The Importance of Validating Work Assumptions Before Presenting and Implementing a Commercial Busine

Every business starts with an idea that will fill a need in the marketplace and then a commercial business plan that will demonstrate how the company will fill this need. This concept should not be anything new to many of the people reading this, but when entering a new market or moving internationally, business owners must create another commercial business plan to demonstrate how and why your business will be successful for investors, customers, and internal members of your team.

Before you can present (and certainly implement) this commercial business plan, you need to validate the work assumptions. In the business sphere, assumptions will not get you very far, so you need cold hard data to back it up. Every business will face various assumptions and your situation might be different, but here are a few examples to help you as you enter a new market.

Example 1: Validating the Market

The first example is in the form of validating your selected market. You must validate that the new market is worthy of the investment and will be profitable for your company in the long-run. Not every company is destined for success in the new market and without doing your research beforehand, you’re setting yourself up to fail.

You must also validate the niche that your product or service fills. Once you’ve identified the specific niche and market, your commercial business plan should focus entirely on these.

Example 2: Finding Initial Customers

Who are you going to sell to first? The key to success in a new market is creating momentum after penetration. Carefully select the first customers that you will sell to so you can make a splash upon entry that will build momentum moving forward.

Have the marketing team research the new market to find out who is most likely to make a quick purchase when your company first enters the market and target them heavily.

Example 3: Defining Your Value Proposition

Not every market or customer segment will perceive the same value of your products. What your current customers value won’t be the same in the new market, so plan a strategy to define this value to your potential new customers.

In your business plan, clearly describe the value that you’ll provide to your new customers and then tailor your messaging around this value proposition.

Example 4: Determining the Price Point

Many businesses find that when they enter a new market that not only is their competition already there, but they offer lower prices as well. Many consumers base their purchasing decision on price, so you need to adjust your prices accordingly without competing in a race to the bottom.

Bring your sales and accounting team into the mix to determine the most feasible price to offer your product or service that will make your business competitive while still profitable.

Example 5: Validating the Penetration Method

Finally, your commercial business plan needs to describe the penetration method your company will utilize clearly. There are a few different ways to do this, but in my experience consulting with companies, when entering a new market, working through a distributor experienced in your new market can help you avoid common pitfalls and improve your company's efficiency.