I come from a relatively technical background with no business background at all. One of the most desired dreams for many Americans is to open their own business; to be their own boss, to work their own hours, to start from scratch. How many of them actually sit down and come up with a game plan? How many of them take an educated approach to deciding what the chances are of them surviving in a competitive marketplace?
Porter’s 5 Force Analysis model does just that. It takes a comprehensive approach to analyzing the current industry and building a foundation for a business strategy.
1. Threat of substitute
2. Barriers of Entry
3. Supplier Power
4. Buyer Power
5. Degree of Rivalry
From 5 Forces
Think about how unique your product is. Are there others like it? Why would someone choose your product over the competitors? What does it take to get started? How much capitol must be raised? Who are your suppliers? What kind of relationship would you have with them? Who are your buyers and distributors? And what happens when you fail? How easy is it to leave the market place? What assets do you have and how would you rid yourself of them?
It is said that nine out of ten businesses fail within the first five years. Those are staggering odds, but with due diligence, careful planning, and a solid business plan, you can build a solid foundation for your business.
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