to NOT write a business plan at all. What? That’s crazy talk, right?
I wrote a business plan once for a restaurant. I figured food costs, utilities, labor and of course the sales. I knew exactly how much revenue was needed to cover all the costs. But I needed a crystal ball to forecast 1, 3 and 5 years into the future if I was going to satisfy conventional lenders. So the numbers get massaged until you get the right answer at the end. After all, it’s not lying…it’s guessing.
But let’s forget about conventional lenders for a minute. Let’s approach this from the “what do I need to do to be successful?” standpoint.
Try adding these steps to your overall business plan:
Really define a value proposition:
1. Don’t describe “features” of your product or service. Instead, put yourself in your customer’s shoes. Define the “benefits”.
2. Why would they choose your company?
3. What problem are you solving?
4. Who is your customer?
Speaking of customers:
1. Who is your ideal customer? (Age, gender, income level, geographic location, technical level or any other pertinent “type”).
2. Where do they come from? Are they converts from other companies? Why would they change? How easy is it for them to change?
3. Are they people that have never used a company like yours? If so, how will they know about you?
Your product of service:
1. How often does someone purchase from a company like yours?
2. Can they purchase it as a gift for others?
3. Do they need to buy any other items in order for yours to work properly? Thru what channels will you sell?
4. Will strategic partners be interested in your company?
5. What kind of follow up service is needed after a sale?
6. How will you track loyal customers?
7. What benefits (design, availability, performance, risk, convenience, cost reduction, price) will your company provide better than competitors?
8. How will customers interact with other customers?
1. Where will you make sales? (Online, brick and mortar, both?)
2. What are your different revenue streams?
3. Do you make your product or a third party?
4. How do you control production and or inventory?
5. How do you handle returns?
6. What payment methods or services do you use?
1. What costs are fixed vs variable?
2. What factors could lower or raise any particular overhead cost?
Ideally, you’ll have pages of answers to all these questions. Really dig deep to root out as many points of view as possible.
Then try this:
Test it! That’s right, go out and try out some of your assumptions. Find a way to get your product or service in the hands of some ideal customers.
Give away a trial, use promotional pricing, sell it to some early adopters, do it part time…just do something to try your idea(s) out before going all in on an office, employees or that 1000/second, dual sided color copy machine.
You see, the problem I had early on was that there were no actual sales, no customers and no feedback on how well received it was all going to be. Don’t make that mistake.
What part of this article makes you the most unsure about starting your business?
Bottom Line: Get out there and try it BEFORE you spend thousands of dollars on something no one wants.
PS. Get my FREE Tool Kit. It can help you find the right, free or low cost tool you’ve been looking for to help launch your business…even if you don’t know how to write a business plan for your local banker.