The following Steps, 11 through 30, will lead you through the process of researching your business idea. Hopefully, the market research steps will also result in proving your business case. The most common pitfall with business plans is that they do not prove the business case, which is the result of inadequate market research. This may be the most critical step in the entire business planning process. It’s important enough to take time to understand how to prove your business case.
If accounting or financial terms cause you stress, use the common terms in column one: demand, supply and enough money for your business to survive and thrive. These terms are more practical for the discussion on proving your business case, because the matter of proof goes beyond financial viability into many areas of market research. The following list provides an idea of what it means to prove your business case.
Actions That Strengthen Your Business Case
- Having spoken to real customers.
- Forecasting sales conservatively.
- Having signed contracts or letters of intent from customers willing to buy your products or services.
- Estimating expenses a little higher than you believe they might be.
- Demonstrating smart shopping and sourcing.
- Being accurate, realistic and truthful throughout your business plan.
- Answering your readers’ questions in your plan.
- Using clear, believable language.
- Using accurate, reliable and credible sources for key information.
- Providing clear, accurate references for your sources of information and attaching supporting documentation in the Appendices.
- Providing a complete set of clear and realistic financial forecasts that you can discuss intelligently with your banker or investor.
- Making it easy for your reader to understand.
- Knowing your business.
- Knowing your Industry.
- Using common sense.
- Having experience related to your business or Industry.
Actions That Weaken Your Business Case
- Not having spoken to customers.
- Making pie-in-the-sky sales forecasts.
- Having a “build it and they will come” attitude and approach.
- Providing low or incomplete expense projections.
- Demonstrating lazy or sloppy sourcing; paying too much.
- Being inaccurate; using half-truths or false statements of any kind.
- Leaving your readers with unanswered questions.
- Using fuzzy, unclear language of any kind.
- Using unknown, inaccurate or unreliable sources of information.
- Leaving your reader wondering where your information comes from.
- Having financial projections that are too skimpy or too overwhelming.
- Making it difficult for your reader to understand.
- Not knowing your business.
- Not knowing your Industry.
- Not using common sense.
- Not having experience related to your business or Industry.
Action
- Map out how you will prove your business case.