Do you find yourself developing a business plan because someone else wants you to do so? Perhaps the bank is requiring it before giving you a loan, or an investor or venture capitalist needs one to decide whether to finance your business, maybe your attorney or accountant said you must have one, or your company president requires a strategic plan for your new division.
I guess these are good reasons enough, but entrepreneurs are self-motivated people, used to setting their own goals and determining their own tasks. They undertake endeavors not merely to please others, but because they understand the importance of an activity in reaching their overall objectives, but creating a business plan only as a response to someone’s request makes the process seem like a burden instead of an opportunity.
Meeting needs is the basis of all business. You can create a wonderful new machine, but if it doesn’t address some real and important need or desire people won’t buy it, and your business will fail. Even Thomas Edison recognized this fact when he said, “Anything that won’t sell, I don’t want to invent.”
Typically, entrepreneurs get their original business inspiration from one of four sources, such as previous work experience; education or training; hobbies, talents, or other personal interests; or recognition of an unanswered need or market opportunity. Occasionally the motivation comes from the business experience of a relative or friends.
As you think about what your business concept, keep in mind that successful business incorporates at least ONE of these elements.
Something New-This could be a new product, service, feature, or technology.
Something Better-This could be an improvement on an existing product or service encompassing more features, lower price, greater reliability, faster speed, or increased convenience.
An Underserved or New Market-This is a market for which there is greater demand than competitors can currently satisfy, an unserved location or a small part of an overall market, a niche market, that hasn’t yet been dominated by other competitors. Sometimes, markets become underserved when large companies abandon or neglect smaller portions of their current customer base.
New Delivery System or Distribution Channel-New technologies, particularly the Internet allow companies to reach customers more efficiently. This has opened up many new opportunities for businesses to provide products or services less expensively, to a wider geographic area, or with far greater choice.
Increased Integration-This occurs when a product is both manufactured and sold by the same company, or when a company offers more services or products in one location.
As mentioned earlier, your business should incorporate at least one of these factors, more than one if possible. Ideally, you can bring a new or better product or service to an identifiable but underserved market, perhaps using a more efficient distribution channel. Evaluate the ways your business concept addresses the elements described above. Your concept should be strong in at least one area. If not, you should ask yourself how your company will be truly competitive.
Source: The Successful Business Plan Secrets & Strategies by Rhonda Abrams, Fourth Edition.