If you're like me, you are probably always coming up with new and great ideas for a business. However, before you go and mortgage your home to finance your idea, here are some questions you better get good answers to:
Description of the market
1. Who are the potential customers for my products or services?
2. Why will they buy my products or services (and not my competitor's)?
3. What is my market niche?
4. How will I position my products or services (low, medium or high)?
5. What is the size, chief characteristics, trends and major customers in the industry?
6. What are the demographics (age, gender, occupation, etc.) and psychographics (lifestyles, attitudes, etc.) of my customers?
7. Who are the decision-makers? What are their "hot" buttons?
1. What are the benefits of my products/services to the customer?
2. How are the benefits related to customer needs and competitors?
3. Is my product or service better than the competition because it:
- is better quality
- is easier to use
- is more efficient
- has fewer breakdowns
- reduces the customer's labour costs
- saves the customer money, time or both
- solves problems?
1. How will I advertise and promote my products/services? What will be the key messages? What promotional strategies will be used?
2. What will my distribution methods, geographical penetration and roll-out schedules be?
3. How will I price my products and services? They must be competitive, yet provide an acceptable return on investment.
4. What customer support will I need to provide?
5. Who is, and how will I deal with, the competition?
1. What will it cost me to develop and produce my product or service for the market?
2. What equipment, software and operational support will I require to develop and deliver my product? How much will this cost?
3. How will I get paid? Are there major collection problems and issues that must be resolved, especially with international customers?
4. What are my revenue and expense projections for the next three years? What is my expected return on investment? How many units do I need to sell to breakeven and show a decent return?
5. Do I have enough funds to undertake this project? If not, where and how will I finance this initiative?
If you (and your partners, spouse, banker, investors) are satisfied with the answers to these questions, then by all means go for it!