Step Three: Plan Things
Out
Date Added: June 3rd, 2002
By Chris Stallman
| E-mail
Ah, this is
yet another important step in the process. Some people really dislike
planning out all of the minute details while some (like myself)
think that it's one of the best parts about starting a business.
Well, whether you enjoy it or not, it's necessary to devote
quite a bit of time to doing this. That way
when you get the business rolling, you'll have an idea of what
you're doing, how much money you'll have to spend on each
expense, etc...
Okay, it's time
to start putting on those thinking caps and get out something to
write with so we can start ironing out the details. In fact, now
might be the time to pick up a stack of legal pads at the local
Staples or something. Okay, here are some questions you will need
to answer:
What exactly is
my product?
If you've gotten to this step, you probably already
know what your product/service is going to be. But this is the time
for you to start giving a lot of thought to it. Is this something
that you have a chance of building well? You don't want a product
that sounds good in theory but is quite unappealing to look at when
you have the finished product. What makes this product/service unique?
Am I qualified to be an "expert" in this area? If you're
going to be running a business, you should be absolutely certain
that you know as much as possible about what you're doing.
Who is my target market?
Okay, imagine that you're the person that you're
trying to make a sale to. How old are you? What do you look like?
Are you a teenager with money burning a hole in his pocket or are
you a conservative adult? Are you a male or a female? It's time
for you to start thinking about who exactly you're trying to
sell to. This is important because it'll help you decide what
approach you'll take to make the sale. If you're selling
to kids, you can probably be more informal. But if you're selling
to adults and want them to take you seriously, you might have to
be a little more formal. So if you've got a shirt and a tie
sitting around the house, you might need to put it on to impress
them.
What is it costing me and
what am I selling it for?
This was mentioned
in the last step but it is still very important so we're reiterating
the fact that you should go over this. Write down all the different
costs you'll have for your business. Figure out what the materials
cost if you're manufacturing something. If you're mailing
your product to people, be sure to include shipping costs. If you'll
be on the phone a lot more, you might want to account for your phone
bill.
Once you figure out how much it will cost to run the
business, you'll need to start getting idea of what you will
charge people for it. Don't ever charge anything more than what
you yourself would be willing to pay for it. Figure out a price
that is reasonable for your target market. If they're teenagers,
you might want to keep the price low.
Now that you have an idea of what it's going to
cost and how much you're selling it for, figure out how many
you'll need to sell to generate a decent profit. If it's
out of reach, you might want to reconsider your idea or simply find
a few ways to cut costs.
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