Maybe you dont need to write a complete business plan. While many business plans are written to persuade bankers or investors to lend money, many other business plans are prepared just to see whether or not a proposed business idea can be turned into a viable business.
If thats why you want to write a business plan, this quick-start business plan will work for you whether youre starting a business from scratch or thinking of buying an existing business. Just answer these five questions to the best of your ability and youll know if this business idea is worth pursuing.
1. Is there a market for it?
Many people want to start businesses selling products or providing services just because they always wanted to do that. But rule one of starting a business is that other people have to want to buy the product or service involved. Otherwise, youre trying to sell ice cream cones on a cold day theres no point in going any farther with this business plan.
Test your business idea by starting out small (such as trying to sell your products on eBay or at local markets/fairs) and doing some market research. Keep notes. If the results arent good, move on to another business idea.
Buying a business: You have a leg up here if youre buying an established business with a proven market. The trick is ascertaining the truth of the information youre being given.
2. Whats the profit potential of this business?
In other words, is there any money in it - or at least enough money to make it worth your while? You may have a flaming desire to crochet tablecloths, but if no one wants to buy the items you produce, theres no profit in it.
Likewise, if the process is so time-consuming that you can only produce one a month, youre not going to see enough of a profit to even make this a viable part-time business. Your business plan for this business idea ends right here.
Buying a business: Check the financials. How much money has this business made in the past? What are the projections for future income?
3. Is the market saturated?
There may be a market for the product or service you have in mind for your business plan, and plenty of potential profit for those who are already doing it. Sometimes theres just too much competition for any new business in the same business to prosper.
For instance, at one point my husband and I were thinking of starting a used bookstore in our small town. There already was one and just as we were in the process of putting our business plan together, another one opened. Looking at the potential size of our market, we shut our business plan down, figuring that thered be no market space for a third used bookstore locally. (Later, a third such bookstore did open but closed within six months.)
Study the competition carefully in light of your ideas for your new business. What exactly do they offer and what will you offer? How will you differentiate your products and/or services from theirs? How much of the market will you be able to get?
Buying a business: Just because a business has been profitable in the past is no guarantee that that business will continue to be profitable. Study the competition carefully. It may be that changes in market share or the difficulties of competing are why the owner wants to sell the business.
The two final questions of the quick-start business plan are on the next page. Click to continue reading...