10 Things To Consider When Starting A Business

by Tax Guy - Burlington Accountant on June 4, 2010 Print This Post Print This Post

The first step in creating a business plan is to develop, what I like to call, a proof of concept. This is an evaluation of your business idea and to find out where any gaps exist. It will help you begin the market research phase and determine whether your idea will make money.

Here are 10 things to consider when developing your business idea or proof of concept:

  1. What Is your product or service? This one seems rather simple, but I have seen projects undertaken where the deliverable was never clearly defined. The leadership had an idea of what activities would be done, but had no clear direction of what service would be received.
  2. Who will your customers be? Knowing your customer will help you create your business around them. This website for example was established to provide tax and financial planning guidance to individuals and small business owners. By defining the customer helps focus my articles to that specific audience.
  3. Will your customers buy your product or service? A business idea can only be successful if people are willing to pay for the product or service. Once you know who your customers will be, determine if they can or are willing to purchase your product or service. If they are not, you may need to seek alternative ways to make money.
  4. Who are your competitors? This goes beyond just stating who they are. Figure what they do and what they don’t do and then evaluate whether you can fill in the gap.
  5. Can you compete in the market? Why will people buy from your competitors or from you? Is your product better quality or lower price? Anticipate your competitions response to you entering the market.
  6. How will your distribute your product or service? Will you open up a retail establishment and sell to the general public or will you have another company distribute your product for you? You may need to modify your idea to a better delivery channel.
  7. How will you promote your business? A business without clients is not a business! How will you get the word out? Some forms of promotion work better for some business. Consider your promotional activities, their cost, and how effective they will be.
  8. Are there any regulations or licenses required? Are you allowed to sell your product or service in your location? Do you require special permits or licenses to set up shop? Your local community may have a business center or other sources to help you navigate you through the process.
  9. Do you need to protect your product or service? Great products and services have patents, copyrights or trademarks to protect the developer/owner from others creating the same thing and outselling you. If your idea is unique and you feel there is a demand, then consider protecting yourself.
  10. How will your finance your business? What resources to do need (equipment) and how will you acquire them? Some businesses can be formed using nothing more than a home computer while others require buildings and equipment. Where will the money come from?  

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 6 comments }

Phil Hogan, CA June 5, 2010 at 12:31 pm

Great post as usual.

One thing I would like to add is that often new business owners do not consider the current life cycle of the particular trend and/or industry they are entering. For instance, you may think it’s a good idea to open a store that sells XYZ products that have been the “hot new product of 2010” without considering that perhaps the selling trend and/or profit margins on this new product may be at an end or maturing.

This type of situation has the potential for changing initial profit projections and negatively affecting the company’s future prospects.

In many cases if a niche trend has already began it’s often too late to compete.

Just my two cents.

Phil

Tax Guy June 5, 2010 at 8:19 pm

Hi Phil,
Great point. I agree.

Sam June 5, 2010 at 8:26 pm

I would add another dimension which probably contradicts with many of your points 🙂
These days the most successful business are free, they can offer premium services at a later stage but they all started out free…
e.g. google, twitter, facebook, zillow …. granted, the adoption of these services are huge and need to be viral, but you can also build a case where you offer free services and either charge for premium services or get some funding till you become very successful.

Tax Guy June 5, 2010 at 8:36 pm

Sam,
The point I was trying to make was that if you can’t make money with your original ideas, you need to think outside the box. I will note that Twitter and other services need backers and money to operate: You can’t have 1,000,000 visitors a day using a service and not incur massive cost. Something like Twitter would have had to have cost a lot of money to start (I’m guessing).

Sam June 9, 2010 at 4:14 pm

Yeah, and they probably did not invest enough considering it’s always down 🙂

stiven June 8, 2010 at 5:19 am

Great Article! I have been thinking to start my own business, and to implement integrated ideas. I am currently looking to buy an established business that is put up for sale which has a sound base. That way, I can get the best of both: an established business with a great working concept.

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