Why It Is Not a Good Idea to Develop Your Business Plan Based

The title of the post is valid even if your target market is Chinese. Most beginning entrepreneurs get it wrong when they base their calculations on the total market they want to reach. To give an example: if you offer a product to people with dogs, it is a mistake to calculate your business figures on sales to 1% of them. Although it seems like a figure that you can reach from the total market, it never gives you a real idea of ​​what you can sell with your start-up one day.

How Not to Calculate the Business Plan for Your Start-up

It is a frequent error seen that it starts from a wrong base. I include myself in this group since I did my calculations when I started with Coguan in the same way.

You do not know what your market wants: it is Armenia WhatsApp Number true that you have to start from the base that you know it. The truth is that you can only guess. It is very likely that you will have to change your business model a few times to find the product or service that really has a market, even if it is small.
Wrong basis for calculating the conversion rate: of all the people who may be interested in your start-up, only a part is actually going to hire you or buy your product. If you assume that the entire market will be interested in your product, the resulting figure is obviously more attractive, but it will still be wrong.
You lack the resources to reach the entire market : What you already know but have not taken into account in your calculations is that you can never “impact” the entire market with the resources available. Even if you receive a relevant investment, you will fall short of the marketing and sales budget that you can dedicate to it.

How to Calculate the Business Plan to Obtain More Realistic Figures

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The formula to obtain sales forecasts that are closer to reality is to start with what you have. The figures you get may not be as attractive but they will reflect reality more.

The day has only 24 hours : consider that 8-12 of them you should not work. The 12-16 hours that remain can be multiplie by the number of people you have to attract customers and sell. At first that’s all the resources you have. It does not matter if your market has 10 million people with a volume of 500 million euros. How many people can you contact through the different channels you have at your disposal?
Assume that 10% will hire you : If you are not the Messi among salespeople, you have to assume a realistic hiring figure. Probably 90% will tell you no. Over time the percentage will rise because you will know better who your target audience really is.
70% repeat, 30% leave : hopefully 100% of the customers you get once repeat and continue to generate income infinitely. Assuming that 70% are still there is already being a bit optimistic, also assuming that the development of the product is well advance. It is important to keep track of this essential data so that you can replace the theoretical ones at some point with real ones to improve the business plan.
Creating a business plan is not an easy task. It is a vital exercise that helps give you an idea of ​​its potential. If it does not pass the “Excel” phase, you will probably have to change it for a new one.

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