One thing that has saved my ass over and over again is whenever I’ve had a business idea I’ve always worked it on “on paper” first.
I usually use Excel. Back in my music promoting days, every event I ever planned I calculated in Excel. I still have all my old files and they are interesting to review.
There is no “rocket science” about them, but they track all of my proposed expenses, and then my guestimate of income, and how much profit is left over.
I’ll work those numbers till they make sense. A lot of my contemporaries of that time never did that, and the result was they never lasted.
Nowadays if I have a business idea I do the same thing. A lot of the time, and by a lot I mean almost always, the numbers just don’t “add up”. There is not enough profit left (if any) to justify the work that would be needed.
So what do I do? I kill the idea, on paper, before I waste any more time and resources on it.
A lot of business owners (or more specifically, attempted business owners) I know don’t do this early planning. I think this is a big reason why the failure rate for businesses is so high. A lot of small business just throw things at the wall and see what happens. Of course a lot of experiments like that are going to fail.
By all means, experiment, but do yourself a favor and make sure it passes the Excel Test first.
