Creating a business plan will help you achieve your entrepreneurial goals. A clear and compelling business plan provides you with a guide for building a successful enterprise focused on achieving your personal and financial goals. It can also help persuade others, including banks, to invest in what you are creating.
Analyze the potential markets for your business. Consider which segment of the local (and/or international) population will be seeking to use your products or services. This needs to be more than mere guesswork and involves doing accurate and intelligent research. You need to analyze secondary research collected by outside observers, as well as getting primary research that you collect yourself, with your own methods and observations. Consider the following areas of inquiry:
- Is there a viable market for the product or service you want to sell?
- How old are your potential customers?
- What do they do for a living?
- Is your product or service attractive to a particular ethnic or economic population?
- Will only wealthy people be able to afford it?
- Does your ideal customer live in a certain type of neighborhood or area?
Establish the size of your potential market. It’s important to be as specific as possible in regard to your market and your product. If you want to start a soap business, for example, you may believe that every dirty body needs your product, but you can’t start with the entire world as your initial market. Even if you’ve developed such a universally needed item as soap, you need to identify a smaller, more targeted customer group first, such as children under eight who might like bubblegum scented bubble bath, or soap made for mechanics. From there, you can analyze demographic information more specifically:
- How many car mechanics are in need of soap in any given community?
- How many children in the United States are currently under the age of eight?
- How much soap will they use in a month or a year?
- How many other soap manufacturers already have a share of the market?
- How big are your potential competitors?
Determine your start-up cost. Make a list of all the tangible and intangible resources you need to get your business going. The total estimated price of all of these items will become your start-up cost whether you’re buying highly sophisticated computers or simply installing a new telephone line on your desk. If there’s any item in your estimates that seems unreasonably high, research other alternatives. But keep in mind that it’s better to include every element you truly need along with a reasonable estimate of the cost of each item, so you don’t run out of money or default on your loans. Be honest and conservative in your estimates, but also be optimistic.
- Don’t aim for the best of everything at the beginning. You can forgo the expensive trimmings of an office of a more well-established company and stick to the basics at the beginning. Get what is affordable, works and is actually needed and don’t buy frills.
Put yourself in the shoes of potential investors. Ask yourself, “If I were going to invest X amount of dollars into a concept or idea, or even a product, what would I want to know?” Gather as much helpful and credible information as you can. Depending on your product, you may need to search long and hard for relevant information.
- Don’t lose heart if you discover some, or even all, of your ideas have been adequately covered by the market. Don’t ignore this reality; instead, work with it. Can you still do a better job or provide a better widget than your competitors? In many cases, it’s likely that you can provided you know the market well and how to add value in ways your competitors are not doing. In other cases, it may be a case of focusing more narrowly or more broadly than your competitors are doing.