"When should I turn my idea into a company?"
We all get excited when we have an idea we believe makes a difference or propels us into the world of entrepreneurship. The important part remains not the idea itself, but the potential it promises in making that difference. Perspective to focus on the reason behind the idea rather than the idea itself or what the idea needs helps drive better decisions.
Consider the below answers:
Short answer: When pursuing the idea further requires a company to do so.
Longer answer: The idea is what really matters. Creating a company helps primarily for the following:
- Protection of the IP (intellectual property)
- Legal means to monetization which sustains the manifestation of the idea and profitability
More than anything, your idea needs to be explored. This includes assessing any gaps between perceived and actual value your idea delivers in making a difference. Keep in mind that an actual product or service may not necessarily be required to assess an idea or the impact that idea makes.
Following the above understanding, consider the insight below regarding the timing of necessity for creating a company:
Earliest time: When pursuing creation or assessment of the idea is prevented by one or more of the following:
- Protection of IP to solicit feedback from an external resource to gauge feasibility of how the idea can be realized and/or identifying requirements for that realization to take place
- Creation of something tangible such as a prototype (product or software applicable) remains critical to properly demonstrating value for assessment
- Establishment of a team as conglomerated effort superseding either your understanding and/or experience is required where member(s) of that team will have a personal stake in the company. Documenting equity distribution early prevents misunderstandings and perceived mistrust amidst core contributors.
Latest time: When money gets involved in a significant way. This includes either spending or receiving a significant enough amount including:
- Infrastructure setup of a minimum viable product / service
- Investing resources contributing initial capital to the corporate entity
- Initial sales accrued from the company regarding the solution that are paid