Evaluating Your Business Idea
Your Business Idea needs to be properly assessed.
You may have several ideas for a new business or only one. Before you start pouring your effort and money into an idea you need to see if it will stand up to some analysis. Try a SWOT analysis. This requires you to think about the Strengths, Weaknesses, and Opportunities your business will have, and the Threats it may face.
A high level of skill with a range of equipment, or a friend that is prepared to loan you some money would be strengths. If you have never run a business before that could be a weakness. A ready, enthusiastic market would be an opportunity, while several businesses almost identical to the one you are thinking of starting or a weakening economy would be threats. This type of analysis can show you if your business idea is viable and should encourage you to exploit opportunities and help you decide how to tackle threats.
Decide on your Unique Selling Proposition...
Why should a potential customer come to you and not a rival? Will you specialize in a certain area? You should be able to identify where and how you can contact your potential customers and have an idea of the demand for your type of service or product.
Write a Business Plan...
There are many versions and it seems every bank and business advisor has slightly different requirements. However every version should keep you focused on what you want to do with your business and the strategies to achieve this in a certain time frame. It should identify the services or products you intend to offer initially, and those you hope to expand into later. Remember the plan is a working document. If you miss deadlines you should be able to modify the plan to get your business back on course.
Once you have decided on the type of business you want to start, do some research to see if there are any gaps in the local market. Find out your competitor's pricing. You could get friends to ask for quotes from the competition, or use a more direct approach and have discussions with a local expert. Remember, a company could be a potential competitor or a potential joint venture partner. Perhaps you could approach them with an idea for a product or service that would complement theirs.
When setting prices, do not immediately assume undercutting is the only solution. You need enough income to cover your overheads and a low price may give the impression that your skills and work have little value.
Cash flow is another important element in starting and running a business. Make sure you do not have to make too big an investment before you get paid. You should know how much you have to earn to at least break even.
After working through your business plan and giving cash flow a good deal of thought you should know whether your proposed business is viable.
A high level of skill with a range of equipment, or a friend that is prepared to loan you some money would be strengths. If you have never run a business before that could be a weakness. A ready, enthusiastic market would be an opportunity, while several businesses almost identical to the one you are thinking of starting or a weakening economy would be threats. This type of analysis can show you if your business idea is viable and should encourage you to exploit opportunities and help you decide how to tackle threats.
Decide on your Unique Selling Proposition...
Why should a potential customer come to you and not a rival? Will you specialize in a certain area? You should be able to identify where and how you can contact your potential customers and have an idea of the demand for your type of service or product.
Write a Business Plan...
There are many versions and it seems every bank and business advisor has slightly different requirements. However every version should keep you focused on what you want to do with your business and the strategies to achieve this in a certain time frame. It should identify the services or products you intend to offer initially, and those you hope to expand into later. Remember the plan is a working document. If you miss deadlines you should be able to modify the plan to get your business back on course.
Once you have decided on the type of business you want to start, do some research to see if there are any gaps in the local market. Find out your competitor's pricing. You could get friends to ask for quotes from the competition, or use a more direct approach and have discussions with a local expert. Remember, a company could be a potential competitor or a potential joint venture partner. Perhaps you could approach them with an idea for a product or service that would complement theirs.
When setting prices, do not immediately assume undercutting is the only solution. You need enough income to cover your overheads and a low price may give the impression that your skills and work have little value.
Cash flow is another important element in starting and running a business. Make sure you do not have to make too big an investment before you get paid. You should know how much you have to earn to at least break even.
After working through your business plan and giving cash flow a good deal of thought you should know whether your proposed business is viable.
A well thought-out business plan will pay dividends later when it comes to
insuring your future.
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