You’re excited. You’ve developed a new product or a new service. A voice inside you tells you this is something people will want. Your friends encourage you to pursue your dream.

But the question you will need to ask yourself as you seek financial support to develop your business: What are potential investors in your business looking for, and what are the essential questions they need answered?

As you develop an overview of the industry and the potential market for your new product, ask yourself these questions…because investors will certainly require answers before they would consider helping you.

Who will you be marketing the product or service to? Essentially, who are your potential customers?

• What problem is your product or service solving for the consumers?
• Will consumers be willing to pay for the product you are making or service you are providing, and if so, at a price point greater than the costs of producing that good or service? If, yes, why would they buy your product?  What makes the product or service that you are making different from what these consumers already have available in the market?
• Where will your consumers or clients be located? Is the business going to be concentrated in one region, state or be national in scope?
• Who are your potential competitors in the marketplace? Are there other businesses or companies which make the same product that your business makes or provide the same service that you want to provide? If so, how successful are they and why? How will you be able to compete with them…on price, on quality…on service?
• What tangible assurances can you provide your investors that no other competitors would be able to enter your market and compete against you for the foreseeable future? For example, will you have patents or other intellectual property protections to guard the essential elements and value of your business from competition?

Establishing Your Business Operations: Will You Make a Profit?

As you develop your product or service, you need to determine in your business plan:

• What is your specific plan to produce the products or service? How much will it cost to make just one of the products or services, and deliver it to the consumer
• What materials will you need to make the product? Are the materials pre-made, or do you have to manufacture them yourself? Will you need to buy raw materials like iron, metals? How to you intend to guarantee the supply of materials needed in producing your product? What are the essential elements of producing the product or service you are going to sell?
• How many people and hours will you need to just make one single product?
• What special expertise is required of the people that will make the product or provide the service?
• How will you sell your product? Will you need distribution channels, or will you be able to just sell directly to the consumers? Do you need to have special contracts with your consumers? How will you market the product, and at what costs?
• Does your product require pre-approval by government agencies before you can sell it?
• Will the clients need to come back for more purchases of your product or service, or is a one-time purchase of your product sufficient for them? (Typically, recurring purchases from consumers is more attractive to investors).

Final thoughts!  What are the itemized costs of what you will you need to begin your business? Segment and detail each aspect of the manufacturing, production, marketing, intellectual property protection, distribution and selling of the product or service. Once you’ve established the economics of cost and margin, it is never too early to develop a long term plan for your enterprise’s ability to grow and scale the business moving forward. In your business plan answer those questions that your business will face for the first six months, first full year, and five years, and you’ll be well on your way to fulfilling your dream. Congratulations entrepreneur!

Follow these links to read information on Financial Assistance and Early Stage Financing.

Jarry R. Antoine is majoring in economics and mathematics at Cornell University, and is working as an intern for LOCATE FINGER LAKES. His previous internships were with Ares Management, L.P., and as an analyst for the Cornell Hedge Fund.