(adaption of a lesson from the course ‘kickstart your idea to a business’)
Do you have an idea that you would like to earn money with? Let me help you with a first check to see if there is potential.
You’ll start with ‘framing’ your idea. This means that you will write your idea down in a way that is ‘big and bold’ idea. It has to make you feel excited and a little scared!
1. Start by writing your idea down on a piece of paper. As short as possible. Take a look, is it exciting and scary already?
2. Probably not. So try to make it more specific and more bold. Just make changes on the same paper untill you think it is the best you got.
3. Turn your paper arround and write the idea, as big as possible, on the other side of the paper.
4. Now, hang it on the wall, take a step back and take a look.
5. What happens when you look at it? Does it give a feeling of excitement? Scare you a little? Or is it ‘just okay’?
6. Repeat steps 1 – 5 until you have written down an idea that makes your stomach jump a bit and your heart dance!
Because really, if it is not something that get’s you excited, their is no need to invest time and money in it.
TIP: Talking your idea through with someone who know’s you well but is also happy to be critical if this helps you forward, can be very helpful.
Maybe your idea is something many people are enthousiastic about. Maybe they said to you “you should sell this”.
But you know, not every idea has the potential to become a business or a way to earn money.
This episode of the series ‘the Big Bang Theory’ where Penny decides to sell handmade Penny blossoms (hair accessory) shows you that sometimes an idea is just not going to be a way to earn money. Even when a lot of people want to buy it.
You’ll will now make a quick check with some very basic information, to find out if your idea has potential as a way to earn money. In the best case you discover this is possible. In the worst case you discover you need to adapt your idea before you continue. In the graphic you see an example for a coffee bar. Just to give you an idea of how your check should look.
…………. a month makes that I can provide a good living for me and my family.
Your monthly income is the amount after paying taxes so add 50% to get a rough idea of what you need to generate by selling your service or product. I need to sell for an amount of at least ………… each month.
…….. for each item is a price people will likely pay. Look at what others ask for a similar kind of service of product. Don’t worry if you think you make something totally new, there is always someone, somewhere in the world, delivering the same type of service or product if not the exact same service or product.
There are two sorts of costs. The ones that you have to make for each item and your main costs such as renting space, electricity and water bills, computer(s) and other machinery, personel etc. For this initial check we will not include the main costs because they need to be divided by the number of products / services and you do not know yet how much at least you need to sell.
I need to spend ……………….. for each service or product (costs for buying materials needed for the production, that may also include transportation costs and import costs).
The difference between the price per item and the costs per item is the profit you can make with your idea. The check in this lesson is an initial and rough calculation, you will need to look more closely at this later in the course but it will show you if it is in potential possible to make an income with your idea. …… sales price (3) for each item minus …… costs (4) for each item gives a profit of …. for each item (5).
TIP: General rule is that the selling price should be preferably 8 times more than the costs but certainly not less than 4 times more. In this check we leave the main costs out so if your price is only 4 times more than the costs it will become very difficult to make an income.
To generate the amount that I need to earn each month ………………. (2) / profit per item ………………. (5) = ……… items per month.
……… minutes are needed to make 1 item.
I need to sell ……… items per month (6) to get to my income ambition and this will take me at least …… minutes a month (6*7). This comes down to ………… hours (8/60) a month. An average month has 720 (30*24) hours so this is … % (number of hours / 720 * 100). Double this percentage and you will see how much of all hours there are you will be spending on your idea. Doubling the percentage is for two reasons. If you want something you are most likely too optimistic and you will spend time on administration, shopping for your business, finding customers etc. etc. If the final % comes around 60% you can at least sleep 8 hours a night and have time for a social private life.
Is the outcome positive? Than your idea has potential. If the outcome is not positive (enough) it will still give you an idea of how you could change your idea so that it does have the potential to provide an income. Try making those changes and see what you find out.
Would you like to get deeper into starting a business with this idea? Buy the online course “kickstart your idea to a business”