Key Questions About Your Business IdeaIf you are in process

Key Questions About Your Business Idea
If you are in process of developing a new business or are thinking of expanding or diversifying an existing one, this is a good moment for you to evaluate what you are currently doing or what it is you want to achieve in the future.
Opening or expanding a business always contains an element of risk, and it is a good exercise to evaluate the possibilities of success; to know and size up problems you will face; to define the financial and human resources required for the task you wish to embark upon; to aware of your own strengths and weaknesses; to know your customer, competitors and prices; to identify the most important suppliers; and to prepare alternative solutions for resolving all potential problems.
The following list of questions will help you reflect on what you need and have to do before embarking upon a new business. Write down your answer next to each one: if the answer is “YES”, you can consider this aspect solved; if the answer is “NO”, you should review the situation and design an improvement strategy.
BEFORE STARTING A BUSINESS
About yourself:

Yes
No

Have you considered at length why you are starting your own business?



Do you want to own your own business so badly that you are willing to invest many hours of work without knowing how much money you will end up with?



Have defined exactly what kind of business you wish to establish?



Have worked in a business like the one you want to start?



Have you worked as a supervisor or manager?



Have you received entrepreneurship training in school?



Do you have savings?



Have you identified your goals for the next 3, 5 and 10 years?



Have you considered the fact that you might earn more money by working for someone else?



Does your family support your plan to start up your own business?



Do you know where to find new ideas and new products?



Do you have a work plan for you and your employees?






How about money?

Yes
No

Have you thought clearly about the nature of risk involved in the type of business you wish to establish?



Do you know exactly how much money you need to start your business?



Have you determined how much of your own money you can invest in the business?



Do you know how much credit you can get from your suppliers- the people you will buy your goods or services from?



Do you know where you can borrow the rest of the money you need to start your business?



Have you calculated the annual income you can expect to receive from your business?



Can you survive with less income than usual so that you can use some of it to reinvest in the growth of your business?



Have you spoken with your banker about your plans?




How about a partner?

Yes
No

If you need a partner with money or with the experience you lack, do you know anyone who meets this profile- someone you can work with?



Do you the advantages and disadvantages of going into business by yourself, with a partner, or incorporating your business?




How about your customers and competitors?

Yes
No

Have you defined your customers or potential customers as specifically as possible?



Have you identified your competitors?



Have you determined why people should buy your services or products rather than those offered to them by others?



Do most of the businesses in your community seem to be doing well?



Have you tried to determine if companies like the one you wish to develop are doing well in your community and in the rest of the of the country?



Do you know many people could be interested in what you want to sell?



Do you like living in the area where you want to establish your business?



Is a business like yours needed there?



If not, have you considered locating it in another place or starting up another kind of business?




WHEN STARTING A BUSINESS:
Your premises and location:

Yes
No

Have you found a good place (premises, building, house, etc.)?



Is there enough space for the future growth of your business?



Can you make any necessary modifications to the property, without incurring high costs?



Do people have easy access to your business from the parking lot, public transport system or their homes?



Have you asked a lawyer or somebody else to verify the lease contract and other requirements?




Equipment and supplies:

Yes
No

Do you know exactly what equipment and supplies you need and how much they will cost?



Can you save some money by buying used equipment?








Your merchandise:




Have decided what items you will sell?



Do you know how much or how many of each you will buy to begin?



Have you identified suppliers who will sell you what you need at a good price?



Does the property where your business operates have facilities for customer access, such as parking and public transport, or is it located close to residential areas?



Have you compared the prices and terms of credit offered by different suppliers?




Your business and the law:

Yes
No

Do you know what licenses and permits you need?



Do you know what business laws you have to obey?



Do you know someone you can go to for advice and for help with legal papers?




Protecting your business:

Yes
No

Have you made plans for protecting your business against thefts of all kinds- shoplifting, burglary, employee stealing?



Have you considered operational insurance policies and the cost involved in obtaining them?




MAKING A BUSINESS WORK:
Advertising:

Yes
No

Have you decided what kind of advertising you will use (newspapers, posters, flyers, radio, mailing, web sites, etc.)?



Do you know where to find help for your publicity campaigns?



Have you noticed what other businesses do to attract customers?





The prices you charge:

Yes
No

Do you know how to figure what price you should charge for each product or service you sell or will be selling?



Do you know the prices offered by your competitors?




Buying:

Yes
No

Do you have a plan for finding out what your customers want?



Can your inventory system tell you when it is time to order more and how much to order?




Selling:

Yes
No

Do you know how to get customers to buy?




Your employees:

Yes
No

If you need to hire someone to help you, do you know where to look?



Do you know what kind of people you need?



Do you have a plan for training your employees?




Credit for your customers:

Yes
No

Have you decided if you will grant credit to your customers or not?



Can you tell a bad credit customer from a good one?




Accounting:

Yes
No

Have you planned an accounting system that will keep track of your income and expenses, what you owe other people and what others owe you?



Have you worked out a way to keep track of your inventory so that you will always have enough on hand for your customers, but not more than you can sell?



Have you decided how you will take care of your tax reports and payments?



Do you know what financial statements you should prepare?



Do you know an accountant or someone else who can help you with the bookkeeping and financial statements?


Group work on opportunity seeking: What Opportunities Exist?
Group should choose a market and identify a BIG PERVASIVE PROBLEM customers face.
Brainstorm some products or services to solve those problems
Share ideas with larger group
Questions to evaluate an opportunity:
What is the need you fill or problem you solve? (Value proposition)
Who are you selling to? (Target market)
How would you make money? (Revenue model)
How will you differentiate your company from what is already out there? (Unique selling proposition)
What are the barriers to entry?
How many competitors do you have and of what quality are they? (Competitive analysis)
How big is your market in dollars? (Market size)
How fast is the market growing or shrinking? (Market growth)
What percent of the market do you believe you could gain? (Market share)
What type of business would this be? (Lifestyle or High potential, Sole proprietorship, Partnership or Limited Liability Company)
How much would it cost to get started? (Start-up costs)
Do you plan to use debt capital or raise investment? If so, how and what type? (Investment needs)
Do you plan to sell your company or go public (list the company on the primary market) one day? (Exit strategy)
If you take on investment, how much money do you think your investors will get back in return? (Return on investment)



Develop operational strategy for your business opportunity based on the following competitive strategy:
Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. Operations strategy is concerned with setting broad policies and plans for using the resources of a firm to best support its long-term competitive strategy. An operations strategy involves decisions that relate to the design of a process and the infrastructure needed to support the process.
Use the following major competitive dimensions that form the competitive position of a company:
Cost- “makes it cheap”
Product quality and reliability- “make it good”

Delivery speed – “make it fast”

Delivery reliability- “delivers it when promised”

Coping with changes in demand- “change its volume”

Flexibility and new product introduction speed- “change it”

Other product-specific criteria- “support it”

Technical liaison and support



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