Can you easily map how you are going to make money?
So you’ve invented the greatest improvement to the light bulb the world has ever seen. Now what? How will you fill your bank with coins? Take the back of a napkin and outline a simple profit projection. Remember the cost of getting your product or service to customers is part of the expense. You can’t just say “OK, so after we build the factory, buy trucks and pay off the HomeDepot buyers we will have $2 per bulb left over.” Every bit of precious cash counts, and if you don’t have the money to invest maybe just use this napkin to wipe the drool off your face from the crazy dream.
Can you show how you will run the company once it’s started?
I know there are 24 hours in a day and seven days in a week, but it’s not just, 'can you afford to clear the time or quit your job,' it's 'do you have the guts to take the risk?' Remember the Betamax? Remember the 2011 Miami Heat? Remember Al Gore? The best doesn’t always win, so you really need to have passion, confidence, and you must love to take chances to make any idea become a business you can run.
Can you handle failure?
This is kind of a touchy subject for me because I have failed so many times that I wrote a book about it (The Good Fail). But I do consider myself an expert. Ask yourself one question: “What happens if you fail?” If your answer is “Well, I’ll just go back to Best Buy and beg for my job back,” then don’t quit. Failure, as in a Good Fail, is a learning process which enables you to try again.
If you fail, you heal from the bruising, get up and try again. I was fired from more than 10 jobs in a year, and surely your odds are better than mine. If you answered the first three questions correctly don’t let the fear discourage you.
Are you starting to get the picture? Owning a small business is not always as easy as stealing an idea in a Harvard dorm room and becoming a billionaire in a hoodie. Work, planning and honesty is the prerequisite for this course. Do you still have an idea you want to talk about?
Richard Keith Latman is the author of 'The Good Fail: From Microworkz to Latman Interactive' (Wiley, May 2012). He is the founder of Latman Interactive and the CEO/co-founder of iMagicLab, a Maryland-based software company focused on the auto industry.