Necessary First Steps to Formulating Your Business Plan
So you want to start a business? As you’ve no doubt heard, that tends to go smoother when you start by formulating a business plan to set your goals and guide your actions. Doing so isn’t always the most intuitive process, however, If you’ve never put one together before, then how would you know where to start? That’s what this article intends to address, by providing you with some initial tips that should point you down the road to success. Here’s what you should know.
Preparing Yourself for the Challenge
Few people, if any, will tell you that starting a business is a walk in the park. More often than not, the path to success is littered with potential pitfalls, so before you get to writing any kind of business plan, you’ll need to make sure that you, the individual, are prepared for this undertaking.
For starters, you’ll have to get comfortable with embracing uncertainty. Your business plan, no matter how well written, can’t account for every possibility, and there are sure to be surprises as your business starts to grow. Being comfortable with this fact will help you keep a level head when things go awry and lead your team out of the proverbial woods.
Beyond an ability to stay cool under pressure, there’s a range of other soft skills and characteristics you’ll need to possess if you’re going to lead a team effectively. Being a capable communicator, for instance, will help you provide clear instructions to your team and resolve conflicts that may arise on the job. Meanwhile, having a bit of empathy will help you forge deeper relationships with your crew, and avoid practices that might alienate them.
Of course, attaining the level of development that you’ll need to run a business while also juggling your health and wellbeing can be challenging. This is why many startup entrepreneurs also keep a life coach in their employ so that they can keep themselves in tip-top shape and have an easier go of all the other complicated realities of the business world.
Finding the Right Lane for Your Business
No business can be all things to all people, and when you’re just starting out, trying to target too large a market can spell certain doom. So for your new business to succeed, you’ll need to narrow your focus into a manageable niche—a small range of products or services that you can specialize in and perfect beyond your competition. On that note, the leadership experts at Entrepreneur recommend five things to keep in mind as you find your lane:
- Identify your interests and passions
- Identify the problems you can solve
- Research your competition
- Determine the profitability of your niche
- Test your idea
In addition to making your business startup phase more manageable, clearly defining a niche will help you build a stronger brand. This, in turn, translates to greater customer loyalty and an easier time attracting clientele, so don’t overlook the importance of focusing on one thing well.
Understanding Why Your Business Plan is Important
Before you jump into writing your business plan, it will help if you understand why you’re doing it so that you can maintain the right mindset throughout the process.
A common mistake many first-timers make is thinking that their business plans need to be grandiose to attract investors, secure partnerships, and recruit talent. This leads them to draft fantastical business plans that won’t do much good when tested by reality.
Instead, you should think of your business plan as a grounded strategy for your operations as you pass through the initial stages of your business. Your business plan should be logical and provide a viable explanation as to your organization’s purpose. What’s more, it should contain a blueprint for how you will realistically survive your first few years and achieve profitability.
As such, most business plans contain the following key elements:
- Executive Summary: A quick, top-down view of your organization’s raison d'être and initial goals. Your summary should succinctly describe why your company needs to exist and how it’s going to make a profit while achieving its main objectives.
- Overview and Objectives: This is where you define the essence of your business—what you need to keep things running, who your customers are, etc.
- Products and Services: As the name suggests, you’ll need to make a list of the products and services your company will be providing at launch, as well as what you might be expanding into if things go according to plan.
- Market Opportunities: Is there a healthy market of consumers willing to buy what you’re selling? This part of the plan should examine that question closely.
- Sales and Marketing: How will people learn about your organization? How will you get them to purchase goods and services from you?
- Competitive Analysis: By finding out what your competitors are up to, you can determine what strategies will be useful for helping your own business survive.
- Management Team: Your managerial team can make or break your business. Taking the time to plan for the individuals you’ll need to succeed is a must.
Each component goes a long way to determining whether or not your business idea will work on paper. Only once you’ve made the call that your idea survives, in theory, should you attempt to put it into practice.
Focusing on Success
Your business plan is central to any entrepreneurial endeavour you might be launching. Remember that the work begins before you even put that proverbial pen to the page, however, and you’ll need to prepare yourself thoroughly if you want to nurture your ideas into truly profitable ventures.