The "Business Opportunity" is fundamental to your business plan. You may have a good idea but without confirming that there is real business opportunity you wont have a business and you wont get any backers. So, before you start the process of writing a business plan make sure you have one! The bottom line is that the more evidence that you have supporting your business opportunity, the more credible your business plan will be, and the more likely you will secure investors.
Don't Fool Yourself
You could assess the opportunity as part of a feasibility study, or simply by carrying out some basic market research and crunching some numbers. But how can you find out whether it is business opportunity worth chasing?
The easiest person to fool is you. You have every right to put your own money where your mouth is on the basis of your "gut feel" but if you are looking for a bank or investor to do the same, your gut feel is not going to be enough . As far as possible you need to put aside your motivations and personal conviction and become objective.
Free & Paid Market Data
So, when looking at your Business Opportunity make sure you look at objective and independent market data to confirm the extent of it.
The first option to explore is freely available internet-based research and freely published information from industry and professional bodies. Press releases, white papers from organisations in your market space are also a good source. Finally, news reports on competitors in the space as well as articles may also give you some top level market data, pricing information and current trends. When looking at different sources, make sure you cross reference them and weed out random data to ensure they are reliable. Use all available free information before you think about paying for market research
Once you have looked through the freely available information you can also check out market research reports to see if there is data there that you need. These are available from a number of sources that cover different industries and sectors. Be sure you know what you are buying before you start paying out hard cash as some can simply be a re-hash of free information.
Crunch the Market Numbers
Once you have some good reliable data the next stage is to “quantify” the Market Opportunity. Here you should look to establish the size of the market and its estimated rate of growth over the next few years. At a basic level you are looking to make an assessment of the monetary value of the market based on a simple set of assumptions relating to price and units sold. Be sure to define the extent of your market - there is no use confirming the size of the international market as £10bn if you are only selling to a specific region in the UK - you need data that will relate to your business.
Does the Business Opportunity stack up?
Once you have quantified the size of the potential market you need to crunch some basic numbers on how the Business Opportunity stacks up under different scenarios. Take a look at some realistic revenue projections and apply costs to your best knowledge. Then apply market related growth scenarios and vary your cost base to see what difference it makes to your profitability.When starting up be sure to consider your addressable market - the market that you can reach initially - before you scale up your forecast to sell nationally or internationally. If things work on a basis profit and loss basis over the first 3-5 years then it will be worth exploring in more depth how you are going to fund the business.
For further evidence talk to potential customers to get some feedback on your idea. See if you can get letters of interest in what you are doing from them - or even better letters of intent to purchase. Once you have confirmed there is a real market and business opportunity all you need to do now is show how you are going to execute on this opportunity in your business plan!
The Business Plan Team Limited
The Business Plan Team specialises in helping entrepreneurs, start-ups and growing businesses translate their vision into a coherent and executable business plan that can help secure funding and guide internal management. It provides a range of services from early feasibility studies through professional business plan development, to introductions to sources of funding. It is based in just outside Oxford, UK.
- Jon Hunt is the Lead Consultant for The Business Plan Team which works with growing businesses, entrepreneurs & start-ups that need help developing a professional business plan to secure funding and guide internal management. It has developed business plans for a wide range of businesses and corporate clients looking to raise funding of between £250,000 and £200million in many different industry sectors including Social Media, Retail, Construction, Mining, Renewable Energy, Technology, Healthcare, Interior Design, Sport & Leisure, Investment Banking, Wealth Management and Trading. Testimonials from these clients illustrate the high levels of service TBPT provides.