- Where have you worked before?
- Have you done anything special, exceptional or unusual?
- What work-related skills or expertise do you have?
External contacts, resources etc.
- What contacts have you in finance, business etc.
- Have you or your family access to any under-utilized resources.
- Do you know people who might help give you a start?
Don’t be afraid to ask other people to help assess your strengths and
Take a moment to complete or view the results of these surveys:
about Strengths & Weaknesses of Businesses
about Writing a Business Plan
To help surmount weaknesses, consider the idea of forming an entrepreneurial
team (or taking on a partner, part-time adviser, non-executive director
etc.) but beware of trying to work with people you don’t like or respect,
and don’t involve family unless you are really, really sure that it will
work out for the long-term.
Write down your assessments and rank your main strengths and weaknesses.
Make sure to avoid the trap of showing something as both a strength and
weakness. Use the resulting list to help set the criteria and boundaries
to your search for business ideas. For example, the scope of your ideas
might embrace ideas centered around one of the following:
- Specific local services; about $XX,000 cash; use of an existing resource
- Previous work experience; national markets; formation of team etc.
Be specific but don’t place unnecessary limits on the scope of your ideas
or thinking. Some clear ideas may have already started to emerge which
could start evaluating straight away.
3. Looking for New Business Ideas
When looking around for business ideas, bear in mind that these could
be based on any of the following approaches:
- A manufactured product where you buy materials or parts and
make up the product(s) yourself.
- A distributed product where you buy product from a wholesaler/MLM,
retailer, or manufacturer.
- A service which you provide.
Bear in mind that most good business ideas are not completely original.
You may be familiar with the following diagram which shows the possible
combinations of existing/new products/markets.
|Existing Products||New Products|
The simplest business ideas (existing products in existing markets) will
be located Box 1 and the trickiest (new products in new markets) are likely
to be in Box 4. If you concentrate on pursuing ideas involving existing
products in existing markets, you run the risk of being exposed to severe
competition. If you focus on new products in new markets, you might find
yourself too far out on a limb. Look most closely at the combinations
of products and markets in boxes 2 & 3.
You must narrow your search to specific market or product areas as quickly
as possible. For example, the “food business” is too broad a search area.
Do you mean manufacturing, distribution or retailing, or do you mean fresh,
frozen, pre-prepared etc. or do you mean beverages, sauces, confectionery
etc.? It is better to pursue several specific ideas (hypotheses) rather
than one diffuse concept which lacks specifics and proves impossible to
research and evaluate.
Generally, you should always aim for quality rather than cheapness. Be
very cautious about pursuing ideas which involve any prospect of price
wars or are very price sensitive; of getting sucked into short-lived fads;
or of having to compete head-to-head with large, entrenched businesses.
Observe consumer behavior:
- What do people/organizations buy ?
- What do they want and cannot buy ?
- What do they buy and don’t like ?
- Where do they buy, when and how ?
- Why do they buy ?
- What are they buying more of ?
- What else might they need but cannot get ?
Look at changing existing products or services with a view to:
- Making them larger/smaller, lighter/heavier, faster/slower
- Changing their color, material or shape
- Altering their quality or quantity
- Increasing mobility, access, portability, disposability
- Simplifying repair, maintenance, replacement, cleaning
- Introducing automation, simplification, convenience
- Adding new features, accessories, extensions
- Changing the delivery method, packaging, unit size/shape
- Improving usability, performance or safety
- Broadening or narrowing the range
- Improving the quality or service.
Be on the look out for:
- Emerging Trends
For example, the population within your area may be getting older and
creating demand for new products and services.
- Expanding Market Niches
For example, local industries may be outsourcing more of their services.
Try the following approaches to locating ideas and suggestions:
- Brainstorm with your friends, associates
- Ask people for their ideas
- Use one idea to spark a better one
- Read relevant trade magazines (local, national and foreign)
- Skim through trade directories (local, national and foreign)
Above all, open your eyes wide and try to spot the obvious gaps. By all
means be inventive, imaginative and original in your thinking but stay
market- and consumer-orientated rather than product-obsessed. We all know
stories about people inventing a better mousetrap and never getting a
nibble from the market!!
4. Assessing the Business Ideas
Having built up a moderate list of ideas, these must be evaluated so
that a short-list of preferred options with the greatest potential and
lowest risk can be assessed in greater depth.
One way of evaluating ideas would be to use a simple scoring system using
gut-feel with a limited number of criteria as shown below.
|Degree of risk||??|
|Ease of start-up||??|
|Level; of preparation||??|
Before scoring individual ideas, run through the criteria and set what
you feel should be minimum desirable scores for each. The resultant total
could be used as your overall minimum threshold. If some ideas don’t achieve
satisfactory scores, drop them and look for better ones.
Once your short-list has been developed, you will need to start devoting
substantial time to assessment, research, development and planning. For
a start, you could pursue the following tasks:
- Discuss products/services with prospective customers
Would they buy from you, at what price, with what frequency etc.?
Why would they prefer your products to the competition?
Find out what they really think – there is a danger that people will
tell you what they think you would like to hear. Listen carefully
to what is being said; watch carefully for qualifications, hesitations
etc.; and don’t brow beat respondents with your ideas – you are looking
for their views.
- Assess the market using desk & field research
How does the market segment (by price, location, quality, channel etc.)?
What segments will you be targeting?
How large are these segments (in volume terms) and how are they changing?
What are the price makeups/structures?
What market share might be available to you bearing in mind your likely
prices, location, breath of distribution, levels of promotion etc.?
- Analyze your competition
Who are they and how do they operate?
Are they successful and why?
How would they react to your arrival?
What makes you think that you could beat the competition?
At whose expense will you gain sales?
- Consider possible start-up strategies
Will you be able to work from home or part-time?
Will you seek a franchise or set up as an in-store concession?
Will you start by buying in finished products for resale as a precursor
Will you contract out manufacturing?
Will you buy an existing business or form an alliance?
Could you lease or hire equipment, premises etc. rather than buy?
How will you stimulate sales?
Look carefully at the White Papers on Devising Business Strategies and Developing a Strategic Business Plan.
- Set ball-park targets and prepare first-cut financial projections
Estimate possible sales and costs to get a feel for orders of magnitude
and key components and to establish a rough break-even point (when our
sales might start covering all your costs). Our Exl-Plan
(for Excel) can be used to prepare 3/5-year financial projections (P&Ls,
cashflows, balance sheets, ratio analyses and graphs). It incorporates
a Quik-Plan facility for doing quick and dirty
Avoid over-estimating likely sales and under-estimating costs or
lead times. Better to be relatively conservative. Don’t confuse profits
and cash – see the paper entitled Making Cashflow
Forecasts for further information – and make sure that you make
adequate provision for working capital.
- Prepare a simple action plan
Cover the first year of operations to highlight the critical tasks and
likely funding needed before the business starts generating a positive
cashflow. This is critical especially if you have to undertake significant
product or market development or need to give credit to customers.
- Critically examine ideas from all angles
Can I raise enough money?
Can I get a premises/staff etc.
Will the product work?
How will I promote and sell?
Think through possible problems. What would happen if sales took
twice the expected time to develop while costs escalated? What would
happen if …….
Bear in mind that the incubation period for a new business can easily
last several months or even years. Don’t rush into the first feasible
idea without letting it incubate or develop in your mind for a reasonable
period. There might be a tendency to get all fired up and enthusiastic
such that your heart is starting to rule your head. Instead, stand back
Do not be afraid to seek external assistance from professional advisers
or from enterprise support organizations which are virtually everywhere.
These include SBDCs in the US, Enterprise Agencies & Business Links
in the UK, County Enterprise Boards in Ireland, EC BICs throughout the
EU and so on……
5. From Business Idea to Business
Having firmed up on a specific idea and conducted preliminary research,
you have several options including the following:
Most probably, you will start addressing all these tasks in parallel
rather than sequentially. Other issues which you may need to start thinking
about include the following:
- Select a company or business name, logo etc.
- Decide how you will start trading – limited company, sole trader
- Enquire into any licenses which might be needed, or regulations
to be complied with.
- Think about where the business will be located.
- Look for professional advisers (lawyer, accountant) and a bank.
- Consider likely telephone/communications needs.
Bear in mind that, to develop a successful business, you must:
- Define precisely the nature of the business
- Offer clearly identifiable products or services
- Tap a real need or generate a demand for your product/service
- Operate within your expertise and resources
- Have realistic targets and have reasonable expectations
- Keep everything as simple and straightforward as possible.
If, at all feasible, there are huge advantages to be gained by embarking
on a “soft start” or pilot launch before plunging full tilt into the new
business. This approach can be of enormous value in helping to firm up
on the scope of the opportunity; gaining more insights into the market;
debugging products and getting customer feedback; curtailing costs and
personal or financial exposure; acquiring a track record etc. etc. – check
Devising Business Strategies for further insights
into “soft start” strategies.
|Free Tools from PlanWare|
6. Introducing PlanWare
PlanWare develops and sells a range of
financial planning packages – Exl-Plan and
Cashflow Plan – for businesses of all sizes &
types. Trial versions of all products can be downloaded from our
PlanWare site and many other sources on the ‘Net.
PlanWare also features:
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