It is often difficult to figure out how to
research your idea, especially if you have never
been in business for yourself. You will need to
decide if your idea has profit potential.
Use the following twenty steps as a
guide to help you determine if your idea is
Create a profile of your paying
List and describe the
features/benefits of your product or
Define the main geographic area
you intend to sell to during your first
What competitors are selling to
this geographic area?
What price do these competitors
Estimate what price you can
charge, yet still remain
Why would your customers buy from
you instead of your competition?
List and briefly describe trends
in your market or industry.
What is the growth potential of
How are you going to let your
customer know you exist?
Estimate Sales for the first
List any government approvals
necessary to launch your idea.
Briefly describe your
manufacturing or purchasing process.
Briefly describe your fulfilment
Estimate the capacity of your
operation in the first year.
Make a list your potential
Make a list of the resources you
will require to start your business.
Determine what resources you will
finance, lease or rent.
List your financial strengths and
Prepare a monthly cash flow
forecast for your first year of
1. Create a profile of your
Your customers might be consumers or retail
stores, wholesalers or manufacturers,
government or other institutions. List as many
points as you can about who you think will buy
your product. If you are selling to a consumer
market, try collecting magazine pictures of
what you think your customer looks like. List
their age, gender, marital status, income and
try to describe their lifestyle.
If you expect to sell to another
business or organization, estimate what
industries they are in, what kind of company,
how long they have been in business, how many
employees, their annual sales, what department
would be interested in your offer, who their
customers are and anything else you can
2. List and describe the
features of your product
service. State how these
features will benefit your
customer. Define the features of your idea and
determine what these features do for your
customer. You will create a list of the
selling points that you can use in your
advertising, your brochures, and in your sales
presentation. This will help you establish why
your customer might buy your product or
3. Define the main geographic
area you intend to sell to
during your first year.
to your neighbourhood? Your community? National?
International? By defining where you are going to
sell in your first year you immediately put
yourself in focus. You will likely be able to
figure out how many potential customers are
located in this area. If you are selling to a
large geographic area, you will probably need
a good deal of money, marketing and resources.
Defining this area makes it much easier to
figure out what your needs are going to
4. What competitors are
selling to this geographic
Once you determine who and where your
customers are, you must determine whom you
have to share them with. Find out if similar
products are carried in retail outlets,
similar companies advertise in the yellow
pages or are listed in industry
5. What price do these
Establish what your competitors charge and
list the selling points of their product or
service. Try to find your industry's wholesale
and retail prices.
6. Estimate what price you
can charge, yet still remain competitive.
Determining how competitive you can
be is a big step toward how feasible your idea
is. If your product is superior to your
competition and your market is not very price
sensitive then you may be able to charge
considerably more than your competition. If
you are selling to retailers or wholesalers,
you will have to leave enough room for others
to mark your products up.
7. Why would your customers
buy from you instead of
What is unique about your offer that would
benefit your customer? There may be something
about your product, your price, the
friendliness and speed of your service, your
hours of operation, your level of quality, the
skills of your employees or other
aspects of your
8. List and briefly describe
trends in your market or industry.
Knowing trends in your market or
industry will help you determine where it's
going and how your business can take
advantage. Check business and industry/trade
magazines for recent articles. Some libraries
have a "business periodicals index" to help
you find these articles.
9. What is the growth
potential of the market?
Is your industry or market growing or
declining? Are trends or fads new, peaking or
declining? Generally, you will be more
successful being part of a growing market.
Check business and industry/trade magazines
for recent articles.
10. How are you going to let
your customer know you
So now you know who your customer is,
where they are and why they will buy your
product. How are you going to communicate your
offer to them? Will you rely on having a good
location? Will you use advertising? Sales
calls? Direct marketing? Yellow pages? You may
find it helpful to examine the Business
Promotion Idea List.
11. Estimate Sales for the
Base your estimates on the size of
your market, level of competition, your price,
your plans for promotion and trends in your
industry. Create a pessimistic, an optimistic,
and a middle of the road forecast.
12. List any government
approvals necessary to launch your idea.
There may be some extensive or
expensive regulations involved with your type
of business. The Information Sources for Small
Business Directory can assist you with
determining provincial regulations affecting
13. Briefly describe your
manufacturing or purchasing
State how you
will make or acquire the goods you plan to
sell. Use your sales forecast to help you plan
this part of your operation. Think about
potential growth in future years.
14. Briefly describe your
fulfilment process.How does your customer get their order and
how do you get paid.
15. Estimate the capacity of
your operation in the first year.
How big will your operation be? What
is the limit of what you can produce, stock,
service and sell. Can you meet your sales
forecasts? Have you taken future growth into
16. Make a list your
Your concept may rely heavily on the
reliability of your raw material suppliers
and/or your subcontractors. How dependent will
you be? Figure out who your suppliers will
likely be and try to find back-up
17. Make a list of the
resources you will require to start your
List the employees, floor space,
leasehold improvements, equipment, vehicles,
inventory, supplies and services you will
require to open your business. Estimate the
costs of each item on your list. You will need
this list to determine your start up costs
18. Determine what resources
you will finance, lease or rent.
You will probably not pay for large
purchases outright but will instead lease,
rent or finance these items. You will need to
estimate your monthly payments to help you
prepare a cash flow worksheet.
19. List your financial
strengths and weaknesses.
How much of your own money do you
have for this business? What assets can you
use as collateral to secure a loan? Do you
already own the vehicles, computer equipment
or tools needed to start your business? Do you
have family, friends or others who are
prepared to invest in your business? Do you
have a strong personal credit
20. Prepare a monthly cash
flow forecast for your first year of