Having that Eureka moment when you cook up a great new business idea is great. You’ll be full of ambition and eager to begin building your startup. But once you’ve had that initial rough idea, how do you assess and plan out your business idea to ensure it has legs?
For a startup, defining what your idea brings to the marketplace is key. This way, you know WHY you’re starting this venture and – crucially – whether it’s a viable business model.
A first vital step is to clarify the business purpose of your idea. What does it do, how does it cater to an existing or future need in the marketplace and who will your customers be?
Think about what your product or service delivers to the end customer and why this customer should part with their hard-earned cash to purchase your offering. Design your product/service to cater to a customer need that you’ve identified, and make sure your business offers the best solution to that need. In a crowded marketplace, you’ll need to stand out.
Once you know the aim of the new business, it’s sensible to start researching your competitors in this space and how your idea compares.
If you’re bringing a brand-new innovation to market, you may well be the first entrant. But for most business ideas, another competitor will likely be out there – and they’ll be eager to take your market share. Research your closest competitors and look closely at their products, services, prices, and their approach to marketing and customer service.
Getting a great understanding of your financial model is critical to your success. Ultimately, if your idea can’t generate revenue, cash flow and profit, it won’t sustain a real-world business.
A good starting point is to work out your initial costs. Add up your estimated costs for producing your new product or delivering your service. Include all your raw materials, your overheads, your labour costs your delivery expenses, etc. Then, think about the margin (profit) you need to make per unit and the price you’ll charge the customer. Will you break even if you can make enough sales at the right profit margin? And will you make a profit?
Every startup needs a business plan behind it. This will be the route map that defines your journey, sets out the key targets and drives the first year or two of the company.
Important items to include in your plan include:
The old saying goes, ‘Fail to plan, plan to fail’. So, putting time and effort into a well-thought-out business plan could be the answer to your future prosperity.
If you’re in the early stages of planning your business idea, please get in touch. We can help you test the viability of your business model and start the planning process.
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