A crucial element of assessing if your idea will be a Start Up success is to develop a go to market strategy that will deliver into your projected financial model. In our article Start-Up Series: 7 Step Guide to Assessing Start-Up Success we promised a series of articles to help assess which of your great ideas have the potential to go all the way.
If you have been following our 7 step guide, by step 6 you would have defined the problem clearly in step 1, determined in step 2 that there is value in the solution, identified the market size for that solution in step 3, assessed the competition in step 4 and developed a model to prove financial viability in step 5.
So how are you going to get to that financially viable point? How are you going to take this new business to the market place?
Business is rarely as simple as hanging up a shingle with your new product or service at the ready and expecting your target customers start knocking down your door to buy from you. You must have strategies and action plans on how you will break into the market place to let your potential customers learn about you and then subsequently start buying from you.
There is never a one size fits all strategy and almost always the first strategy never works out like we expect. Therefore, there should be multiple strategies in the kit bag to ensure success in breaking into the market place. Assess the strategies and the actions documented to ascertain the likelihood that one or more will work out and the timeframe anticipated to achieve sales volumes.
So if there are one or more strategies that are likely to get the business to the point of financial viability the next step is to determine how much money it is going to take to get to the point where the business is at least self-sufficient and reaches that breakeven point.
This is important as even though the financial model demonstrates that the business can be financially viable those results are not going to be achieved right from day one. It will take time to build the business up to this level and you will need to determine how long it will take to do this.
It is important to figure this duration of time out as you will need to build a 3-way financial forecast that predicts the results and cash flow of the business from the start date to the point where the business breaks even. This will quantify the total cash spend incurred in this period that must be funded from start-up equity capital or financed through debt.
You don’t want to find yourself on the brink of success then be in a position where you have exhausted all avenues of capital only to have that success elude you.
Measuring twice and cutting once is a good motto to keep top of mind at this juncture. If you require some assistance to determine this breakeven point please contact Robert Pitt on 3218 3900. We encourage you to follow our Start-Up Series of articles to work through this 7 step guide to assess if one of your ideas could be a start-up success. If you want to delve into all 7 steps in one sitting, please download our Guide here.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.