It is sometimes difficult to know if your business idea is feasible, whether it can be turned to a profitable venture if the right foundation is in place. In order to turn your passion into profit, we have enumerated some steps that you need to follow to make it work out. You will need to research more on any area that you are unable to address.
THE STEPS
1. CREATE A CUSTOMER PROFILE
Your customers might be consumers, wholesalers, manufacturer etc. List as many points as you can about who you think will buy your product. If you are selling to a consumer market, list their age, gender, marital status, and income, and try to describe their lifestyle.
If you expect to sell to another business, you need to assess the industry type, the age of the business, its staff strength, annual sales and also their customer base.
2. LIST THE FEATURES AND BENEFITS OF YOUR PRODUCTS AND SERVICES
State both the features and benefits of your product or services and how they would benefit your customers. Why should the customer patronize you and not your competitors? You will create a list of the selling points that you can use in your brochures/fliers. This will help you establish why your customer might buy your product or service over that of your competitor.
3. DEFINE YOUR GEOGRAPHIC AREA
Are you selling your product or services within your state, out of state or to other countries? Your budget should restrict your geographical location. Defining this area makes it much easier to figure out what your needs are going to be. It will also help focus your area of concentration when conducting market research.
4. WHO ARE YOUR COMPETITORS? Your target market
Once you determine who and where your customers are, you must determine your actual competitors? Find out if similar products are already in existence, their weaknesses and the gap that your product/services can fill.
5. WHAT PRICE DO THEY CHARGE?
Establish what your competitors charge and list the selling points of their product or service. Try to find your industry’s wholesale and retail prices.
6. WHAT PRICE CAN YOU CHARGE?
Determining how competitive you can be is a big step toward establishing how feasible your idea is. If your product is superior to your competition and your market is not very price sensitive, then you may be able to charge considerably more than your competition. If you are selling to retailers or wholesalers, you will have to leave enough room for others to mark your products up.
7. DEFINE YOUR UNIQUE SELLING POINTS (USP)
What is unique about your offer that would benefit your customer? There may be something about your product, your price, the friendliness and speed of your service, your hours of operation, your level of quality, the skills of your employees, or other aspects of your business.
8. IDENTIFY TRENDS IN YOUR MARKET OR INDUSTRY
Knowing trends in your market or industry will help you determine where it’s going and how your business can take advantage. Check business and industry/trade magazines for recent articles.
9. ANALYSE YOUR GROWTH POTENTIAL
Is your industry or market growing or declining? Are trends or new fads peaking or declining? Generally, you will be more successful as part of a growing market. Check business and industry/trade magazines for recent articles.
10. HOW WILL YOUR CUSTOMERS KNOW YOU EXIST?
So now you know who your customers are, where they are and why they will buy your product. How are you going to communicate your offer to them? Will you rely on having a good location? How will you promote or advertise?
11. ESTIMATE SALES FOR THE FIRST YEAR
Base your estimates on the size of your market, level of competition, your price, your plans for promotion, and trends in your industry. Create a pessimistic, an optimistic, and a conservative forecast.
12. GOVERNMENT APPROVALS
There may be some extensive or expensive regulations involved with your type of business. Find out the regulations regarding your industry.
13. MANUFACTURING, PURCHASING, OR PRODUCTION
State how you will make or acquire the goods, or produce and deliver the services, you plan to sell. Use your sales forecast to help you plan this part of your operation. Think about potential growth in future years.
14. FULFILLMENT
How does your customer get their order and how do you get paid?
15. CAPACITY OF YOUR OPERATION IN THE FIRST YEAR.
How big will your operation be? What is the limit of what you can produce, stock, service, and sell. Can you meet your sales forecasts? Have you taken future growth into consideration?
16. POTENTIAL SUPPLIERS.
Your concept may rely heavily on the reliability of your raw material suppliers and/or your subcontractors. How dependent will you be? Figure out who your suppliers will likely be and try to find back-up suppliers.
17. RESOURCES YOU MAY NEED.
List the employees, floor space, leasehold improvements, equipment, vehicles, inventory, supplies, and services you will require to open your business. Estimate the costs of each item on your list. You will need this list to determine your start up costs.
18. RESOURCES YOU WILL FINANCE, LEASE, OR RENT
You will probably not pay for large purchases outright, but will instead lease, rent, or finance these items. You will need to estimate your monthly payments to help you prepare a cash flow worksheet.
19. FINANCIAL STRENGTHS AND WEAKNESSES.
How much of your own money do you have for this business? What assets can you use as collateral to secure a loan? Do you already own the vehicles, computer equipment, or tools needed to start your business? Do you have family, friends or others who are prepared to invest in your business? Do you have a strong personal credit rating?
20. MONTHLY CASH FLOW FORECAST FOR YOUR FIRST YEAR
A cash flow forecast shows the critical “when” of cash coming in and cash going out during a certain month. Preparing a monthly cash flow forecast provides you with the opportunity to show figures, representing revenues and expenses, in the month the business expects to collect and spend the cash. Cash flow can demonstrate the need for cash injections at critical periods when sales are lower in seasonal businesses. (A culled article)
HOW CAN WE ASSIST?
BecaonGate can help you start, grow, manage and sustain your business for optimal performance.
For more information, contact Client Services at 08162970699 or send email to ritababalola@thebeacongate.com if you would like to get the latest information relevant to your business, join our SME Club at www.thebeacongate.com/smeclub
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