STARTING AND RUNNING A BUSINESS with THE COACH in your corner.
THE COST OF IGNORING YOUR BUSINESS PLAN

A small group had created a new business based on a truly unique concept that they believed would revolutionize an industry. They had identified their very niche market, raised hundreds of thousands of dollars, and had already produced and patented one prototype when the lead partner passed away unexpectedly. When the group extended an invitation to a friend of mine to take on a managerial role, it appeared as though this start-up business was positioned to do extremely well and therefore he accepted the offer.

The group soon discovered that while the prototype did the job, the cost to produce it on a large scale was so high that the sale price would wipe out any of the savings or other benefits that would make the machine of real value for the end user. By ignoring their budget for costs of production, they had shrunk their market so significantly that the original business plan no longer made sense.

This one error caused other parts of their start-up plan to fall into stress. The prototype needed to be redesigned with a focus on materials that would be equally strong but less expensive, more readily available than the exclusive materials originally used and everything re-tested and resubmitted to the patent offices. This redesign would affect two very precious commodities of any small business: time and money. The timetable for launch of the product would now need to be pushed back indefinitely while all of those new factors for production were explored. Each week without going to market also meant the projected sales revenues to generate a profit to support the business was going to be delayed.

The new, more cost-effective prototype was designed and built just in time for the business to run out of money and be unable to take the machine to market. This is a very clear example of how losing sight of an element of your business plan can have catastrophic results. Between lack of proper market research, being too focused on the wrong details and being undercapitalized, this start up had a number of major challenges right from the beginning that if recognized at the beginning through a solid plan, could have saved a number of people a great deal of time and money.

Do the research. Create a proper business plan. Focus on the right details. For 50 key areas to cover before launching your small business visit: www.startingabusinesscoach.com

 

3 minute preview

First Video FREE - Take 30 Minutes and BE SURE!

Share this site