By: The Small Business Company Limited

 

The first thing you should do when starting a business is put together a business plan.

But what's the use of spending hours and hours preparing your plan if you have no early indication of whether the idea will succeed.

What you need to do at the outset is prepare a basic start-up plan to determine whether the idea has sufficient commercial potential.

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8 Key Entrepreneurial Questions

1. Identify your potential customers

Answer these questions: Why should this business exist? Who will be its customers, and how will it benefit them? How will your product or service solve your customer's problems or satisfy their needs?

2. Consider your keys to success

Name three or four critical factors that will be essential to this new business' survival. Be tough about it, because you will normally want the business to work, so don't underestimate the importance of critical elements. For example, a restaurant will need to provide quality, value for money, service, ambience, cleanliness and consistency.

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3. Determine your points of difference

If you aim to provide a product or service that no one else is providing, that's great. As long as you have established there is a demand for it.

However if there are already similar products or services in the market place, you will need to have something that sets them apart from the competition. This must be something that your product or service does that is different or better than the competitors. In other words, what makes your product or service unique?

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4. Do a simple market analysis

Estimate how many potential customers the business will have. Define the traits that will make somebody a potential customer. You should divide customers with similar traits into different target markets. Where do those customers now purchase, if at all? Are there enough potential customers amongst all your target markets?

 

5. Consider the ease of entry

How easy is it going to be to set up business and how easy will it be for competitors to follow you? Answer the following questions:

  • How much will it cost to set up?

  • How well developed is the market?

  • How many competitors will you have?

  • Are they direct competitors or indirect competitors?

  • How difficult will it be for others to follow you into the market?

6. Do a simple break-even analysis

How many units of sales will you need to cover costs? Are you being realistic? Add up the costs you'll have for rent, overheads, wages, advertising, etc, then figure out how much money you'll make for each unit you sell after its specific costs, and calculate how many units you need to break even. For example, if your shoe stores regular running costs are $6,000 per month and you make $20 on average (after the cost of the shoes) on every pair of shoes, then you need 300 pairs of shoes in a month to break even.

7. Now think about it

Do you really have a potential business? If you do, then you need a real business plan. If you don't, then you've saved yourself the time and trouble.

 

 

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