PART 2: BUILDING A COMPASS
Having a plan for your business is important. It far exceeds the strength of your concept or idea. The power of having a plan transcends getting financing. Done well, it should serve as a blueprint or road map that details how you are going to achieve your business goals and objectives. I probably do not need to tell you in further detail just how important it is to have a business plan because it is one of the most emphasized aspects of starting a business.
Before putting your grand plan to paper, it is advisable to determine the purpose for which you are writing your plan. Although it is commonly thought that business owners write Business Plans in order to obtain funding, you may actually be writing your plan as a map that details your objectives and how you plan on achieving your goals. Knowing to what end you would like to use your Business Plan after it is complete will determine what you focus on detailing in your plan. Even though all elements of a Business plan are important, emphasis on different sections of your plan may differ based on the purpose of the plan.
Time is an expensive commodity for entrepreneurs. It may therefore be wise to evaluate your business idea and what demand there may be for your offering before diving into writing a 30 page Business plan. Start with a one or two page Business Plan that answers to four main aspects of any business. I call this stage of planning a business ‘conceptualization’. Even though the concept or idea is already founded at this stage, it takes a mental process to mentally gather information that paints a picture of viability or feasibility.
Divide your one page Business Plan into these four main sections;
- Business Overview
All successful businesses thrive because they solve a problem. The really successful corporations solve problems that the consumer is not even aware that they have yet. By defining what problem your business solves, you start to answer questions about to your mission, vision, goals and objectives. Solving a problem also allows you to master your product or service before you run a pilot of your business.
This section of the one page business plan can include your business mission, vision, goals and objectives, a description of your services and a basic SWOT (Strengths, Weaknesses, Opportunities and Threats) just to mention a few valuable components you will need to define as part of the overview section of your business.
- Marketing Plan
Part of knowing how to market your products and services is knowing who they will benefit. After defining the problem and the solution that your business solves, you will want to define who the majority of benefactors will be.
The purpose of your marketing plan is to create a road map for selling your product or service. The best place to start when embarking on writing your Marketing Plan is to define who you will be selling your solution to. Determine what this person looks like, what they like, what are they willing to spend their money on. Really try to get into the psychology of your ideal customer prototype.
Once you have defined your target market, ask yourself how best to communicate with them. What type of message will attract them to your product or service? How much will they be willing to pay for your product or service.
Understanding your consumer will help you determine what the best channel(s) of communication and effective messaging are. Does your target audience read the newspaper instead of making use of the internet? Do they use both? Are they active on Social Media? All of these factors will also affect your message, tone and imagery.
- Financial Plan
This section of the business plan may not be the easiest to complete for some entrepreneurs but instead of becoming despondent and leaving this to chance, it is best that you look at it as a plan that determines how much you will need, how much you think you will make, if you will have any assets or liabilities that you will have to include in your forecast for the business as well as what cash flow movement you anticipate.
Even though your forecasted values may not be accurate you should remember that you are working on a road map, a guideline that will determine where you are taking your business and how you want it to be run.
Looking for funding may take time which may affect when you get the funds you need to start the business. Funding applications can take time which may affect the prices you have quoted on your financial forecasts. Adding 10% to your expenses to allow for price increases and other price changes may work in your favor if you are going to apply for funding. If you do decide to add a percentage to your forecasts, be sure to disclose this to your potential investors, it is the ethical thing to do. Alternatively, you can try to negotiate price locks on most products and services.
- Human Resources
Carving out and defining the type of key employees and partners you want for your business is key to success. Even if you have not hand-picked these people as yet, it is highly beneficial to pre-determine what characteristics, skills and experience they should have in order to propel your business forward.
When presenting your Business Plan, be aware that it does not have to be presented in the conventional black and white text in paragraph form on paperback. Depending on your business and the nature of its services or products, industry and target market, it may be beneficial for you to add elements that best describe the uniqueness of your business. For example, if you are planning a web based business, you may want to present your business plan in the format of a website that showcases the functionality, mood and tone of your online business. If your objective is to obtain funding this may secure funding better than trying to describe your idea and offering to bankers using Web Development Jargon.