Identify Business Opportunity

Is there a need for your product or service?

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There is more to a good business than a good idea. Once you have identified a business opportunity you need to carry out some preliminary research to check if your idea is viable before you embark on creating a business plan.  You may think you have a great idea, but will it appeal to anyone else – is it a viable business?

Firstly, you need to identify your target market, then you need to use focus groups and meet up with local business networking groups to test your ideas.  Researching and discussing your ideas will help hone your proposition to meet the needs of your target market and will tell you if there's an opportunity to turn your idea into a profitable business.  Research will help gather information about potential customers, analyse the market and identify a competitive advantage for your business.

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You will also need to consider if your personal goals and drive are compatible with your business. Do you plan to run your business to suit your life (lifestyle business) or do you wish to grow your business nationally or internationally?  When a business owner is passionate about their product or service they are more likely to succeed as they are more likely to spend time building a business they enjoy.  Consider carefully if you have the drive and passion to start and build a business.

Write A Business Plan

A business plan acts as a roadmap for marketing, financial and operational objectives. Writing a business plan is often overlooked but can be key document to help keep you focused on priorities and will also assist in getting funded - investors want to feel confident their investment is safe and there is a potential opportunity to see a return.

Using a business plan can help identify everything you need to do to start and run your business breaking it down into manageable pieces by providing a structured way to organise your ideas, define your goals and plan your finances.  

Your plan will formalise your: business goals, your plans to attain your goals and a time frame in which to reach your goals. Your business plan can be a simple one-page document or an in-depth multi page document depending on your resources.  Most business plans should include:

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• Executive Summary.

• Objectives

• Market Analysis. (Competitor Analysis, Target Market, Location)

• Proposition/USP

• Service or Products. (Suppliers, Cost, Payment Terms, Pricing Strategy, Production Lead Times, Storage, Shipping)

• Sales & Marketing . (How will you reach your target market?)

• Organization & Management. (Business Status e.g. Sole Trader or Limited Company, will you use outsourced services/freelances/contractors)

• Financial Projections. (Sales & Costs Forecasts)

• Funding. (Self-funded, Grants, Loans, Investment)

Sales Forecast

Your sales forecast is the foundation of your financial planning – with a sales forecast, you will be able to create your profit and loss statement, cash flow statement, and balance sheet.  However, forecasting sales for a new business is extremely difficult. To be as accurate as possible you should constantly review your projected sales with actual sales and adjust your forecast accordingly. Your sales forecast will also help guide your budget planning and you can use it to help assess what you should spend on marketing, operations, and administration.

You will need to consider the following in your sales forecast:

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• Price – How will you position your pricing in comparison to competitors.

• Volume - is your product or service high volume, is your product or service affected by seasonal changes or holidays.

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To forecast your sales, multiply the price of your product of service by the volume you predict to sell per month.

Budget

There are several start-up costs to consider when launching a new business:

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• Premises: rent, rates, utilities, refurbishment

• Machinery: For production, movement, storage or service provision

• Products: R&D, stock, packaging, storage.

• Sales & marketing: branding, digital advertising, print advertising, networking events, trade shows, signage

• Travel expenses: visit suppliers, trade shows, potential clients

• Professional Fees: insurance, accountancy, bookkeeping, payroll, pension provision

• Salary: what will you need to pay yourself every month cover your personal expenses? Will you employ other people?

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In the first year if you can reach your target market without huge investment you will strengthen your financial position and have an opportunity to test the viability of your product or service.