Starting a business without a business plan is similar to setting it up for failing. It’s a road map for a successful business journey. If you start off on a journey without any idea of where you’re going, you will get lost. So, why take a chance and gamble with your business thinking that things will fall into place without any direction?
You must know the vision of your business. When it’s written down, it’s easy to communicate it to others, especially if you plan to have staff. Another reason you might need a plan is for funding. You can’t approach a bank or an investor without a business plan. Your written plan is proof that you have a valid business idea, showing how you intend for it to work.
A detailed business plan will look at your competitors – and include a SWOT (strength, weakness, opportunities & threats) analysis. This information will help you gauge your ideas to effectively offer a superior product or service.
Create a Business Plan to Understand How Your Business Works
There is a lot of essential information you should put in your plan in order to see the overall picture of how to operate your business. However, this is a basic plan with details of your USP (unique selling point), business aims, market research, customers, product/service, value proposition, marketing plan, financial forecast and personal survival budget.
To get a better understanding, we will look at each individually:
USP (Unique Selling Point)
A strong USP will set your business apart from your competitors. To find out yours, Identify why your business is different. What do you offer that they don’t? Look at your target market and find out how you can solve their problems. Your answer should define why a customer should come to you instead of going elsewhere.
“A USP is not merely a slogan — it is your company’s DNA and reason for being,” Marshall wrote. “If you cannot summarize exactly what sets you apart in one or two sentences, you are not unique enough within your marketplace.” ~ Business News Daily
Business Aims and Objectives
This is a guide for where your business is going and what you hope it will achieve. Strategies will help achieve your goals. They should be SMART to make them measurable and easy to manage.
Specific – be clear about what you want to achieve.
Measurable – goals should meet the results you hope for.
Achievable – goals should be realistic.
Relevant – goals should be consistent with your business objectives.
Timed – set a deadline that you can stick to it.
Market Research and Customers
Knowing your market will help you identify your customers and their needs. Carry out market research by doing surveys, questionnaires or talking to potential customers. You will understand their buying habits, behaviors, their age, income, gender, likes, dislikes and whether there is a need for your product or service.
Product or Service
This is about the product or service you will be selling. Describe in detail. How much will you charge your customers? Include your main sale items or service. How is it different to your competitors? How will it benefit your customers? List your projected income from your product or service. Include anything that could bring in extra income.
The value proposition explains how your product will solve the problems of your customers. Or how it will make their lives better or benefit it. It’s a statement highlighting why your business is superior to your competitors. It will help you achieve a successful marketing plan.
Contains a combination of market research, product/service, trends and economics. How will you promote your business to new customers so they know about you? What type of marketing methods will you use? Where will you sell your product or service? It also consists of details of your customers’ characteristics.
Financial Forecast and Personal Survival Budget
The financial forecast is projected showing how much money you expect to earn and spend. It should be realistic and include monthly sales income and expenditure for the first year. How do you plan to spend the money and will you pay yourself a salary?
The survival budget is the money you need to live on after paying rent/mortgage, utilities, insurance, telephone bills and other essentials. You should be left with enough to survive on after taking your drawings from the business and paying expenses.
To conclude, a business plan is a working document used to monitor its progress. It’s not static and should evolve as the goals of the business are achieved or changed over time. It’s a document of the future of your business and will guide you along the way to running it successfully.