Business Planning & Research
It may be annoying to hear people say that you need to thoroughly research your business idea and then write a detailed business plan if you want to increase your chances of success, but that is the best advice you are likely to get. Research helps you determine if your business idea is feasible, or how to develop that idea to improve its chances of success. Once you have researched and developed your idea, you are ready to write your business plan.
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Business Idea
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A lot of good ideas don't make good businesses. You must start with a revenue goal, and your business idea must support that goal. There are only four types of business models: manufacturer, distributor, landlord and agent. The manufacturer sells products to distributors, who resell those products. The landlord owns an asset, such as a bulldozer, and leases it to customers. The agent arranges deals between companies or individuals and takes a commission. Your business idea should incorporate at least one of these basic business models in order to be economically feasible.
Research
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Industry trade associations are excellent sources of information that will help you understand your marketplace and fit your business, revenue and marketing models into the best configuration. You need information on the cost of doing business, average profitability, target customer demographics and buying habits. Trade associations are in the business of making it easy for start-ups to be successful because that helps the industry. Ask for referrals of other sources of information and potential members for your advisory board.
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Development
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A good advisory board is important if you want to increase your chances of success. In addition to industry experts, you should invite a banker, attorney, accountant and a successful local business owner. These advisers will help you plan your company by providing feedback on your ideas. During the development phase, contact suppliers and distributors to learn as much as you can about the wholesale prices you will be paying and the prices you will be able to charge your customers. By the end of your development phase you will be ready to write your business plan.
Business Plan
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A good business plan is a fact-filled document with little hype. It should demonstrate your command of knowledge about your industry; target customer, detailed descriptions of your business, revenue and marketing models, how you will build your company and detailed financial projections. It reflects the level of planning you put into creating your company--something that every banker and investor will want to see. It should also contain a description of what you will do if your assumptions turn out to be faulty.
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References
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