In this video, we’re going to talk though the 5 steps we tend to take when developing our business concept.
At the end of step 4, we take the biggest decision of all – should we proceed or not.
Let’s get started.
First our business idea.
Business ideas come from many places, but these 3 tend to be the most common sources:
- You have a concept that you haven’t seen done before. This could be a brand new product or service, or it could be that you are bringing a new product or service to your area or industry.
- The next is to put a twist on an existing concept. Maybe you can deliver a product in a new way? Or add more bells and whistles to a service or introduce it to a new industry?
- The last example is to improve an existing concept in terms of quality, availability, or functionality.
Once an idea is established, it’s time to test it:
- Ensuring you have a market to sell to, is number one. How big is your market? What does the overall market look like? Where is it located etc?
- Next is to take that market and see if you can find a subset (sometimes called niche) that will be most attracted to your product or service and do the same thing, define the market, size it, etc.
- Going to that market to test the idea is then advised. Figure out where you can find them, and then send out questionnaires, ask them on social media, if you have the money engage someone to do market research.
- Listen to feedback and adjust your concept if required to ensure your product or service is in demand and fills a need for that group.
After proving the need, it’s time to ensure that the business will make money:
- How much will it take to produce your product or service? Include everything from materials, time, supplier costs, bills, etc.
- What volume do you anticipate selling month on month over 3 years? It’s always best to do a low, middle, and best estimate.
- Based on those figures, what will your profit be over the first 3 years?
- What are the costs involved in getting the door open?
Now that you’ve determined that you idea has legs, it’s time to create a Business Plan.
The plan isn’t just useful if you are going to ask for financing help from a bank or investor, but also to help you gather all your thoughts and research in one place. It’s a document that can grow with you as the business grows.
Business plans come in different shapes and sizes, but the key areas for inclusion tend to be:
- Your business concept/idea/definition.
- Your marketing plan including your website strategy and social media plan
- Your operations plan which includes your hr strategy, your location, your equipment needs, etc.
- Your financial plan which includes your start up costs and cashflow forecasts (income and expenses) for at least 3 years.
- Any assumptions you are making about your market, costs, product needs, etc.
- Any risks you can foresee for you business, and how you will overcome them (mitigation).
- The activities and dates you have for your rollout.
Once you have your idea fully fleshed out, your financial forecasts are set, and your business plan written, it’s time to make a informed decision about whether or not you wish to proceed with this particular business idea.
Let’s look at Go or No Go separately.
For a Go decision, it’s time to get your ducks in a row before starting your launch countdown.
Depending on your business there will be many activities you’ve built into your rollout plan, such as development of your product or service, buying supplies, finding a business location, starting your marketing campaign, etc. These activities will be different for each business, but some things will be the same:
- Obtain financing for your business if you need it. Visit banks or other financial providers, see if you qualify for a grant, look for partners or investors, etc.
- Register your business name according to your local requirements.
- Decide on your business entity for tax purposes and register it with the CRA if necessary (obtain accounting advice first).
- Obtain any additional vehicle, liability, possession, location insurance if necessary.
- Obtain a business license accoring to your local requirements.
For a No Go decision, it’s time for another round of activities.
Deciding that the time or the concept is not yet right for you, is not failure – you’ve just saved yourself significant time, effort, and money. But you don’t have to give up.
Here are two things you can do:
- Reevaluate your idea and see how you can improve it. Can you save costs in your start up or rollout? Can you charge more? Can you tweak your product or service to better meet your customers’ needs? Can you change you market – or your delivery mechanisms or geographical spread? Can you limit your rollout to one product rather than 2 or 3 initially? Etc.
- If the existing idea just doesn’t hit the right spot for you anymore, or doesn’t seem feasible no matter which way you look at it, it may be time to come up with a new idea!