Did you know that one in five businesses fail within two years, nearly half of new businesses are gone within five years, and three in four new companies don’t make it past 15 years? Yes, the odds are stacked against startups and entrepreneurs, so it’s best to have a mentor from a business consulting services provider before you start your business.
There are many things you can DIY, but setting up a company shouldn’t be one of them. Things are going to go wrong. To avoid problems and minimize their impact, seek expert help and guidance.
Your business consultant should be able to guide you through the process, from business setup to launch and beyond. Their assistance and advice can be particularly beneficial when you conduct your feasibility study and prepare your business plan.
The Feasibility Study
A feasibility study is a systematic assessment of your business idea. It’s a reality check to determine if your idea is viable, sustainable, and profitable. This guide simplifies the process into practical, actionable steps.
1. Conduct a preliminary analysis.
Begin with a pool of ideas and narrow them down to a handful. Explore different ways to set up and conduct your business and position your product or service in the market. This step will help you clarify your thoughts and decide on the idea/s to investigate and assess.
You must be actively involved in this stage. Your consultant can be the voice of reason that will check your assumptions.
Don’t be discouraged by any initial negative analysis. You can look for ways to refine your idea. However, learn to let go of obviously infeasible ideas before you invest more time and resources into them.
2. Assess market feasibility.
During this step, you will identify your target market, evaluate if a demand exists in that market for your product or service and determine the price at which there is viable demand. If the market assessment shows no opportunity, reconsider proceeding with your business idea. You can start again with an alternative.
3. Determine your organizational structure.
Determine the scale of planned operations, decide on your organizational structure, and analyze your staffing and leadership requirements. Your business consultant should be able to provide you with valuable corporate structuring insights.
4. Assess financial viability.
Develop an opening day balance sheet with projected revenues and expenses. This step is crucial for understanding the financial viability of your venture.
5. Identify vulnerabilities.
Identify and analyze internal vulnerabilities that can adversely affect your business. Are there laws your business will violate? What could cause your supply chain to fail? Once you have a register of possible risks, you can develop strategies to eliminate, control and mitigate them.
6. Write your feasibility report and arrive at a decision.
Put together a report to outline everything you’ve covered in your feasibility study, including all the variations of the idea you evaluated. This will allow you to assess your idea systematically and arrive at a conclusion about the feasibility and practicability of your idea/s.
Be skeptical and thorough in examining the data, and don’t forget to consider your business consultant’s input. After carefully evaluating the information and intelligence you’ve gathered, decide whether or not to proceed with setting up a business around your idea.
The Business Plan
Once you’re ready to proceed with your business idea, you need to write your business plan. It will be your business blueprint or roadmap, providing a detailed discussion of the path your business will follow.
The importance of a business plan cannot be overstated. It will steer a business through its initial stages and serve as a critical tool for attracting investors, guiding leadership and evaluating progress.
A business plan typically has the following components:
1. Executive Summary
The executive summary provides a concise snapshot of your entire plan. When it’s for a new business, the executive summary can also summarize what pushed you to start the business.
2. Business Description
Describe your business. Elaborate on your goals, products, and services, and give the reader a firm grasp of your business identity. Emphasize your competitive advantage.
3. Market Analysis & Strategy
To whom do you want to sell your products and services? Define your audience by elaborating on their:
- Location (physical and virtual)
- Pain points and needs
- Demographics
In this section, you want to clarify how your products and services will serve your market. You can use your feasibility study’s market assessment as a basis for this section.
4. Marketing & Sales Plan
After defining your audience in the previous section, you must disclose how you plan to reach and sell to that audience. You must outline your:
- Promotion techniques
- Pricing strategies
- Sales approaches
- The defining features or characteristics that give you an edge over the competition
5. Management & Organization
Describe your organizational and legal structure. Introduce the company executives (e.g., president and vice presidents), and tell the reader why these people are qualified to hold their positions.
Note that you’ve already assessed your possible organizational structure in your feasibility study. You can build on that part of your feasibility report when creating the management and organization section of your business plan.
6. Products & Services
Discuss your products and services in depth. What products are you selling? What features do they have? What service are you offering? How will they be delivered? Describe the experience and benefits associated with your services.
7. Competitive Analysis
Under the competitive analysis section, elaborate on your competitors’ strengths, weaknesses, and competitive advantages. Next, discuss what makes your company different and justify why it has a place in the competitive landscape.
8. Operating Plan
Lay out your operational blueprint. Cover logistics, human resource capacity, intellectual properties, etc. How are you manufacturing your product? How are you distributing and selling it? How will your business operate on a daily basis? This section of your business plan will answer these questions and more.
9. Financial Projections
How do you plan to make money, and how much revenue will you generate? This section also specifies funding sources and amounts.
10. Appendices
This section holds your business permits, intellectual property and patent certificates, and a copy of your feasibility study. It should also contain all documents that support any assertions made in the previous sections. For instance, you can include your executives’ resumes to prove your organization’s leaders are qualified to hold their positions.
Get Your Business Started
To start a business, you must create a feasibility study and a business plan. The former investigates the viability of your business idea, while the latter operationalizes it.
Getting a business off the ground is challenging, to say the least, and only a few of those who start make it. This is why it’s best to start prepared and with help from an experienced business consultant.
