According to Patricia Schaeffer at BusinessKnowHow.com, almost half of all business start-ups fail within the their first five years. One of the greatest mistakes many businesses make is failure to plan for the operation and growth of the business. All aspects of the business should be outlined in a business plan, which basically is a map for the company for how to take an idea, develop it and become profitable. Ideas in business plans come in three "types": A, B and C.
Type A Ideas
A type A idea for a business plan takes an existing product and builds a business around it. For instance, if one were to open up an ice cream parlour, you would be building a product around one that already exists, ice cream. Of course, for it to succeed there needs to be something outstanding about it, such as that it is located in a populous area that does not already have an ice cream parlour or that it offers unusual flavors that customers will want.
Type B Ideas
Type B ideas in business plans take an existing product, but apply a new technology to it. Amazon.com was a type B idea: its initial product, books, already existed. But what Amazon.com did was apply a new technology, online ordering, to how the product was sold and delivered. Another example of this is wireless printers, which took the Wi-Fi capability of computers and applied it to peripheral devices.
Type C Ideas
Type C ideas in business plans simply offer an "improved" product. The Bose Radio was a type C idea: while portable sound playback devices had existed for many years, the Bose player's sound quality was noticeably better than any competitor's. Developing a business model to provide a product more cheaply is also a type C idea. Doing something better is the most common premise for a start-up company.
To support the viability of a type C idea, the entrepreneur must perform a thorough competitive analysis that shows quantitatively how this new idea is better, cheaper and faster than anything else done to date. The business owner may also conduct a rigorous SWOT -- strengths, weaknesses, opportunities and threats -- analysis of his business model and provide rationales for any mitigating circumstances. If the owner can demonstrate convincingly why his business model will be profitable, then his chances for receiving funding are greatly increased.
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