Few things fill most entrepreneurs with dread more than the business plan. Some of it is the stressful association with lenders and investors, but a lot of it is just that making a business plan is hard.
A lot of thought and time goes into them. Which is exactly why you should have one, regardless of whether you need funding or not — even if you’re business is already up and running.
Creating a business plan
The fact is, even just the act of writing a business plan can help your business succeed, because (even if you never look at the file again), it forces you to mentally organize your goals and priorities.
It’s a tool you can use to review how on-target your business is, to identify things that need improvement, and to set specific objectives for yourself and your staff.
A business plan is not something you can sit down and come up with in a couple of hours. Sure, you can sketch out the basics in one sitting, but it’s something that you need to put time into — it takes a couple of weeks to a month to create a finished business plan.
That time includes:
- A lot of research
- A lot of asking for feedback
- A lot of revising
Ready to start putting your business in gear? Here are 5 steps that will make creating a plan as painless as possible:
#1 Identify Your Ultimate Goal
Don’t worry if it seems too over-the-top. Want to change the world with your product or service and be a household name? Make it your goal.
It doesn’t mean you can’t have smaller goals as your business grows — but if your ultimate goal is to, say, put your product for sale in a single local boutique, you’re probably running more of a hobby than a business.
That local boutique can be a great starting point, however. Part of identifying your ultimate goal is determining how you will get there, step by step.
#2 Research Your Competition
Even the most unique product or service has some kind of competition. Search for similar businesses and study the heck out of them.
The best place to start, naturally, is the internet. Search for businesses like yours in your area to start. Check out their websites and think about what they’re doing right and what you could do better.
Check out their social media and see how (and if) they interact with customers.
If a competitor is doing well in your market, think about what you could offer that they don’t. They do gutters and roofing, you might do gutters and powerwashing.
It’s good to have something to offer that all of your competitors don’t, but even if you’ll be starting out offering fewer services, you need to start thinking about it.
Research the little things, too: How do they construct their product pages? What information do they include on their About page?
What’s their blog like (if they have one)? The idea is not to look at these things and imitate them on your own site, but to understand the standards.
In all cases, you should be thinking about how you can do better than your competitors, not how you can copy them.
#3 Make Sure Your Plan is Feasible Financially
This is probably the most dreaded part of the whole plan, but it’s important to do it. If you plan to hire ten people, lease a storefront, and finance equipment, will you turn a profit with realistic first-year sales, or is a loss inevitable?
Can you really afford to sell your products or services at the prices you plan to sell them at (or are already selling them at)? What do you have to do, by the numbers, to make a profit?
If you need help here, ask for it. The math can be tricky. But if you don’t do it, you could be setting yourself up for failure.
#4 Determine Who Your Clients Are and How to Make Them Happy
Depending on your business, your clientele may be very specific, or very broad, but it’s important to identify them either way.
If your clientele is broad, identifying specific demographics will help your marketing plans. For example, say you’re a graphic designer.
You’re versatile and feel you can do work for anyone who needs design work done. If you leave it at that, you’ll miss out on business you could land if you decide to focus on a few more specific areas.
Maybe you’re good at website and promotional design — what about your work stands out, and who might it appeal to most?
Are there other things you could design (t-shirt artwork, auto magnets, album art, etc) that might increase your potential business while focusing on more specific demographics?
And remember — you don’t have to stick to a single clientele. You can do corporate work, boutique, and album art, and find ways to market for each.
#5 Define What Makes You Different
Very few businesses are truly one of a kind. You operate within an industry with competition. Whether you freelance or run a brick-and-mortar business, or are entirely ecommerce, you need something that makes you stand apart from the pack.
Depending on your industry, that can be anything from a special way of doing things (“we ground our beans by hand”) to unusual turnaround (“logos in 24 hours”) to a philosophy that isn’t common in the industry.
Your uniqueness, even if it’s a relatively minor thing, is a selling point. While you’re working on this part of your business plan, make a list of as many things as you can think of, no matter how small.
The list is just a step. It isn’t effective to define 14 things that make you (sometimes vaguely) unique. Narrow down the list and combine things until you have that one special thing that makes your business your business.
For some, this will be a simple task that will take no time at all. For others, it will take a lot of time and thought.
Don’t skip this if it seems unnecessary — just thinking about what sets you apart will help you land clients and improve your marketing strategy.
Write out your plan, step by step, over the course of a week or so. Then share it with as many people you can — friends, family, advisors — and listen to their feedback.
Your cousin Jimmy might not have a business degree, but he might know your demographic or know what really sets your business apart.
Of course, if you do know business experts, get their feedback. Get as many eyes on it as you can.
Then, go back and rewrite the whole thing. Twice, if possible.
Not only will creating a business plan put all of this in your head, cementing your goals and plans, it’s something you have — you meet a potential investor out of the blue?
No problem, you have a business plan.
Once you’ve created one, you should review your plan annually and update it as necessary.
Did you create a business plan when you started your business?
Share your business plan experience (or lack thereof) in the comments!
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