Developing new trading activities is all about focus: spotting opportunities, deciding which ideas are worth investigating, and assessing the viability of the best ideas.
Draw up a list of ideas
This is a brainstorm exercise you could do with your entire team. Ask them to select between five and ten ideas to take forward. Create a brief summary of each idea, covering the following points:
- What is the proposed product or service?
- Who is it for?
- Who would pay for it (this might not be the end-user)?
- How is the idea linked to your mission?
Do an idea appraisal
Use the following criteria for selecting the best ideas to take forward to a full feasibility study. Score each idea against these criteria:
- Mission: Does the trading activity fulfil the mission and purpose of the organisation?
- Market need: Is there evidence of demand for this product or service?
- Competition: What advantages do you have over your competitors?
- Finance: Will it generate significant levels of income and surpluses?
- Organisation capacity: Do you have the necessary skills and resources?
Conduct feasibility studies of the best one or two ideas
The final step in this process is to conduct feasibility studies of the best one or two ideas. The aim should be to gather evidence to support your initial appraisal, and to check that it will really be worth developing the idea as a trading activity. There are many different approaches to feasibility studies, but one reliable method is to concentrate on the four Cs: customers, competition, cashflow and competencies.
Customers
- Who are the potential customers?
- Is the purchaser and end-user the same person?
- How large is the target market and what are its key characteristics?
- What do customers need, want, expect?
Competition
- Who are the main competitors? What are their strengths and weaknesses?
- What trends are affecting this market?
- What are your best sources of competitive advantage in this market?
Cashflow
- How much initial investment is required?
- What turnover is required to break even?
- How profitable will this activity be over the next 12 to 24 months?
- What are the cash-flow requirements?
Competencies
- Have you got the skills, knowledge and experience needed to trade in this area?
- Have you got the right resources (e.g. tools, equipment) and systems (e.g. financial management procedures)?
- How difficult and/or expensive will it be to acquire the necessary competencies?
Further information
See also:
