You have found a gap in the market, you have thought of a business idea that you believe will make you a healthy profit. The next stage is to conduct a thorough analysis.
You've had a brilliant business idea. But it's a bit early for you to splash out on an expensive market research survey or start to negotiate with investors over how much you'll need to raise to get started. It's probably even too soon to put together a comprehensive business plan.
What you need is a simple, clear, quick insight into whether the marketplace is sufficiently receptive to your offering. In short, what you need to do is to conduct an analysis.
What is an Analysis?
An analysis is a quick, circumspect way of examining a company's viability by looking at its strengths and weaknesses and matching these to its opportunities and threats. Collating these facts and ideas enables you to see the bigger picture at a glance. You can then identify all major factors affecting your company's competitiveness and it acts as a decision-making tool for you to formulate a marketing strategy. Each company will have its own specific profile and the process requires an ever changing approach to reflect the ever-changing internal and external relationship.
How its Done?
You take a sheet of paper and separate it by pen into four quarters. You firstly focus on the company itself, looking at its culture and character. In the top left quarter fill in all the strengths of both your company and yourself. Spell them out clearly and be honest and don't be modest. Typical questions you should be asking are:
What are you best at?
What differentiates you from potential competitors?
Are you strong on customer service?
Do you have exclusivity of a product line?
Have you got access to a skilled and innovative workforce?
Can you scale your operation as demand requires?
Then move to the top right quarter and fill in all your weaknesses or areas in which your business may be exposed. Be honest. It's better to face the bad news now rather than see the business fall flat at a later date. Ask these types of questions:
Will your workforce be inadequately skilled?
Are your resources sufficient?
Is the marketplace broad enough?
Is the revenue stream too limited?
Is your operation adaptable?
In the bottom left quarter you need to examine all of the environmental issues that surround and affect your company, product and position. Identify areas such as:
What opportunities exist for you?
When you look at the state of the current market, what do you see?
What niches have you spotted that your rivals have missed?
Where are the gaps that you are proposing to fill?
Is the market moving in your direction?
Do you anticipate a shift in taxation/demand/the economy/product supply?
Now on the bottom right quarter, list those factors which may threaten the success of your business. These might include:
Rivals moving into your market space
Products soon to become obsolete
Is the opportunity finite?
Are you based in an unsuitable part of the country?
Now you have defined your analysis profile you are now in a much stronger position. You need to weigh up all the pros and cons of starting up your new business and then make your decision as to whether you intend to proceed.
If the business still strikes you as a viable proposition, then it's time to put together a detailed proposal and get the ball rolling. If, however, you decide it doesn't look good on paper any more, you may wish to adapt your analysis profile and target a different area of the market.
This systematic approach examines the external and internal factors while looking at both the negative and positive elements. It gives you a simple and rounded perspective on evaluating your business idea. Providing you continue to build on your strengths, minimise your weaknesses, seize your opportunities and counteract your threats, you will hugely boast your chances of setting up and running a successful business.
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