to create a profile of that customer. For Rover’s Treats, this may be people in your immediate neighborhood with dogs and disposable income. You may get more specific and note that most of these dog owners are ages 40–50.
- Set up a website or some kind of online presence. Even if all you have is “coming soon,” getting online can help people find you during times of social distancing and generate excitement.
- Develop an operations system. If you’re building a product, think about production and inventory. In a crisis, finding vendors and figuring out a supply chain that works for you may be more complicated, so do extra research before signing any deals. With Rover’s Treats, that might mean using ingredients that haven’t seen big price fluctuations or shortages over the last year.
- Consider pricing carefully. In a crisis, client budgets may be in flux. Think about your target client and how their spending habits may have changed during the current economy.
- Start a balance sheet early on to tracks your assets, liabilities, and equity and then keep it up to date. (If this is part of an existing business, you can separate these elements by assigning a project code.) This may help you find or apply for funding in the future. You’ll want to be mindful of your own cash flow, too.
- Visit an accountant and consider consulting with other experts as needed to help ensure you have all bases covered.
As you go through all these logistical next steps, gut check your business plan against your initial idea. You may need to adjust the way you think about your idea or make adjustments to your plan to ensure you’re still building something that works for your target market.
3. Market your new venture
Marketing your new venture may seem obvious if you’re a new company. But if you’re an existing business, marketing a new offering can be challenging. Say you’re not launching Rover’s Treats from scratch. Rather, you’re a neighborhood restaurant that decided to launch Rover’s Treats to help supplement your business during slow periods.
According to business coach Ian Altman, promoting these types of new ventures is key. If you don’t promote new services to existing customers, he says, you risk having those customers leave you in pursuit of services you actually offer. So as a restaurant, your customers may be buying their dog treats elsewhere. But if you let them know Rover’s Treats are launching and involve them in the process, they’re more likely to get excited about the idea and buy treats from you, instead of another supplier.
Action: Altman suggests asking potential clients for their opinion on your new offering. Say something like: “What do you think about our restaurant starting to offer dog treats? Would dog owners be interested that?”
4. Future proof your business
Starting a new venture in a crisis (whether it’s a totally new business or simply a new offering) comes with unique challenges. It’s important to look past those challenges, though, and think about how your new venture might look when the crisis is over.
With Rover’s Treats, you might ask:
- What will owners be looking for a year from now?
- Will they be willing to spend more on treats if the economy improves?
- If prices for different grains or meat products stabilize, can you start offering new types of treats?
Running a business means focusing on your customers’ present needs but try to carve out some time to think about their future needs, too.
Action: Explore trends to help think about how you might transition your business from the current crisis to the future, when we hopefully reach a new normal. The U.S. Chamber of Commerce provides a list of ideas, like mobile customer support, which could be help your business right now while also preparing you for the future.