7 Steps To Follow When You Have a Great Idea For a Business.
An idea is the first milestone in the process of building a successful business. A business idea is a concept that can be used for financial gain, it usually focuses on a product or service that can be offered for money.
The number of steps involved in business planning may seem daunting, but if you accomplish all seven steps, you will be on the way to a successful launch.
1. Create a Business Plan:
Create a specific plan for what your business objective is, how you will cater to your customers and what new you can bring to the market.
Business ideas should not only look good, they should be commercially viable.
Before you start writing your business plan, you need to think about who your audience is and what the goals of your plan are. While there are common components that are found in almost every business plan, such as sales forecasting and marketing strategy, business plan formats can vary greatly depending on the target audience and type of business.
There are three common types of Business plans:
- One-Page Business Plan: A one-page business plan is exactly what it sounds like: a quick summary of your business written on one page.
- The Lean Business Plan: A lean plan is more detailed than a one-page plan and contains more financial information, but is not as long as the traditional business plan. Lean plans are more likely to be used internally as tools for strategic planning and development.
- External business plans: External business plans, formal business plan documents are designed to be read by outsiders, it provides information about the business. The most common use of a complete business plan is to persuade investors to fund a business, and the second most common use is to support a loan application.
2. Target Customer Analysis:
Research about who your target audience is, where you will find them and what they demand.
In order to sell effectively, the company should know the needs of its customers. A target customer analysis is a useful tool to establish what the target customers want and how to reach them.
Formulating target customer analysis requires research and detailed studies and reporting. A target audience analysis provides a high-level perspective of the overall business sector and typically outlines opportunities and restraining factors for companies hoping to enter the market.
By knowing who the target audience is and what they are looking for, businesses can strategically develop new products and services to solve common problems between these groups and to meet the demand for these demographics.
3. Demand and Supply Analysis:
It involves understanding the customer’s demand for a product or service in the target market and comparing it with the quantity of product or service you can get in the market at a given or expected price.
The importance of demand analysis in business decisions is that, it helps firms formulate their pricing policy. The firm may choose to reduce or increase the price of the product by observing the trend of consumer demand for that product.
4. Competitor Analysis:
Identify major competitors and research their products, sales, and marketing strategies. Curate business strategies based on this that will put you ahead of your competitors.
The purpose of a competitor analysis is to understand the strengths and weaknesses of competitors. Competitor analysis is important because: It will help you identify how you can develop your own unique business strategy that brings something unique to the market.
Types of Competitors:
When you identify competitors, you have three types to consider: direct, indirect and replacement.
- Direct Competitors:
These are businesses that sell the same product or service in the same category as you. (These are the contestants you think of most often.)
Examples: McDonald’s and Burger King both are direct competitors of each other.
- Indirect Competitors:
These are businesses that sell products or services in the same category as you but are sufficiently different to serve as an alternative to your product or service.
Example: McDonald’s and Subway are indirect competitors of each other.
- Replacement Competitors (also known as “phantom contestants”):
These are businesses that sell a product or service that differs from your product or service in both category and type, but these are the services that your customers may choose to spend their money on instead.
Example: McDonald’s and Stouffer’s frozen meals are phantom contestants.
5. Build a Prototype:
Prototyping is an essential initial stage in business planning. This allows you to test whether your vision is possible.
“Prototyping” is not just for organizations that make physical products. A prototype can also be a simple website representing your future website business that you plan to use to collect email addresses from interested parties.
If you are after a specific niche like fashion or cooking, you can also consider creating a blog, so you don’t necessarily need to go out and make a completely finished product- Some people are willing to pay for what you plan to make.
The prototype stage is about taking your business approach and releasing it to test whether real consumers will bite.
6. Raise Fund:
Consider how much money you need to start and how you would like to fund your new venture. Some of the most popular methods include:
- “Bootstrapped” businesses are developed by founders with little or no external investment.
- A bank loan or loan from SBA (Small Business Administration) requires that you pay principal and interest.
- Many new businesses approach outside investors who invest money in exchange for a share in the company’s final revenue.
- Finally, new models such as “Crowdfunding” through organizations such as Kickstarter allow entrepreneurs to collect micro-donations to help their businesses grow.
7. Reverse Engineering:
Reverse engineering is a process that examines an existing product or service to find out information and specifications on how it was made and how it works. Reverse engineering involves studying the market’s current conditions and determining what changes are to made to the above 6 steps in order to grow or thrive within the market.
Once you overcome or fulfill all the above mentioned steps, you will be ready to start your business.