Defining your business idea
We at Albert O’Connor & Co Accountants know that for a startup, the key thing is to define what your idea brings to the marketplace. This way, you know WHY you’re starting this venture and – crucially – whether it’s a viable business model.
As the old saying goes, ‘Fail to plan, plan to fail’. So, putting time and effort into a well-thought-out business plan could well be the answer to your future prosperity.
Here are some tips from the Albert O’Connor & Co Accountants team to consider if you are starting a business:
Research the existing market and do your homework
The first vital step is to clarify the business purpose of your idea. What does it do, how does it cater to an existing or future need in the marketplace and who will your customers be?
Think about what your product or service delivers to the end customer, and why this customer should part with their hard-earned cash to purchase your offering.
Check out the competition
Once you know you know the aim of the new business, it’s sensible to start researching your competitors in this space and how your idea compares.
If you’re bringing a brand new innovation to market, you may well be the first entrant in the market. But for most business ideas, there’s likely to be another competitor out there – and they’ll be eager to take your market share. Research your closest competitors and look closely at their products, services, prices, and their approach to marketing and customer service.
Do the numbers add up?
Getting a great understanding of your financial model is critical to your success. Ultimately, if your idea can’t generate revenue, cash flow and profit, it won’t sustain a real-world business.
A good starting point is to work out your initial costs. Add up your estimated costs for producing your new product, or delivering your service. Include all your raw materials, your overheads, your labour costs and your delivery expenses etc. Then think about the margin (profit) you need to make per unit, and the price you’ll charge to the customer. If you can make enough sales at the right profit margin, will you break even? And will you make a profit?
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