A business's cash flow is its lifeblood and is generally defined as its daily money coming in and going out. We advise entrepreneurs to organize and separate their personal and business accounts (bank and credit cards), plan to use a system that continuously monitors their balance to ensure cash is available, and to maintain a cash reserve to get you through lean times.
Before launching a new business, it is important to scour the market for competitors. Your competitors can include direct (same products or services) competition and indirect (same market segment) competition. Identify these competing businesses and gather key information on their: strengths, weaknesses, differences, missteps, successes, etc. By analyzing this information, you should see opportunities that you can take advantage of, market gaps that you can fill, and ways to differentiate your business.
When preparing to enter the market with a new product or service, you must take note of the evolving opportunities and threats that can arise. By completing a SWOT analysis as part of your business plan, you can relate these external opportunities and threats to your businesses’ own strengths and weaknesses. Completing this exercise can help you determine the best time to enter the market, or even help evaluate the attractiveness of a particular market.
A powerful tool to use while developing your business plan is a SWOT Analysis. Short for Strengths, Weaknesses, Opportunities and Threats, conducting a SWOT analysis forces you to examine internal factors – strengths and weaknesses – and identify external factors that could affect your business– opportunities and threats. From this exercise, you can uncover unique opportunities due to your strengths, and address your weaknesses to mitigate external threats.
A SWOT analysis most often examines overall business strategy. However, it can also focus on a particular aspect of your business: human resources, brand image, marketing activities, competition, new markets, product, industry, and more.
Market research forms an essential part of your business plan. Your market research will reveal the size of your target market and how much money is spent on similar products or services. From this information, you can extrapolate the data to estimate the market share you are likely to capture. This can be a very revealing test of you business concept. For example, if you need 40 clients a month to break-even but your research shows you will only capture 15, then your business concept is not viable.