How a Business Plan Helps Determine if Your Business Idea is Viable

The plan that many aspiring entrepreneurs have may be a flawed one. They have an idea or product that they are positive will work, even if the rest of the world is blatantly skeptical. They will do anything to prove that they are right about their product or idea; even if it means simply ignoring evidence, cherry-picking data, and otherwise relying on notoriously unreliable methods to collect their ‘proof’. They will convince anyone who will listen that they will be successful.

One of the major purposes of a business plan is to force a prospective businessperson to examine his or her plans realistically.

Assume You Will Fail

Statistically, 80% or more of businesses will fail. That makes failure the ‘null hypothesis’, as statisticians put it. If you assume failure, you can build your business plan not to prove a future success, but to disprove the assumed failure. The challenge is that you may not be able to; and that is the entire point. If you cannot disprove the assumption of failure, the business is probably not viable in the first place.

Look For Weaknesses and Holes

Many things must go right for a business to work. If your business plan may not work if it cannot describe:

The size of your market

  • The description of your target market segments
    • How your advertising/marketing is going to attract those segments
    • How your price point and fulfillment matches those segments’ budgets
  • How your idea is going to stand out among your competition
  • The backup plan for what you will do if sales do not meet projections

You need to assume that your market is too small and provide proof that it is not. Assume that your audience is too poor to afford your product and then provide proof that they are not. Assume that your audience does not want your product and provide proof that they do. Item by item, your business plan should disprove every assumption that would discredit your business idea.

Put It All Together

Once you have proven to an outside observer (preferably someone like a family member that is nervous for your risk but supportive of you anyway) that your business will not fail and written your plan, you are ready to find financing and get the business off the ground with confidence.

Enhanced by Zemanta
Scroll to Top