If you’re planning on starting a business, or if you’re interested in monitoring your business’ progress, having a solid business plan is an absolute must. Well-designed Business Plans allow us to focus our energies on our objectives, setting specific goals that can be met along the way. However, knowing what Business Plans can do for our companies is just the tip of the iceberg. The real challenge comes in actually sitting down and putting that Business Plan on paper. Here, I consider seven steps to help you design a successful Business Plan.
1. Business Plan|Define the Problem Your Business Solves
The first step in developing a business strategy is to decide what problem you plan to solve with your business. For most, the tendency is to simply describe the products or services they plan to offer. However, that is not the ultimate goal here. What we really want to do during this first step is to clearly identify the need we are trying to fulfill with our business. Another mistake typically committed in this crucial first step is relying on technical terms or trendy jargon. Avoid this trap by presenting your ideas concisely using terms that can be easily understood even by those with little experience in your area of expertise. The simpler the better; you want to explain why your product or service meets this crucial need, and why your business is better than your competitor’s.
2. Business Plan|Describe Your Niche
Once you’ve laid the groundwork for your business’ ultimate purpose, the next step is to describe the specific niche your business fits into. Here, you should examine the historical trends and the future projections for your specific industry. What are the success stories? What trends are predicted for the next five to 10 years? How does your business fit in? At this stage, it is also important that you consider the make-up of your customer base. Market segmentation is an important process because it will allow you to identify secondary and tertiary uses for your products or services, widening the scope of your marketing strategy. A tip here: while words are powerful, images can really bring home what you’re trying to portray. Consider presenting a line graph of historical and future trends as well as a pie chart summarizing your market segments.
3. Business Plan|Clearly Present Your Business Model
With the information you’ve gathered in Steps 1 and 2 to support your projections, you’ll want to use Step 3 to lay out how your business will generate profits. This sounds easy enough. But in reality, you will need to consider a series of calculations, taking into account the expenses you’ll accrue along the way as well as your revenue sources. At the heart of this step is an honest appraisal of your business’ true potential. Will the first few years be focused on product development and marketing? How will future sales compensate investors for that initial period of development? What about the long-term financial feasibility of your product or service?
4. Business Plan|Identify Your Competitors
Next up, it’s time to take a look at your business’ main competitors. A great place to start is to consider your inspiration. Who inspired you to develop your product or service? Chances are, they offer something similar, or a product or service that might very well meet some or all of the needs you are trying to fill. Let’s take a look at an example. If you’re planning on selling bicycles, you’ll want to include roller blade and scooter manufacturers among your competition because, although their products are substantially different, they may meet the same need your product hopes to satisfy. This is also a great point to consider why your offering is better than your competition’s. Returning to our example, bicycles can be used for transporting people as well as goods if, for example, a basket or trailer is added; roller blades and scooters just can’t offer that kind of flexibility.
5. Business Plan|Detail Your Marketing Plan
While we’re thinking about what makes your product or service stand out, this is the ideal time to consider Step 5: marketing. Here you’ll want to focus on your marketing strategy, including prices and how you plan to distribute your product or present your service. At this stage, you’ll want to consider potential strategic alliances as well. This step is ideal for listing long-term marketing goals as well.
6. Business Plan|Present Your Team
Turning now to the human side of your business, Step 6 involves introducing your business team. This is your chance to show investors where your know-how comes from. Who are the key players and what are their qualifications? Each member of the board should be introduced, as well as the innovators and the doers. This is where you make your business come to life, so look closely at how each member works with the rest of your team in melding your product or service into a successful endeavor that will convince investors to back your business.
7. Business Plan|Focus on Finances
And since we’re talking about investors, we might as well move on to the final step in designing successful business plans: considering finances. Here you’ll want to lay out exactly what you need in terms of funding to get your business off the ground. You’ll also need to devise a plan for exactly how that capital will be used, and how it will generate a return for investors. You might consider a scheme were those who get in on the ground floor will be compensated, perhaps with a percentage of stock in the company. This is also the place to consider you company’s financial future. At what point will you break even? Be prepared to show historic expense and revenue charts as well as projections for the next few years.
Now, all that’s left is for you to get your unique business plan laid out and make it happen!