Before deciding whether to start a new business, you need to have a good idea of who your competitors would be. Are there any incumbents with established brand recognition? If so, how could you compete with them? What suppliers do you know you could count on to stick by your side?

• The starting point for any business venture is getting to know your market. Take the time do your research and be as objective as possible.

• A thorough assessment of your competitive landscape and customer segments will help you come up with a realistic business plan.

Your market

• Does your product or service have profit potential?
• Could your market be disrupted by new technology?

Customers and suppliers

• What main customers will you target? What customer segmentation will you use (such as by location, age, disposable income, or other criteria)?
• Is there a chance you could become overly dependent on a single supplier? If so, could that supplier be easily replaced if necessary?

Competitors

• Who would your main competitors be, and what are their strengths and weaknesses?
• How will those competitors likely react when you launch your new business?

To succeed in today’s business environment, you need to have a clear value proposition that sets you apart from the competition.

You also need to decide how you will price your product or service, taking into account your distribution chain and marketing activities.

• Your pricing policy is very important since it will have a direct impact on your company's profitability. Poorly-established prices can undermine all your other efforts in terms of product development and sales & marketing.

• You will have to decide which marketing channels will be most effective in getting the word out about your product or service – while staying within your budget.

• You should also evaluate whether the product or service you want to sell has real sales potential.

Next you'll need to crunch the numbers – calculate what your estimated income and expenses are, and what level of sales you’ll need to turn a profit. These calculations will be the backbone of your business plan.

• First you should determine how much money you’ll need to start up your business and achieve your initial growth targets. Do you plan to take out a loan? Or would you rather bring in outside investors? Regardless of which financing method you choose, you’ll also need to have quite a bit of savings on hand to tap into. A promising business idea isn’t enough to secure a loan or win over investors.

• Now you’re ready to generate projected financial statements, drawing on all the data you collected in the previous steps. These financial statements include:
  • A balance sheet: a summary of your assets, liabilities, and equity
  • An income statement: a list of your income and expenses
  • A cash-flow statement: a list of the cash coming into and going out of your business
  • A financing plan: how you plan to fund your expenses, such as by getting a loan or seeking investors

Once you’ve made your financial projections, you’re ready to put together a business plan.

The business plan will help you pull together the results of the various assessments you've done and use them to outline a concrete strategy. It’s a big-picture document that describes the key aspects of your new business. It also serves as a calling card that shows how serious you are about making your vision a reality.

You need a business plan to:

• Show why your business idea is a winner
• Convince potential partners and investors
• Convince lenders (if you need outside loans)
• Ensure all partners in the business share a common vision

See our tips on putting together an effective business plan.

Before launching into your new business venture, you should ask yourself whether you have what it takes to succeed as an entrepreneur. Do you have the requisite business skills? And are you ready to make the necessary sacrifices?

• When it comes to starting a business, the person behind the idea is just as important as the idea. Take an objective look at whether you have the entrepreneurial drive to handle the inevitable ups and downs of striking out on your own.

• The thought of being your own boss may certainly be enticing, but there are some downsides. When starting out, you won't be able to keep normal working hours or take vacation. Your income will most likely take a hit at first, and your company could very well be in the red for some time. What you gain in flexibility and freedom will be offset by uncertainty and pressure. So weigh all these factors carefully before deciding whether you are really cut out to be an entrepreneur.

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