As an entrepreneur who founded and runs a successful and growing business, Getaroom, I see many entrepreneurs with great ideas but no clue how the business will be profitable. For certain websites or apps, if the idea is good enough you can get lucky and sell the business after you get a spike in interest. However, most companies require considerable planning and need both a competitive advantage and a solid business plan in order to succeed. For my company, I focused on a big market and found a profitable and attractive niche.

If you’re thinking about starting your own company, here’s my advice:

Set realistic expectations. While enthusiasm and faith are needed when planning out your business, you do want to temper those thoughts with realism. Your projections for the business should not be wildly optimistic so you can manage your expectations and those of any partners. Consider the type of business and industry. Are you selling a lower margin product that will take time to gain traction? Or are you taking a shot with an app that might be a dud or might attract 100,000 downloads a month? Plan for a realistic amount of sales and interest so you can conservatively manage your finances. Are you counting on advertising to bring in customers? Remember that most advertising simply does not work, and you’ll need to attract customers through other channels and the power of word-of-mouth referrals.

With Getaroom, I understood the lodging market is massive and knew a niche player could capture a large amount of revenue, but my initial projections were modest and I watched expenses closely.

Have a clear value proposition. Your product or service should offer true value. The value assessment has to go beyond your own biased opinion. You’re invested in the business, so of course you’ll feel it has value for your customers. Gather some outside counsel to be sure the value is clear and easily explained to your targeted audience. Envision someone referring your service to a colleague, saying “You need to get Service X because it will help you do A, give you B, and offer you insights into C.” If the value proposition is unclear, then you’re likely setting up the business for failure. Getaroom.com’s value proposition is based upon superior pricing and service. In an environment with rate parity such as in lodging, companies that can offer consumers reduced prices and exemplary service are able to really stand out as valuable.

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