Steps: Taken One at a Time, and in Order.
That’s the Best Way Not to Fall Down.
YOUR IDEA FOR A STARTUP.
Many people choose to start a business around something they know and are passionate about, And that’s all well and good, but the first question you need to answer of this product or service idea is…“What problem does it solve?” or, “What need does it fill? Your idea needs to be well thought out and surprisingly doesn’t have to be all that original to succeed. You simply need to do it better than the way it is currently being done.
There are many reasons why consumers make purchase decisions, but the primary one is need. Market research will help you answer this question.
MARKET RESEARCH (FEASIBILITY)
So you may think your idea is exciting, revolutionary and exceptional. However, market research will tell you if you are right. In fact, your idea may be all that, but is it FEASIBLE? The right market research will clearly tell you if your idea is likely to succeed or fail.
Complete market research contains research from industry, market, customers and competition. You’ll be looking for answers to questions like:
- How big is the industry my business fits into?
- What are the trends of that industry?
- How will my idea benefit customers?
- Who and how many potential customers are there?
- How many competitors are there?
- What is unique about my product or service?
- What will motivate customers to buy from me?
Industry is the BIG PICTURE of what’s happening in the “total world” of your particular type of business.
Market is the population of consumers or businesses that buy your particular product or service – you can generally define them by a common set of characteristics. Market segments are groups within that population that you can define by even more specific set or sets of characteristics.
Customers are the individual people or businesses that will buy your product or service. A good exercise is to define your ideal customer and work backwards – where there’s one you can find another just like it, then another, and so on. How many households exist in my geographic area? How many of these use my product or service and how often?
Competition is any business that sells a product or service that is exactly like what you want to do (DIRECT) or that may be similar to or an alternative to your product or service (INDIRECT). Is there an unmet need? Am I offering something totally unique? Are they dissatisfied with other choices?
A BUSINESS PLAN EQUALS A VIRTUAL DRY RUN.
Lack of planning is often cited as one of the major reasons for business failure. Despite that, “creating a written business plan” is often one of the most hated task on any entrepreneur’s list. Most struggle to do it well. Time, energy, lots of research are not high on the priority list. But they should be because a business plan can serve as a virtual dry run launch of your company. It can identify all sorts of obstacles that you can steer away from and opportunities you can run to, when you actually launch.
If that’s not enough of a good reason to write a business plan, then consider these.
- If you’re looking for financing or investment, lenders and investors require a written plan. A completed business plan provides the information needed, and communicates your ideas to others as the basis of a financial proposal. A decision on whether to extend financing, investment, or credit will be based on all the information in the business plan, not just the financials.
- But the most important reason is YOU! It’s not enough to “have it all in your head” since ideas and thoughts aren’t a plan – they are like an assortment of clouds that change from minute to minute depending on how the winds blow. The process of putting a business plan together, including the information-gathering, thought and analysis, and activity of writing out the information you’ve discovered along with your ideas and measurable goals forces you to see the business project in its entirety, including its strengths and shortcomings.
- Writing your business plan is a virtual simulation. Before you invest a chunk of money, it allows you to get to know the economic environment, test the financial scenarios, identify and locate your markets, figure out the what/how/when/why of operations and management, and more. It allows you to consider and adjust, to pinpoint needs or opportunities that might otherwise be overlooked. Writing a business plan is a method for reducing your risk as well as increasing your chances for success!
- Once launched, your written business plan is a management tool, providing benchmarks and milestones you can use as measures of your success. A business plan provides a set of decisions and assumptions about the business and the economy, to comparing actual events to your decisions and assumptions provides the basis for day-to-day decision-making. In addition, the business plan can be used to communicate the goals of the business to employees and as a reminder to management, keeping everyone coordinated and heading in the same direction.