How to turn your spark of genius into a sustainable business.

Key takeaways:

• Not every great idea translates into a thriving business, so it’s important to consider financial viability when launching a new business.
• Conducting market research and identifying unmet needs among your target demographic can help you create a financially sound business plan.
• Building a network of trusted advisors, including a small business banking expert, can help you anticipate and overcome challenges in launching your business.

Looking to turn your big idea into the next thriving business? You’re far from alone.

More and more Americans are looking to create a brighter future by being their own boss. More than 400,000 new business applications have been filed each month in 2024, according to the U.S. Department of the Treasury — a 40% increase since 2019.

But entrepreneurship comes with its fair share of challenges. Nearly half of new businesses fail within the first five years, and one in five close within their first year.

“Having passion is important, but creating a financially viable business means having a strategy in place that maps out your path to success,” says Keith Warren, Senior SBA Business Development Officer, Northwest Bank. “By drilling down into the nuts and bolts of your business, you can anticipate the challenges you’re likely to face in those first months and years, so you can plan accordingly — and prevent those roadblocks from throwing you off course.”

Here’s how to transform your idea into a realistic plan and the steps you should take to set your business up for success.

Start with an open mind

Of course, it’s important to find a business idea you’re passionate about. But your first idea isn’t necessarily the best one. Chances are, you’ve got multiple interests — and Warren recommends looking to the community around you to weigh the pros and cons of multiple concepts to find the best fit.

Start with an unflinching look at the local business community to determine what’s missing and where there’s an opportunity for you to add value with a new business. “Maybe you’ve got your heart set on opening a steakhouse, but what your neighborhood really needs is a restaurant that provides a sense of community, and a cafe or coffee shop would fit the bill,” Warren says. “Building a successful business is all about finding a way to meld your vision with what your target market needs.”

Don’t be discouraged if you have to work through several ideas to find the right one, he says. “It’s not uncommon to go through five or six business ideas before finding one that works for you and your community.”

Conduct market research

Once you’ve selected a potential business idea, it’s time for a deep dive into the details. That means conducting market research: Looking into what customers are looking for and the best ways to meet their needs.

Intimidated? You don’t have to be: Market research is likely much easier than you think. “You don’t need to reinvent the wheel here,” says Warren. “But you want to examine which customers you’ll be trying to reach and how you can impact that demographic.”

If you’re planning to open a clothing boutique, for example, you’d want to map out the demographic of customers you’ll appeal to. Will you sell men’s and women’s apparel, or focus on a single gender? Will you focus on workwear, athleisure or trendy fare? The answers can help you determine how you’ll fit into the local business landscape. 

Finally, ask yourself what would make your business different. Of course, you might innovate an entirely new product or service. But you might also fulfill an unmet need by offering a popular product at a lower price point, for example, or redesign an offering to appeal to a new demographic of customers. Reflecting on what makes you different helps ensure you’re meeting a unique customer need, and doubles as an opportunity to brainstorm how to communicate your unique selling proposition (USP) to customers once you launch.

Put together your business plan

A business plan is a document that outlines the strategy for your business, along with financial forecasts. Writing your business plan is an important part of launching a successful business, since lenders will review the plan when you apply for financing.

• Read more: Creating a Business Plan

The good news: Your market research gives you a great head start in creating your plan.

The next step is to take a deep dive into the finances and ensure your idea will be financially viable, says Warren. “You’ll want to run the numbers to ensure your idea can result in a profitable business,” he says. “The exercise helps you decide on a pricing strategy for your offering and it also helps you determine how much financing you need to get your business off the ground.”

Creating financial forecasts also allows you to scenario-map different business models to find the most financially viable option, he says. “A standalone daycare, for example, might not be financially viable over the long term, but opening a chain of daycares might be. By creating your business plan, you can map out which strategy will work best.”

Cultivate a network of support

It takes a village to build a successful business, even if you’re a solopreneur. And building a trusted network of colleagues and advisors is critical to achieving success.

“Although every business is unique, the entrepreneurs that came before you had to overcome the same challenges you’re facing, and they’re probably more than willing to help,” says Warren. He recommends networking in local business organizations, as well as reaching out to a Community Development Financial Institution (CDFI) for insights and resources that can help you launch your business.

Your bank can be a critical part of your business development team, too

As you’re building out your network, consider bringing a trusted financial advisor into the fold. A financial expert can help you create financial forecasts for your business plan, as well as help you manage your business finances before, during and after you open your doors.

And it’s never too soon to talk to your bank, says Warren. “While you might not strictly need a bank when you’re first developing your business, we’re more than happy to be a sounding board to discuss ideas and strategies,” he explains. “Plus, as we get to know you and your business, we can help you plan for what’s next, and help you find the solutions you need to reach your goals.”

Get help creating a financially sound business

Whether you’re still brainstorming business ideas or you’re looking for financing to help you grow your business, Northwest’s team of small business experts can help set you up for success. To learn more about how we can move your business forward, or find a branch near you, visit us online.