How Can You Tell Whether You Have A Genuine Business Opportunity?

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!

Good Luck!


Jon Hunt
Director
The Business Plan Team Limited
www.TheBusinessPlanTeam.co.uk

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.

Business Plan: Securing Funding Part 2

In "Business Plan: Securing Funding Part 1" we looked at "How" you write your plan and how a professional business plan gives an indication of your professional approach. We looked at avoiding hype, writing about a "plan" rather than an "idea", being realistic and paying attention to editing and presentation.

In Part 2 we look at content. What are the key elements that you must address in order to secure funding? There are, of course, no guarantees. However, you will significantly increase your chances of funding if you include the following:

1) The Opportunity to Solve a Problem - Your Market Opportunity
Be clear in your business plan what problem you are solving. If you are not solving a real world problem your product or service is simply a "nice-to-have" rather than a "must-have". Must have propositions have a much better chance of getting funded. Once you are clear that you are solving a real problem get clarity on the size of the problem - both in terms of volume and value. You then have an indication of the market opportunity. From there you can go on to show exactly how you are going to reach that market with your solution to the problem.

2) Delivering the Business Plan - Management Team Experience and Expertise
You wouldn't let someone who can't drive and hasn't got a license borrow your car. Whilst they have nothing to lose and will be more than happy to get behind the wheel, you are lining yourself up for an expensive fall! In a similar way, an investor is not going to lend you money for your business unless the management team has proven track record - in particular the knowledge and experience driving your type of product or service to market. Banks or investors need to be assured that the management team will deliver the business plan in front of them. If you haven't got the experience yourself, get it, or get someone on board who has. Investors also like to see that the management team are prepared to get their hands dirty and shoulder some of the risk. You are more likely to secure funding if investor and management risk are aligned.

3) Delivering a Return - Return on Investment (ROI)
You need to convince investors that you have a real market opportunity and that the scale of it has the potential to generate significant profits and cash-flow. You also need to show that they can exit their investment at a future date. Avoid the temptation in the business plan to over-analyse projected revenues, market growth, industry norms and financial valuation models. All this can end up with a highly speculative future business valuation / ROI that can easily be dismissed as over-optimistic by a potential investor. So, you might want to work out funding round valuations yourself, but concentrate your efforts in the business plan on justifying the commercial case. Let them see the potential for themselves and you can then discuss potential ROI with them.

Good Luck!

Jon Hunt
Lead Consultant
The Business Plan Team
www.TheBusinessPlanTeam.co.uk
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.

Business Plan Checklist to Secure Funding: Part 1 of 2

It's tough raising funding for your business plan at whatever level. You are up against hundreds of other businesses with polished business plans and you need to ensure that yours shines through. You may not have great experience of business plan writing but you can improve your chances of securing funds but making sure you cover off the basics. We have put together a checklist for anyone writing a business plan and in this first part cover a checklist of "How" to write the business plan.

How you write your plan conveys a lot about you. It shows your ability to organise and present information in such a way that is is relevant & coherent and gives an investor a window on how you approach your business. A professional business plan gives an indication of a professional approach. The opposite can equally be true. So here are a few basics to follow:

1) Write about a "Plan" not an "Idea"
Ideas are not enough. Ideas drain time and money and give investors the sweats. An investor or bank want to see a business plan that is ready to be actioned. If you get your funding tomorrow, do you have a time-table of what needs to be done? You need to explain in detail, exactly how you are going to reach your target audience / make your product / deliver your service / operate the business etc. Detail doesn't mean lengthy. Be concise and ensure your business plan is not too long.

2) Avoid Hype
Avoid extreme statements ("un-parallelled opportunity", "we have no competition", "will be outselling [insert any leading organisation of your choice] within 3 years" etc. .. ). Investors have seen all the hyperbole they can stomach and it won't improve your chances to try and think up some new word for "world beating". Show enthusiasm but stick to the facts. Build the case for the business proposition logically. Tell it how it is and you have a better chance of gaining an investors' respect, attention and funds.

3) Editing and Presentation
There is nothing worse than a poorly presented, repetitive, in-coherent business plan that is missing key information, and has obvious spelling and grammatical errors. Make sure your business plan has all the right sections, and don't get bogged down in tech speak or jargon. First impressions count, so ensure the Executive Summary is well structured and the document itself is presented in a professional way. If you are not the best at this then run the document past someone who is. If you decide that you need business plan help make sure you select a good business plan consultant to develop a professional business plan.

4) Realism
Ground your plan in the real world and avoid over-optimistic objectives and financials. Anyone funding a business plan wants to know they are not going to have to deal with a Walter Mitty character who lives permanently in the clouds, and who generally over-promises and under-delivers. Sanitise your business plan by looking at other businesses in your industry, their financial results, their cost base and their growth rates. You can be sure an investor will. If your business plan diverges significantly ask yourself whether you can justify your claims.

In Part 2 we will will look at "What" specific points you need to cover in your business plan that will improve your chances of securing funds.
Good Luck!

Jon Hunt
Lead Consultant
The Business Plan Team
www.TheBusinessPlanTeam.co.uk
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.