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Business plan frequent planning mistakes: #Number 1

The market analysis is one of the most important chapters of a business plan. These include the market quantification and reflections on the targeted market share. This post is the first in our new series: “Warning: The 8 most common planning mistakes”.

Business Plan

Example of Business Plan:

In Switzerland bags are sold worth CHF 1.3 billion (market potential). Many founders now multiply this potential market with a small factor, for example, 1%, and aim this market. This is a classic mistake! You can’t check the revenues of companies and then adapt a percentage to your calculation. Important is that you go top-down and break the cake piece for piece.

How do you do a correct business plan?

1% of the above market potential represents 13 million CHF in revenue. This could be reached within the first few years and would be a strong result for a startup company.

First, you need to identify the relevant market in your business plan. If you produce laptop bags your market segment will be less than CHF 80 million (Estimation of STARTUPS.CH).

In this relevant market different competitor hold their market shares. Estimate your market potential and calculate your possible market share. In the example of the laptop bags on the Swiss market, it would be already a great success, achieving sales of over CHF 2-3 million within the first year.

Market share calculation for the Business Plan

Our recommendations for the calculation of your business plan we have summarized for you:

• Identify the relevant market

• Observe competitors and the industry circumstances

• Estimate your target shares

If you have difficulties within this process, please let us know and our consultants will help you.

 

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