Is Your Business Idea Really Good Or Are Your Kidding Yourself?
You are sick and tired of working for someone else that is making all the money from you so you think about starting your own business.
Before you go and quit your job and spend lots of money on your new exciting business, I want you to think about this information I have given you.
On average 47 businesses fail everyday in Australia and mostly through lack of planning and management experience from the owners.
What is the maximum number of customers that will need my service/product? Conduct excellent market research.
Spend days and weeks searching for as many facts that you can get.
You need to have realistic numbers of people that could become your customers.
Don't use 'Chinese Calculations' where you calculate that if 1% of Australians bought my product I will be rich.
Drill down further to find out who many fit your exact customer profile.
What is the maximum number of customers can I service within my business capabilities? Now look at how many customers you can service with your staff and business hours.
For example if you make vases and it takes you 1 hour to make a single vase you will only be able to sell 40 per week maximum.
What is the market price range for my service/product? Again you will find this through market research.
Discover what your competitors are charging for similar products/services and work out the price range for your product.
You will only be able to charge a price that the market finds competitive, and usually you will undercut your price to 'buy' market share at the start so will need to factor in low starting prices.
Can I deliver that service/product to customers within that price range and make net profit? Now calculate all your expected business expenses, including things like advertising, rent, materials, labour, insurance etc to give you a total expenses figure.
Work out how much it will cost to make a single product/service.
If this cost is above the market price range your business will struggle and fail sooner rather than later.
No-Go decision must be thought about.
Business Viability If you cannot get enough customers or sell the product with a realistic Net profit your business will not survive.
This is called a Go/No-Go decision.
Don't waste any more money trying to sell a product that you cannot make money from.
Go back and review your business plan and see if you can change something to increase your survival chances.
As a small business coach I see too many business owners that think they can make lots of money because there are thousands of tourists coming past their business without noticing that none of them wanted what they were selling.
© Copyright 2008 by Paul Baker
Before you go and quit your job and spend lots of money on your new exciting business, I want you to think about this information I have given you.
On average 47 businesses fail everyday in Australia and mostly through lack of planning and management experience from the owners.
What is the maximum number of customers that will need my service/product? Conduct excellent market research.
Spend days and weeks searching for as many facts that you can get.
You need to have realistic numbers of people that could become your customers.
Don't use 'Chinese Calculations' where you calculate that if 1% of Australians bought my product I will be rich.
Drill down further to find out who many fit your exact customer profile.
What is the maximum number of customers can I service within my business capabilities? Now look at how many customers you can service with your staff and business hours.
For example if you make vases and it takes you 1 hour to make a single vase you will only be able to sell 40 per week maximum.
What is the market price range for my service/product? Again you will find this through market research.
Discover what your competitors are charging for similar products/services and work out the price range for your product.
You will only be able to charge a price that the market finds competitive, and usually you will undercut your price to 'buy' market share at the start so will need to factor in low starting prices.
Can I deliver that service/product to customers within that price range and make net profit? Now calculate all your expected business expenses, including things like advertising, rent, materials, labour, insurance etc to give you a total expenses figure.
Work out how much it will cost to make a single product/service.
If this cost is above the market price range your business will struggle and fail sooner rather than later.
No-Go decision must be thought about.
Business Viability If you cannot get enough customers or sell the product with a realistic Net profit your business will not survive.
This is called a Go/No-Go decision.
Don't waste any more money trying to sell a product that you cannot make money from.
Go back and review your business plan and see if you can change something to increase your survival chances.
As a small business coach I see too many business owners that think they can make lots of money because there are thousands of tourists coming past their business without noticing that none of them wanted what they were selling.
© Copyright 2008 by Paul Baker
