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How to Formulate your Business Idea
When starting a business you are formulating your business idea by writing down everything you can. Analyze the competition. Do research about the industry and find out if there are customers who will buy what you are selling. Even if you are already familiar with running someone elses business. These are valuable exercises to go through.
1. Does this idea offer a new solution to an old problem or complement a new trend?
2. Do you know who the target market is? Their age? Where they live and how far they will travel? How much they will pay? Identify all the people or companies that want or need what you are selling?
3. Understand the benefits and value your products and services offer. Is it cost saving? More convenient? More luxurious? More exciting? Knowing the benefits will help you generate ideas for future promotions, products and services you can offer.
4. Know the industry, understand if it is a growing industry. This information is available from the trade associations, government agencies and at the library business research data base.
5. Identify the market share that is realistic. Are there enough customers interested in the product or service and how will you compete with the existing businesses? How will your business be unique or different?
6. Understand your costs so that your pricing is competitive. What do your potential customers think? Can you offer a good value while making a profit?
7. Study and evaluate the competition. What do they do well and what can you do better? Call them and do business with them. Where is the gap? That is where you come in.
8. Always price your products and services to make a profit. That means negotiating everything. Making sure you get the best price for everything you buy. Service is also something that needs to be evaluated. Travel time, labor cost, supplies. Price the job by the hour or by the job? You are in business to make a profit.
If you are considering starting a business and becoming your own boss. It is essential to gather as much information you can and obtain advice from the many resources available. www.score.org Speak to people who have owned a business and know that each person has had a different experience and perhaps had run their business differently. The main thing to keep in mind is that you are in business to make a profit. Understand the finances. The money coming in and the money being spent. This is the most important aspect of succeeding in business.
Always know,all businesses are solutions to problems and without sales there is no business. If you follow these important steps it will help you formulate your idea and determine if your idea is feasible and can be profitable or if you should continue to work for someone else.
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Start Up To Do List
1. Know the type of business you would like to start. What is your passion?
2. Evaluate your business strengths and weaknesses.
3. Do you have industry experience and work experience?
4. Do you know who your customers are?
5. Conduct thorough research, is this a growing industry? www.ibisworld.com
6. Understand the direct and indirect competition, who are they? How will you compete?
7. Determine Legal Structure: Sole Proprietor, LLC, and Corporation.
8. Identify your professional team: Lawyer, Accountant, Banker and Insurance agent. Speak to them for guidance. Chamber of Commerce can help identify professionals in your area.
9. Write a Business plan and have a marketing strategy.
10. Evaluate business locations: Home based, online, storefront, office and industrial. How much space is needed?
11. Once you have the business license, open a business checking account.
12. www.business.gov guide on starting and growing your business
13. Contact the Secretary of State www.sos.gov register your business
14. www.irs.gov register your federal EIN number
15. http://tax.state.us department of taxation for sales and use tax ID
16. Identify one-time expenses to start the business and monthly expenses. How much income is needed to cover expenses?
17. Secure Capital: friends and family, line of credit, bank loan, alternative financing, crowdfunding, angel investors and venture capital.
18. Print Business cards: reflects the business, easy to read and printed on high quality card stock
19. Get involved in the community and join professional business associations. Network with everyone you meet.
20. Call your local SCORE Chapter for free confidential business mentoring www.score.org
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Simple Business Plan Outline
BUSINESS PLAN OUTLINE
Cover Page: A professional, formal document: The name, logo, address, owner’s name, telephone number, Email address and website, social media
Table of Contents: Title of Section and corresponding page number.
Executive Summary: In a page summarize the vision of the business and why it will be successful. It should be a clear and compelling story to convince investors to loan you money. It should be long enough to give detailed information and short enough to keep the readers interest. Clearly describe the entire business in 2 pages or less.
Business Description: What is the company’s mission? What are the products or services you will offer? What are the unique benefits, features and value you provide that distinguishes your business from the others, explain why your business will succeed and why the world needs it.
Services or Products you plan to sell: Describe in detail what the products and services are that you will offer. Include pictures, prices and how it will solve a problem for the customer. Explain how your business will be different from the competition. Is this a new product or service? Describe the industry and industry trends.
The Competition: Name and location of 3 competitors, length of time in business, type of business and what they sell, business strengths and weakness. Analyze how your business will be different from the competition their weaknesses and what your strengths are?
The Market: Describe who your customers are: age, race, gender, marital status, income, education, and employment. What is the size of the market, the growth rate, trends and characteristics? Where are your customers? How do they shop, when do they shop?
Promotion and Marketing Strategy: In detail describe how you will sell your products or services. How are you going to reach your customer? What types of advertising, promotion, community relations, publicity email and social media, blogs, videos, YouTube channel? How many different ways can you sell your product or service?
The Management: Who will be running the company, their experience in the industry or in managing a business? Include resumes and industry expertise. Owners must have the ability to manage both employees and finances. Identify your Professional team, Accountant, Lawyer, Banker and Insurance agent.
Financial Information: Sources and uses of funds. How much money do you need to start? Where will the money come from? What will the money be spent on? How much will you need each month to operate the company? How much will you need to sell to cover all of the expenses and to make a profit? What are your Start up costs? These are one-time expenses for signage, licenses, insurance, equipment, supplies, deposits, and websites. Write each cost down. Recurring Monthly expenses: and Projected Income from sales: Get help to set up an easy bookkeeping system. I recommend Quick Books easy to use and understand.
This exercise is essential before you start your business
If you have a business idea this is the first step in formulating your business idea. It will confirm if your idea is feasible and I am always happy to help you with any questions you may have.