Will your new business work out ?

So, you have an idea for a new business. But will it work? There are so many things to think about but the most important is do people want your new product/ service ? - get this most fundamental area right, and you're onto a winner.

Is there a need - then test it ?

Of course people only buy products and services if they have a need/ problem/ challenge that they need something to help them achieve this.

So, whatever your idea, be it a cafe, a consultancy practice or a hotel, go and ask your potential customers what they think of your idea.....

What !!?? - that last sentence will ensure you plan your business properly. Let's split that last sentence down to see what you need to do...

Go and ask your potential customers...

Yep, you're going to need to undertake some market research.

So you need to know the make up of your customer. All the demographics (income, age, gender, where they live etc). This is important, as most businesses are not targeting the whole population. Most businesses are niche players and not "all things to all men/ women". And most good niche businesses make a lot of money.

Cut down your target audience as follows:

• UK population - 56 million - This includes children under 16 as well as retired people - you may or may not think of these people as your customers
  
  
• UK working population - approx 12 million - Yikes, this has cut our target audience by 75%! - but hey, not many new businesses have 12 million market place
  
  
• Working population in my town - approx 400,000 - and again, it's cut right down
  
  
• Working female population in my town - approx 140,000
  
  
• And those under 40 is 45,000
  
  
• And those with children under 5 is 3,200

So by being really specific I now know my target market. Of course not all are going to buy my products, but I may think, that's not big enough. And this is where your financial forecasts are important - but we'll look at that later...

What they think about your idea...

Knowing your target audience is 50% of the battle. Now you need to understand if they have a need for your idea.

In the above example, you can carry out some simply research in the high street. Prepare some simply questions in advance and go and camp out in the high street and ask passers by about your idea. Qualify them first (ie: women under 40 with children under 5..) and ask about your idea.

You'll get a good response about whether or not it's going to fly. Don't ask too many questions though and have backup (ie: if they all say no, ask them what they would like...)

Financial Forecasts...

You need to know how many of your product you need to sell at what profit margin to cover your fixed costs AND pay yourself a living wage.

In your first year it's unlikely you'll going to be able to pull a decent wage whilst investing back into your business -- but prepare a decent forecast first. (Our business plans have an easy to use financial planning wizard to do this for you)

Start now

If you can, start your new business now. Before you have to leave your current job or sell your current business.

Any business is hard work. Sacrificing evenings and weekends for a few months now will greatly increase your knowledge of your market place but also show you if your idea is going to work!

Good luck and let us know how you get along.