Good businesses start with a good business idea. That fundamental principle has inspired dozens of generations of hopeful entrepreneurs, fueling them with the promise that one good idea and a lot of work is all it takes for anyone to become a billionaire. Unfortunately, there’s another side to this equation: Just because all good businesses need a good idea to get going doesn’t mean that a good idea is the only thing they need to get going.
Countless businesses have been created from great ideas, only to collapse under their own weight, fall victim to competitors or fail to gain any momentum from the beginning. Why is this? Here are 5 reasons why a great business idea isn’t enough to succeed:
1. Good ideas aren’t necessarily unique.
A “good” idea has the potential to make money in a given environment; yet this doesn’t guarantee that someone else isn’t already out there who’s developed his or her own version of this idea.
A bit of competitive research up front protects you against this possibility; if you find a competitor with a similar idea, you can either pull out before you’re too invested, or differentiate your idea enough for it to stand on its own. You’ll still have to move cautiously, of course: Once your idea has developed into a full business, a separate competitor may emerge to threaten your business. Competitors can be — and will be — vicious. Keep that in mind when you flesh out the strengths and weaknesses of your idea.
2. Timing is critically important.
As Idealab founder Bill Gross once explained, there are many factors responsible for why businesses succeed, and the biggest one seems to be timing. A good idea that appears before the market is ready for it can fizzle out despite its huge potential. Imagine a piece of technology that consumers aren’t ready for, like Google Glass or even a television sitcom whose humor is ahead of its time.
Both ideas, though strong, and with great potential, get squashed. Similarly, an idea that comes too late — once consumers have already had their fill or moved onto another trend — will fail to have the same impact. Timing the release of your business in that “sweet spot” is crucial to success.
3. “On paper” doesn’t always translate to real life.
Hopefully, if you have a good business idea, you also have a good business plan. Business plans are where you flesh out the details of your enterprise, from who’s going to buy your product to when you plan on launching and at what point you will become profitable.
In theory, the numbers may support your plans. Your idea may seem like it will really work. But real life doesn’t always work the way it “should” on paper. Your customers may not be as interested as they seemed during your market research. Your cost basis may not be as tight and predictable as when you put your plan together. Those unpredictable factors will always be a danger, even to the best of ideas.
4. Circumstances change.
Business environments never remain static. New technologies are constantly developed, trends come and go and economies fluctuate between periods of consumer spending and periods of frugality and fear. The circumstances in which your business emerges will certainly be different from the circumstances you face mere months into your business’ existence.
Successful businesses aren’t those that took an idea, adopted it, then kept it static for years. They’re the ones that took an idea and allowed it to change and develop as new circumstances emerged. Truly great business ideas are flexible enough for talented, insightful entrepreneurs to develop them over time, in accordance with changing circumstances.
5. Execution is as important as planning.
This goes back to the idea that “on paper” doesn’t exactly equal reality. Remember that a good business idea is only as good as the people who are able to execute it. If you have a masterfully designed workflow, you need an operations manager skilled enough to oversee it. If you have ambitious financial goals, you need a controller with enough experience to help you hit those goals.
Building a team is an important part of the process, and without a strong one on your side, even the best business ideas can result in failure. Human resources should be one of your top priorities.
If you have a great business idea, and you’re interested in starting your own business, don’t let all these reasons dissuade you. Starting a business is tough, and making one successful is even tougher. But if you go into it with the right expectations and a reasonable vision for development, you won’t fall victim to the misconceptions that have disrupted so many.
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