The first thing you should
do when starting a business is put together a
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.
Entrepreneur: 10 Key Action Roles
8 Key Entrepreneurial Questions
1. Identify your
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
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.
Estee Lauder: 15 Rules for Entrepreneurial
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
Yin-Yang of Customer Value Creation
4. Do a simple market
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
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
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.