Do I need a feasibility study?

A feasibility study or a feasibility plan, is an assessment into the viability of an idea. In business, we use feasibility studies to decide whether to proceed with a proposed venture. They are used by all types of businesses.

Feasibility plans get used as a way to account for and mitigate some of the risks associated with starting a new business or project. The larger and more expensive the proposed business investment, the more a business owner will want to assess as many facets of the market as possible to decrease their risk before they start.

Feasibility plans can be expensive. The more complicated a project, the more expensive a feasibility plan is. A feasibility plan will not just assess the market potential for a product, but will also assess things like location, the capacity of your team, and skills needed to enter into a business.

Feasibility Plans are traditionally divided into five sections each of which assess the capacity of a particular project:

Technical feasibility: technological capacity both of existing technology and of the organization
Legal/Regulatory feasibility: the legal or regulatory frameworks which surround a particular issue and which may affect the ability of a company to enter a market or deliver a service
Market Feasibility: Is there a market for the product? What is the estimated market size and profile of the consumer
Operational/Schedule feasibility: what operational requirements are there? Is the schedule feasible? Will your team be able to complete it given the requirements, what additional resources are required?
Financial feasibility: given the market size, technical and operational requirements does the project make monetary sense?
By answering these questions in an indepth analysis you can begin to develop a response to the question, is this a feasible business idea?

So who buys feasibility studies? Anyone from large real estate developers, to product developers, to mom and pop shops, who need to assess, if there is market for their product or service.

How much should a feasibility study cost? The question depends upon the value of the business idea. The larger the business, the more likelihood that something can go wrong, and the bigger the risks, thus the more likely you will want to do a feasibility or even pre-feasibility study. What it comes down to is the bigger the project, the bigger the feasibility study. A factory will require far more details than a new piece of software. Generally, expect to pay upwards of $5,000 per study, with the average being somewhere in the $7,500-$10,000 range for most small products and services. Larger real estate developments and resource based projects, require environmentals and testing, and can easily fetch over $100,000.

If you think this is expensive, the question becomes, what does it cost to make a bad or uninformed business decision? This is the reason feasibility studies and plans still play a very important role in business decision making, and why your lender or investor may want one.

Is the Business Plan Dead? Not necessarily….

Is the Business Plan Dead? Think again.

Business Plan on Blackboard
Business Plan on Blackboard


We keep hearing that the the business plan is dead. We have moved to business model canvasses, pitch deck and other tools.  Try telling this to a banker! For the majority of businesses who are looking for financing, a business plan is still a relevant document. Even if you are doing a pitchdeck, business model canvas or other tools of the trade, the act of planning is crucial to the success of the business. For any business you must know your market, you must know your costs, and operational details. Without these, your business has almost zero chance of survival.  We also have to remember that many of these other business tools are crafted for industries where the industry and technology change daily. This really is not the case for 80%+ of businesses out there.

The reality of our situation is that if you are running a restaurant, salon or are a solopreneur, your business will NOT change that much day to day. You are still in the industry of serving people. Customers have to come first.  The technology you use can change, but it is not the service you are delivering.  This is why banks, and many financiers still want a business plan. They want you to go though the actions of planning out your business, think of the different situations you will encounter, and how you as an owner will deal with the events. In essence, you are asking them for their money, so how will you guarantee that you are keeping it safe. How will you plan to pay it back and how will you ensure the long-term survival of your venture?

Nobody, even most advisors, really like business planning. What we like is people. We want to see those who we work with succeed. It makes us feel good inside. We see the added value of our work and line of service. It gives us credibility and helps to grow our client base.

So is a business plan something you do only once to get your funding? For some entrepreneurs, yes. They do their plan, get their money and run their mom and pop operation.  Increasingly however, in today’s fast changing business environment, many people find it helpful to do a plan review once a year to help keep them on track.

Why Employ a Consultant? Isn’t it cheaper to do it myself?

The answer is yes, but a consultant can be objective. We also work across a lot of different industries, and can offer insight that we see across multiple sectors. I cannot tell you the multitude of times that I was able to offer clients insight based on a technology, tool or other trend I saw from my experience in working across multiple industries.  The truth is, when you plan businesses for a living, you learn a lot about many different industries. You’d be surprised the value a good consultant can bring.

 

Do I Need a Business Plan? The answer may surprise you…

do I need a business plan?

Do I need a business plan? I cannot tell you how often I get this question. Early in my career, I was an avid supporter of Business Plans. Not the business plan itself per se, but the planning process. Planning in itself is crucial to the success of a business-or so I thought. However, over the years I have become more of a cynic.

I have seen many well-planned businesses fail. These were businesses where the entrepreneurs wrote business plans, strategic plans, revised, reviewed and planned their hearts out. Some entrepreneurs plan for years before launching, but even the best laid out plan, can fail– and believe me, they do. I have also seen many ideas, developed after intense all-nighters, go on to flourish and sell for seven figures within two years without ever having a single page of a planning document.

What is the difference? Why is it that some can survive without a business plan and others seem to live and breathe by their plans?

To fully understand this this, we need to take a step back and ask, what has led to this business planning phenomenon? The answer can be found, both in our business culture and our communities. There are parts of the world, where business plans do not exist. Yet in North America, the Business Plan is seen as a crucial component of the business process–and the torment of Entrepreneurs and their Financiers.

Years ago, when we wanted to borrow money for a new business, we went to our local bank-the one we had dealt with for years. The bank or lending manager knew you by name. He knew where you lived, your family, your Church and your habits. Further, many people had higher levels of personal savings. These were tapped and used at key moments such as this.

One might run a family farm, a general store or small restaurant, but imagine the lack of bureaucratic red tape of the Wild West compared to setting up a business in a large urban city today – from non-existent to a nightmare. As our communities grew, as newcomers entered, as borrowing markets expanded, knowing everyone that we dealt with was harder. What was needed was a rigorous process that would standardize the way we evaluated people and introduce some scientific validity to what had previously been a very personal decision.

Enter the business plan, the savior of the Financier and the Entrepreneur. Over the years, particularly since the 1980s, the use of the term business plan has skyrocketed.

But who actually needs a business plan? These days, if you are seeking financing of any form, you require one.
Do you need a business plan to ensure the success of your business? I would say “No”. I would say for some personality types, a business plan is a requirement to ensure that they have thought through their business idea. I would suggest that those entrepreneurs who are rash, those who have entered into risky arrangements in the past and those who are investing personal funds into industries which have high capital costs, would do well to stop and prepare a business planning document.

For others, I would say that a business plan is no more than a checklist item to get you investing. This is not to say that all business planning is bad. Rather, like reading literary classics in school, this is a checklist item that you need to get through the system. Some will take pleasure in preparing these, for others the term “business plan” evokes visions of weeks (or months) of pain.

There are scores of business planning solutions on the market. Business Plan Pro by Palo Alto software is one of the greatest pieces of entrepreneurship software ever to come out. For those who do not remember or recall life before this program, it really did revolutionize business planning. Tim Berry is a guru in the industry and paying homage to him is an honor. By the same token, Microsoft and Palo Alto also have subscription services that are great for those who suit that personality. Enloop, a recent entry into the market, is also very clear and easy to use.  For organizations serving entrepreneurs, we developed SME Gurus – a complete entrepreneurship platform that builds on the business plan by adding goal tracking and accountability.

 

However, the majority of these pieces of software are still difficult—even for me as an accountant and consultant. I enjoyed learning about industries, putting together financials and forecasts, solidifying a marketing plan and watching entrepreneurs’ dreams take flight–but writing the business plan was painful process. I stand back and think how difficult a process it must be for others. I have run across immigrants with great work ethic and a great business idea, but who get stalled in their access to capital because of poor language skills. I have come across others who have trouble with numbers, or others who have such passion and vision in their business idea, that I would say a business plan for them is nothing more than an obstacle. Some things you have to feel, and just know they are going to work. Others, no matter how much you plan—they will never take off.

So what is the happy medium?  My recommendation is know yourself. Ensure you know your customer. The best way to know them is to ask. Think about the business you want to build and ask yourself, what the crucial steps to getting it done are. If a business plan is part of that for you than do so. If you need financing, you will need a business plan. If you are applying to incubators, you will need a business plan and more.

So what planning must be done? The only planning that is crucial to a new company is knowing your market and cash flow planning. Understanding who you are selling to and why, and knowing how much cash you have, when payments happen, and how you are going to support yourself and your business is the key to the success of your business. This is because without a steady flow of income you will not survive long enough to figure out your business model. Start with these two key factors, and plan additionally as needed. Remember, until you need to go for that first loan, don’t stress over your business plan.

Business in a Slump? It’s time to Growth Plan

Develop A Business Growth Plan

It seems like all we do is plan.  We write business plans, strategic plans, marketing plans, and disaster recovery plans. We plan our businesses to death.  In the early days of your business, your need to plan less. Personally, I am a planner by nature. Planning is how I organize my thoughts, how I mitigate my risks and develop my to- do lists. When our businesses are first being developed, we need to focus on the DO, and less on the planning. Yes, you heard me correctly. You need to plan less and DO MORE.

Let me explain.  This does not mean the abolition of “Planning” but rather it needs to evolve to Growth Planning. As a small business you always need to be in growth mode. This does not mean chasing the aggressive growth of early business days, but it does need to evolve to be focused on implementation and the “how” rather than the “what”.

A growth plan, in its purest sense, is a cross between a business plan and a strategic plan. A business that is growth oriented has to evolve with its customers, in needs to be in touch with the market, it has to be aware of trends and the social and environmental impact of its products or services.  Most importantly, a business that is not growing is stagnant and not healthy. It is reaching the peak of its life-cycle and beginning its decline.

Should businesses be in perpetual growth? Some people may say no. Some experts will tell you that a business where the owner seeks to exit, may begin to think about succession and naturally, as we age we begin a process of seeking to “slow down”.  However, think about it from viewpoint of a prospective buyer for your business. Would you rather buy a business that is healthy and growing? Or one that has shown decline over the years leading up to the sale? The answer from this perspective is simple. Focus on the growth, and the rest takes care of itself. The following are what I define to be the 10 Key Components of a Business Growth Plan.

The 10 Key Components of a Growth Plan

 1. Where Are You Now?

Examine the following for your organization:

  • a. Mission- this is the “DO” of your organization. What you do, and how you do it.
  • b. Key Success Factors – What do you do well or better than your competitors?
  • c. Key Constraints-What are you limited by? Who are you limited by? What is the financing available?
  • d. Stakeholder analysis-What do your customers think? How about your suppliers? Your employees? Your partners and family? Get everyone’s input, it matters

 

2. Where Do You Want To Be

 

  • a. Vision Statement-Define where you want to be in 5 years and build a vision for your company around it.
  • b. The Magic Number- What do you want your company to be worth in 3-5 years?  How much do you want to make? This is your magic number that you will be working towards.

 

3. What is Going on In Your Environment and Industry?

It is vital to understand what is going on in your industry and how your company fits into it. The following analyses should be conducted to understand how all the pieces fit together.

  • a. SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats). Look inward and outward to your company and industry and judge how you fit.
  • b. Porter’s 5 Forces-This business school classic has staying power for a reason. The five “forces” of Porter identify how you work within the broader industry. It examines your customers, suppliers, competitive rivalry within the industry, the threat of new entrants and the threat of substitutes in the industry for your product or service. It creates a picture of how dependent or independent you can be of industry trends in general.
  • c. PESTLE Analysis (Political, Economic, Social, Technological, Legal and Environmental). This examines the broader trends in your industry, from each of the above contexts and how they can potentially impact what you do.

 

4. What have others in your field doing?

Competitor Innovation Analysis. In the history of your industry, how have your competitors innovated? Can this type of innovation still be useful to you? What products or services do competitors offer that are successful? Can you mimic them? What is not working? Is this something you are currently doing?

5. What are people doing in in other industries that can be applied to your Industry?

External Innovation Analysis- what are others doing that is innovative in another industry that can be applied to your industry? Can you change the business model of your industry to become more innovative?

6. Prioritize Your Current Opportunities

Prioritize opportunities based on a model that identifies needed inputs, available resources and constraints. Identify your resource requirements based on:

  • a. HR
  • b. Technology
  • c. Financial
  • d. Network and contacts needed to help you grow

 

 7. Do you Need Extra Capital or Resources to Make Growth Happen?

How will you raise it? What can you cut, divert or change from your current operations or business model to make this happen?

8. New Initiatives

What new initiatives will you develop? Identify your identify your CIPD Strategy- How will you Concentrate, Innovate, Penetrate (Market) or Diversify your company’s products or services?  This is the foundation of growth. Your CIPD Strategy can happen in any of the following areas:

  • a. Marketing
  • b. Sales
  • c. Technology
  • d. Partnerships
  • e. Alliances
  • f. Products

Find the ones that work best for your industry and company.

 9. Develop Your Implementation Plan.

Your implementation plan should be detailed and should include quarterly goals (financial and growth) and should identify key resources and steps needed to accomplish your vision and get you to your “Magic Number” of growth. Identify the riskiest steps, and develop action items to specific how you will address each item.

10. Just DO It!

At some point, you have to start growing your business. The faster you get this point, the faster your business will grow. For most entrepreneurs, this is the scariest, but most exciting part.  There are ways to make this manageable. Develop a daily checklist. Do 3 things every day that will grow your business in a solid way and contribute to growing your business based on your Growth Plan. A growing business requires daily infusions and care to push it forward, but not at the detriment of the owner.

Business growth needs to be sustainable, responsible but ever pushing forward and upward.  Implement these strategies, and watch your business and profits soar.

Business Plans for Newcomers – Part 1

I cannot tell you how many times, I have heard of newcomers turned down for loans simply because they could not produce a business plan.

In our lending systems, as covered in a past blog, it is customary to ask for a business plan. In many cases, lenders will not even look at your business idea without it.
So what is an immigrant, with poor English skills to do? Many will pay consultants to prepare plans for them.
Sometimes the immigrant will just stop the application process right there. Others will attend month long classes where they will be guided through the business plan process.

While both of these are good in principal, consultants can be expensive. Classes that drag on for months and months, are not only time wasters, but not effective at teaching what a business plan should be.

A business plan should be a guide-NOT a ROADMAP, but a guide, that gives general direction, provides some estimate of costs, and demonstrates an understanding of the market and the steps you need to get where you want to go with your business.

Many, expect business plans to be “gospel truth”, but they are not. There are those in the business world who will tell you never to plan or that they are a waste of time. I prefer a more democratic approach and believe that a general document should be prepared, but that document should never be taken as the Road Map for a new business.

For newcomers, understanding what to put in a plan, how to obtain market research, estimates of business costs and mission and vision statements, can be beyond not only their language, but also their cultural skills. Remember, Business Plans are largely a North American invention. To do them properly requires insight into Business Culture.

So what is an immigrant to do? My advice is to find a plan/template/program you are comfortable with and use that to develop a basic business plan. More important are items like personal credit and financial holdings. Also, getting a mentor in the industry would be a great asset, for immigrants or those new to an industry. In the next blog we will discuss finding a Mentor.

Article keywords: immigrant business plans

Demographics for Small Business: market segmentation and counting customers

The last couple of entries have focused on stories of entrepreneurs who have either not cared about customers or who believed that the entire world was a prospective client base.

While these strategies may work for some entrepreneurs, generally speaking, we need to have some understanding of the size of the market and what we can expect to sell. This understanding increases dramatically if you are a “product” based business, where you make or manufacture a product. Making too much can result in excess inventory and wasted operating funds, making too little and you forego potential profit.

I’ve created a 5 step process to help you segment your market and more accurately predict potential sales:
Go through this exercise – even in your head, and I guarantee you will have a better understanding of your potential customers and will be better able to quantify your market research to an investor, funder or partner.

1. Who will buy your product and why?

Most entrepreneurs create a product to fill a need or to improve. Who will buy your product and why they will buy is the first step in calculating your customer base.

2. How many of these individuals/group/needs exist?

For most people this is the hardest part of market research. Calculating the number of people in the “market” can be a daunting task. However it need not be that bad. If you determine that your product is aimed at young professionals who live with their parents, you would first need to consult the Census in your country to determine the number of professionals, then most censuses narrow these by age, so you can further segment professionals say in the 24-34 range.

3. Narrow, narrow, narrow that customer base

One of the core mistakes in research is that many people want as large a customer base as possible. This is a mistake. While some lenders will let this pass, to the trained business person, the more narrow a target market, the more I know that the individual has thought about his product and who will buy it. The trick here, is to tie the narrowed slice of the target group back to question 1 – who will use your product and why?
So in our example above, we decided that young professionals who live at home with their parents are your target market. You know that not all young professionals still live at home. However you saw a recent stat in a newspaper that said about 20% of these individuals lived at home until the age of 34. So if we determined that in our City, there are 200,000 young professionals, and we estimate that 20% of them live at home, then our market segment would be 40,000. (200K*20%)

4. Market penetration rates: The world is not your oyster.

The next biggest mistake people make is that they assume either naively or optimistically that they will sell to the entire market. Either this, or they assume a far too low market penetration rate. A general rule, the smaller and better defined your market, the larger your market penetration rate can be. The larger your prospective market size, the smaller your number.

Let’s clarify with an example.

So if I was going to sell business plans, and I know there are over 3,000,000 global searches a month in Google for business plans, I could say that I could sell to half of the market (50%) and I would have generous predictions indeed. Trust me, if I was selling 1,000,000 business plans a month I would not be here blogging!

Rather, I know that the 3,000,000 can represent less than the total market. Why? Because many individuals do a search more than once. Particularly for something like a business plan. Also, they may search on more than one device. Finally, this represents global searches and my market is the English speaking world of do-it yourselfers or those for whom English is not a first language.

So if I were to limit my search to Canada, there are over 12,000 searches in Canada. Assuming that half of these are repeat queries, and then taking the percentage of the general population that are do-it yourselfers, (perhaps in the 5-10% range) might provide me with a realistic size of the market that I am targeting.

(12,000*50% for repeat queries) = 6000*10% DIY market= 600 = the number of business plan writers that are DIYers

My target capture rate of 35% = 210 Plans per month – my sales at maturity.

Now compare this number with saying that I plan to capture 0.1% of the global business plan market – that would be 30,000 plans per month – still much to high, particularly since many of those searches are in a language other than English. Numbers below 1% make no sense to anyone, so segment, segment, segment I say.

5. What will your sales be in year one?

The third and final biggest mistake that people make, is that they assume they will sell their predicted sales at maturity in year 1. Remember, that your size of the market is once your sales reach maturity. For the majority of businesses, this can be a minimum of 3-5 years. How quickly you reach your sales will include how quickly the industry is growing, the number of competitors and the quality of your product. Anyone of these can change your sales forecast.

For myself, I know that I will most likely achieve 15-25% of sales at maturity in year 1 and then predict that sales will increase by 20-35% every year thereafter.

So, to all the prospective entrepreneurs out there, good luck and start selling!

The Customer is always right….Except when he isn’t…

As part of my continuing series on markets and customers, I would like to tell you about another entrepreneur who was determined to change his customer. Unlike Bob from the last blog who was content to live with his books, this entrepreneur, Luis, has been fighting to convince customers that he was right and they needed to change since the day he opened his doors.

Luis was a Portuguese immigrant to Canada in 1980. Luis was a bright, energetic and enthusiastic young man eager to make a life for himself and his family. He came over to Canada as a pastry chef. His family had been bakers for generations in Portugal and despite his rather Neadrathal like appearance, Luis was rather artistic when it came to decorating cakes.

Luis at a Market in the winter
Luis prefers to sell outside…and grab (sometimes literally) unsuspecting customers as they walk by.

He started off living in Leamington, Canada, working for a baker there who sponsored him. Within a few months, knowing some contacts in London, Canada, Luis moved there. Always dissatisfied working for others, Luis changed jobs every few months, much to the chagrin of his wife and young family. Finally, in 1986/7, Luis took over a Latvian bakery and began working for himself on weekends (still doing construction during the week to supplement the family income).In 1989 the bakery was forced to re-locate due to a zoning change and Luis bought a new home and bakery in Aylmer, Ontario Canada where he has been ever since.

Luis makes what we would call today artisan bread. The bread is made with flour, salt and water-nothing more. Fashionable today, these loaves in the 1980’s resembled a cross between a flatbread and a rock. Despite this, Luis peddled his wares at area markets. He haggled with customers, yelled at them, insulted them and kept coming back for more every week. For a few years he tried retail-delivering to area health food stores and supplement stores. When one of them went broke–owing him a large amount of money, he swore off retail in favor of farmers markets and flea markets where he could sell directly to customers.

What makes Luis unique? Well for one, he has never changed his product in nearly 30 years. He has added lines, detracted products, changed recipes slightly, but the core product has never changed. His selling style resembles old world Arab market (think yelling and haggling) crossed with a pushy car sales man. People either love him or hate him. He has adapted his “pitch” to go with the times. In the 1980’s-1990’s the pitch was “diet bread” no fat, sugar, milk or oil…..the magic fix pill that would make you lose weight. In the late 1990’s to 2000’s healthy bread-with no fats or oils, that would let you take charge of your health. From the late 2000’s onward he has been peddling artisan breads with no additives or preservatives that supports the small business owner.

Selling outside in the Summer time
Luis used to use cardboard boxes to sell his bread–old banana boxes. These days he uses wicker baskets because banana boxes are treated with chemicals and health regulations actually prevent their re-use in our local area.

Over time has his product changed? Not really. Instead he uses language of the times to “re-invent” himself and keep his product relevant. He is still in business, fighting with customers who disagree with him, pushing his product onto unsuspecting passer-bys. Is he happy? Yes, 99% of the time he loves what he does. He is eccentric and his work environment permits him to be eccentric.

Luis, fights with his customers to make them understand why his product is relevant. Everyweek he fights. For some this would be exhausting, but for Luis, this weekly fight is what motivates him, what drives him. At heart, he loves people (“I am a lover, not a fighter” as he would say). He is known to be yelled at to keep him quiet. However, despite all of this, he loves what he does. He is passionate about bread and never hesitates to educate customers about his product, about bread, about why you should be passionate about it. He does not let the customer dictate what product he should sell, rather he fights with the customer, changes his sales pitch and educates, until the customer exhaustedly agrees to buy a loaf just to shut him up. The funny thing is, most customers come back a second time, a third…etc. He knows he just has to get them to take one loaf. A few have put up with him for nearly 30 years, others tire of his ways, and only come back occasionally. Does Luis care? No. He knows the world is full of customers, they just have to be convinced and he will go on “convincing” till the day he stops baking.

As an aside, there is much more I could tell you about Luis–enough to fill an entire book–and that book would be called ” A Baker’s Daughter” –yes he is my dad and probably the reason I am a passionate entrepreneur today.

Article keywords: the customer is always right

Demographics Part II: The Battle Between the Customer and the Entrepreneur

I promised in the last blog post to guide you through the demographic research component of your business plan. Before we get into it, just understand that knowing demographics is really nothing more than thinking about your customers and every business must have customers.

The Story of Sylvan’s Foremost Bookstore
I would like to tell you a story about Sylvan, Ontario’s Foremost Bookstore. Sylvan is a clustering (I do not think it can even be called a hamlet) of about 20-30 people and this bookstore proudly lays claim to being the “foremost” bookstore in Sylvan–in fact it is the only thing in Sylvan.
(Sylvan’s Foremost bookstore) Yes there really is one…

Sylvan's Foremost Bookstore
Sylvan’s Foremost Bookstore

Now the reason I bring up the Sylvan bookstore is that its owner Bob Lewis, according to his bio on his webpage, is a most unusual sort of character. Having spent a significant part of his youth working in rural areas, Bob loves country living, and he loves books. The road where his business is located is quite busy in the Summer as it is enroute to some of Southwestern Ontario’s best beaches. However, the short construction period, means that this road is frequently closed during its “peak” season, leaving Bob alone with his books.

If you ever entered this shop you would realize that Bob is a bit of a hoarder. There is no where to walk with all the books in the place. Yet, there is a charm to this place and Bob, who charmingly refers to himself as the “book gnome” on his bookmarks, is not far off the mark.

Bob, on his bio-says that he “will never be a dot come millionaire” and he probably won’t. He is happy living amongst his books, reading and selling one or another when a stray customer happens to walk in. Usually, customers come in because of his claim to have 40,000 books in the place.

Bob is happy. Others may be less happy with the lack of material possessions, but to those of us who dream of running our own businesses, it is important to do so under your own terms. You just have to fully comprehend how these terms relate to the rest of the world. Bob is quite happy to be away from the rest of the world and take the consequences that come with it.

We may seem quite far off the mark from where we started. What does Bob and the Sylvan bookstore have to do with demographics? Quite simply, you have to understand the customer, you have to be prepared that customers may not want what you want and that you have to define what it is you want very early on in your dream. Do you want to be a dot come millionaire, or do you want to be Bob and his books? Do you want the inner peace that comes with doing what you love, or do you want to just make a lot of money? These are two very different objectives and it is rare that you are able to combine the two.

When an entrepreneur goes into business, many times it is because they are passionate about something. We want to share this passion with others: our customers. Yet, very often along the way, the vision changes. What we want is not always what the customer wants and needs. We have to be prepared to understand that we may either have to sacrifice our vision or sacrifice sales and the material.

Bob has chosen to not fight. He simply has removed himself.
Tomorrow, I will tell you about another entrepreneur who set out nearly 30 years ago to “change” customers and he still slugs on today and who believed his calling came in providing the world with a better loaf of bread.

Article keywords: market demand

Demographics and Your Business Plan

The term for some of you may conjure up images of university classrooms and painful modelling excercises. For others, the term might imply some kind if research to do with population, but most certainly nothing to do with your business plan.

What if I told you that demographics should form the basis of your ENTIRE business plan. That if you have not addressed the demographics of your plan that you are doomed to fail?

Before you think I’ve lost my marbles, or worse, before you start to freak out and start “Googling) the term Demographics, sit back and read the following. Demographics are no more than your customers. Most would call this market research, but I prefer the term Demographics because in my experience most people DO NOT do their market research properly (if they did-half of the businesses we see fail would never have been launched in the first place).

Demographics, to cite Wikipedia, “Demographics are current statistical characteristics of a population” and Demographic Trends ” Demographic trends describe the historical changes in demographics in a population over time (for example, the average age of a population may increase or decrease over time). Both distributions and trends of values within a demographic variable are of interest. Demographics are about the population of a region and the culture of the people there.”

So if we are to understand the WIKIPEDIA definition, Demographics provides us with information about a population and the culture of the people who live there.

This is a very powerful statement. Demographic trends not only give us insight into whether populations are increasing or decreasing, but they also tell you about the area.

Let’s go through an example. Years ago, I moved into a new subdivision. New subdivisions tend to draw young, newly married or co-habituating couples if housing prices are close to their actual market value. A couple of years later in the middle of the night, I could not find my infant son’s soother and so had to run to walmart to find a 0-6 month soother. When I got there, not only were there no soothers in that age range, but also no size 1 diapers. Talking to the sales associate, and she said, “we just can’t keep this stuff in stock” I have no idea what it is”. Fast forward a few years, and he was preparing to enter school, the local school was talking about the “boom” in enrollment and chalked it up to the excellent reputation of the school.

You probably get where I am going wiht this. The new couples who moved in had babies, those kids grew up and went to school. So why might this info be useful if you are opening a business? Well let’s say you want to open a neighbourhood daycare. It would be wise to know the age of your subdivision. Why? Because in starter neighbourhoods, couples tend to stay an average of 3-7 years in their first home. After that they may disperse. Newly married people will have their first child within 1-5 years (generally) so if you open in a neighbourhood where there are a lot of children or young married couples, you are assured constant business (as was the case with a neighbor). However, if you open your daycare in a more established neighbourhood, you will have to search further for clients and have a marketing strategy that makes up for the lack of proximate customers.

So how does one begin to navigate this minefield of information? Before we begin, I think it is important that we begin to understand the very nature of entrepreneurship and I will tell you about some entrepreneurs that I know and what entrepreneurship means to them.

who needs a business plan?

Part III: So Who Needs a Business Plan?

So Who needs a business plan?

These days, if you are seeking financing of any form, you probably require one. Do you need a business plan to ensure the success of your business? I would say no. Don’t get me wrong, business planning can be a very valuable exercise. For some personality types (you know who you are!), a business plan is a requirement to ensure that they have thought through their business idea. These entrepreneurs are generally rash, and have likely entered into risky arrangements in the past. If this sounds like you, and you are considering investing personal funds into industries which have high capital costs, you would do well to stop and prepare a business plan.

For others, I would say that a business plan is no more than a checklist item to get your business launched. This is not to say that all business planning is bad. Rather, like reading literary classics in school, this is a checklist item that you need to get through the system. Some will take pleasure in preparing these, for others the term “business plan” evokes visions of weeks, or even months of pain.

Entrepreneurs like this may choose an app to build their business plan. After all, putting together a 25+ page document from scratch can be daunting. My own experiences with software and as a consultant led me to create SME Gurus and BizMula – two solutions that really simplify the process without losing sight of the value behind the thought process of writing a business plan.

What it really boils down to is this: why did you start thinking about a business plan: Was it a requirement from a lender or an entrepreneurship program? Did a friend or mentor recommend one? Did you just hear about it and think it was a good idea? Or are you just unsure of launching your business idea, and want to do your homework? Then you need to ask yourself, what kind of entrepreneur are you? Do you need a plan to help keep you on track, or can you plan on the go?

Regardless of your choice, don’t brush over this question, as it could be the difference between success and failure.

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