The business opportunity (or proposition) is one of the fundamental elements of your business plan and as such it should be completed ahead of almost anything else. Some people include this as part of a feasibility study, others on its own, and many not at all! But if you are going to end up with a professional business plan you are going to need to address this early on.
But how is your opportunity best identified and supported? How can you ensure the business opportunity is compelling?
As I said in my last blog the easiest person to fool is you. You have every right to put your own money where your mouth 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 to secure funding. As far as possible you need to put aside your motivations and personal conviction and become objective.
So, one of the best approaches to this core area of the business plan is to ensure that you derive the opportunity from objective independent market data where possible. The bottom line is that the more evidence that you have supporting your business opportunity, the more credible will be your business plan.
The first option to explore is freely available internet-based research and freely published information from industry & professional bodies. Even press releases may give you some top level market data. Make sure you cross reference sources and ensure they are reliable. There are also market research reports 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.
Once you have some useful data then carry out some analysis and financial modelling to see how the opportunity stacks up under different scenarios. Once you have this complete you will be able to “qualify” your opportunity – define it and put it in the context of the market. In some cases where the market is large and diverse it is as important to say what your opportunity is not as much as what it is.
The next stage is to “quantify” the opportunity – establish the size of the opportunity. This can be done in several ways depending on the nature of the market (unit sales, demand for services, survey data) but is often based on a set of assumptions and should always include an estimated value in terms of revenue potential.
So, once you have a qualified and quantified opportunity all you need to do now is show how you are going to execute on this opportunity in the rest of your business plan.
The Business Plan Team
- 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.