is often difficult to figure out how to research your
business idea, especially if you have never been in business for
yourself. You will need to decide if your business idea has profit
the following twenty steps as a guide to help you determine
if your business idea is worthwhile.
a profile of your paying customer.
and describe the features/benefits of your product
the main geographic area you intend to sell to during
your first year.
competitors are selling to this geographic area?
price do these competitors charge?
what price you can charge, yet still remain competitive.
would your customers buy from you instead of your
and briefly describe trends in your market or industry.
is the growth potential of the market?
are you going to let your customer know you exist?
Sales for the first year.
any government approvals necessary to launch your
describe your manufacturing or purchasing process.
describe your fulfilment process.
the capacity of your operation in the first year.
a list your potential suppliers
a list of the resources you will require to start
what resources you will finance, lease or rent.
your financial strengths and weaknesses.
a monthly cash flow forecast for your first year of
Create a profile of your paying customer.
Your customers might be consumers or retail stores,
wholesalers or manufacturers, government or other institutions.
List as many points as you can about who you think will
buy your product. If you are selling to a consumer market,
try collecting magazine pictures of what you think your
customer looks like. List their age, gender, marital
status, income and try to describe their lifestyle.
you expect to sell to another business or organization,
estimate what industries they are in, what kind of company,
how long they have been in business, how many employees,
their annual sales, what department would be interested
in your offer, who their customers are and anything
else you can identify.
List and describe the features of your product or
State how these features will benefit your
customer. Define the features of your idea and determine
what these features do for your customer. You will create
a list of the selling points that you can use in your
advertising, your brochures, and in your sales presentation.
This will help you establish why your customer might
buy your product or service.
Define the main geographic area you intend to sell to
during your first year.
Are selling to your neighbourhood? Your community?
British Columbia? The United States? By defining where
you are going to sell in your first year you immediately
put yourself in focus. You will likely be able to figure
out how many potential customers are located in this
area. If you are selling to a large geographic area,
you will probably need a good deal of money, marketing
and resources. Defining this area makes it much easier
to figure out what your needs are going to be.
What competitors are selling to this geographic area?
Once you determine who and where your customers are,
you must determine whom you have to share them with.
Find out if similar products are carried in retail outlets,
similar companies advertise in the yellow pages or are
listed in industry directories.
What price do these competitors charge?
Establish what your competitors charge and list the
selling points of their product or service. Try to find
your industry's wholesale and retail prices.
Estimate what price you can charge, yet still remain
Determining how competitive you can be is a
big step toward how feasible your idea is. If your product
is superior to your competition and your market is not
very price sensitive then you may be able to charge
considerably more than your competition. If you are
selling to retailers or wholesalers, you will have to
leave enough room for others to mark your products up.
Why would your customers buy from you instead of
What is unique about your offer that would benefit your
customer? There may be something about your product,
your price, the friendliness and speed of your service,
your hours of operation, your level of quality, the
skills of your employees or other aspects
of your business.
List and briefly describe trends in your market or industry.
Knowing trends in your market or industry will
help you determine where it's going and how your business
can take advantage. Check business and industry/trade
magazines for recent articles. Some libraries have a
"business periodicals index" to help you find
What is the growth potential of the market?
Is your industry or market growing or declining?
Are trends or fads new, peaking or declining? Generally,
you will be more successful being part of a growing
market. Check business and industry/trade magazines
for recent articles.
How are you going to let your customer know you exist?
So now you know who your customer is, where
they are and why they will buy your product. How are
you going to communicate your offer to them? Will you
rely on having a good location? Will you use advertising?
Sales calls? Direct marketing? Yellow pages? You may
find it helpful to examine the Business
Promotion Idea List within Session 2 of this Workshop.
Estimate Sales for the first year.
Base your estimates on the size of your market,
level of competition, your price, your plans for promotion
and trends in your industry. Create a pessimistic, an
optimistic, and a middle of the road forecast.
List any government approvals necessary to launch your
There may be some extensive or expensive regulations
involved with your type of business. The Information
Sources for Small Business Directory can assist you
with determining provincial regulations affecting your
Briefly describe your manufacturing or purchasing process.
how you will make or acquire the goods you plan to sell.
Use your sales forecast to help you plan this part of
your operation. Think about potential growth in future
Briefly describe your fulfilment process.How does your customer get their order and how do you
Estimate the capacity of your operation in the first
How big will your operation be? What is the
limit of what you can produce, stock, service and sell.
Can you meet your sales forecasts? Have you taken future
growth into consideration?
Make a list your potential suppliers
Your concept may rely heavily on the reliability
of your raw material suppliers and/or your subcontractors.
How dependent will you be? Figure out who your suppliers
will likely be and try to find back-up suppliers.
Make a list of the resources you will require to start
List the employees, floor space, leasehold
improvements, equipment, vehicles, inventory, supplies
and services you will require to open your business.
Estimate the costs of each item on your list. You will
need this list to determine your start up costs .
Determine what resources you will finance, lease or
You will probably not pay for large purchases
outright but will instead lease, rent or finance these
items. You will need to estimate your monthly payments
to help you prepare a cash flow worksheet.
List your financial strengths and weaknesses.
How much of your own money do you have for
this business? What assets can you use as collateral
to secure a loan? Do you already own the vehicles, computer
equipment or tools needed to start your business? Do
you have family, friends or others who are prepared
to invest in your business? Do you have a strong personal
Prepare a monthly cash flow forecast for your first
year of operation.