One Simple Idea summary

You might think that, given the recent economic downturn in the U.S., now would be a bad time to create a product and attempt to bring it to market.

But you’d be wrong. Even during a financial slump, consumer spending in the U.S. accounts for 60-70% of the national economy.

Starting a business for the first time can be scary, and you might even find yourself wondering if you’re cut out to be an entrepreneur.

But no one is born an entrepreneur. Like other apparently innate “gifts,” being an entrepreneur is actually learned, and the first step is to make yourself aware that starting your own business requires, above all, passion for your idea and unyielding persistence to get that idea off the ground.

One of the main reasons startups fail is because their idea is too ambitious and too complicated. So, if you want your business to succeed, you should start small and keep it simple – and the simplest way is to make a small modification to an existing, successful product.

This offers a number of benefits:

So you’ve developed your product idea and gotten to know your market. What now?

First, it’s time to make a business plan. This is an invaluable step in setting up a profitable business as it will force you to describe your business clearly and concisely: what you’re doing, how you’re doing it and why. It will also help you to forecast your financials — i.e., projections about revenues and expenses — and thus ensure that your business will be profitable. And if you’re looking for external financing, you’ll need a business plan to present to potential investors and to get feedback on your business concept.

If you care about your business idea, then it’s natural to be afraid that someone might steal it.

Fortunately, however, there are several ways to protect your great idea from the competition.

Even if you start small and simple, at some point you’ll need cash. Of course, there are many funding options available to you. The simplest way, however, is to use your own money and avoid any external obligations as far as possible.

This is because people tend to work harder to keep their own money; they don’t spend it as freely as borrowed money and tend to have more control over it. After all, would you spend your own money on a business-class flight without a second thought?

If you can’t make your product at the right cost, you’re not going to make a profit. It’s essential, therefore, to find the right manufacturer. Most contract manufacturers specialize in a certain area, so some might have the experience and expertise you need to produce your product.

To find the right manufacturer, you need to vigorously investigate those you’re considering, by, for instance, getting a referral from someone who produces a similar product to yours, and using due diligence when evaluating other potential manufacturers.

In today’s consumer-centric, highly-connected world, traditional so-called “push marketing” is not the most promising strategy for small businesses. Instead, what startups need is to understand their customers and to make their products all about them. In other words, they need “pull marketing.”

Nowadays, marketing is not about selling a product but providing value to your customers. Small companies have to let their customers know that they are able to give those customers with what they need and want.

To sell your product successfully, you have to get it into the stores. But which?

Fortunately you’re spoiled for choice: in the U.S. alone there are 1.5 million retail stores, collectively making more than $2.5 trillion each year.

If you succeed with your business idea, at some point your business will become large, busy and complex. As the captain of the company, it's your job to steer the ship, and the most important levers are your financials and your inventory.

Managing a business's finances is a crucial factor in managing that business effectively. This requires that you can pay the bills, so keep your finance records up-to-date and review your monthly reports carefully. You should also negotiate your vendors’ payment terms and incentivize your customers to pay on time so that you're always able to pay on time, too.

When successfully growing a startup, you (like most entrepreneurs) will be itching to further expand your brand.

But you should be aware that this entails an increased effort in managing your business relationships, monitoring the quality of your products, and even involves hiring new people. You should therefore be careful about expanding your business into new areas, and first make sure that it’s the right fit for your brand.