If you are hoping to go into business, then it is best to be as prepared as possible. One way to help ensure you are prepared is to have a business plan. This is very important for several reasons. Creating a business plan helps you identify flaws in your strategy, allowing you to correct them before they become a problem. Another benefit is that it helps you keep your business on track and headed in the right direction. A third reason, which is most important for a lot of people, is that a business plan can help you attract investors.
Not convinced yet? A study that was undertaken in 2010 showed that businesses that create business plans are twice as likely to succeed as those that don’t. With that in mind, it should be a no-brainer for you to make sure you have a plan before getting started.
But how do you make a business plan that actually works and is a benefit to you and your business? Let’s take a closer look.
When speaking to investors, one of the first questions they will ask is: “So, what do you do?” Your business plan should begin with a description of your company. What you are making and selling, who is your target clientele, and so on. A business plan can also help assert your focus and vision going forward.
This is one of the most important sections in terms of helping you plan and showing others that you have given thorough consideration to your business idea. It helps ensure that you are being realistic about how well your business is likely to perform and how much demand there is for your products or services. If you don’t perform a market analysis, then you may find yourself committing to the time and expense of setting up a company that is doomed to fail from the start.
A thorough market analysis will include looking at factors such as:
- Demand for your product or service.
- Size of the sector and potential expansion.
- Any laws and regulations that might affect how you can do business.
- Your competitors.
- Potential suppliers.
- Industry trends.
- Staffing availability, training and costs.
Those are just a small selection of aspects that may need to be researched, and different business ideas will require slightly different approaches. Thorough research will help you identify potential obstacles to your plans and may also reveal avenues that can be exploited.
Know Your Audience
Research into your audience is very important if your business is to work. You will need to know who your ideal buyer persona is — what they like and dislike, what their needs are, their income range, buying obstacles, and so on.
For example, you could have a product that your target audience wants, but it might be too expensive for them, generally speaking, meaning sales will be poor. Armed with this information, you can consider adjusting your product to make it more affordable or consider a different product altogether.
Knowing your audience is essential for another key reason — it will help you define your marketing strategy. A good marketing strategy is essential if you are to get the attention of the right people.
Modern marketing will typically involve online marketing techniques like pay-per-click (PPC) and social media marketing. These are very affordable and very effective, helping even smaller companies to compete with the big players.
Online marketing is not the only strategy to consider. There is also TV, radio, and billboards, and the right ad in the right place using digital signage technology or similar can help to make your brand a lot more visible and generate revenue.
Any business plan must include a marketing strategy so you have a clear picture of how to get your business noticed and the potential costs involved.
It is important to show that you have considered the financials involved. A thorough profit/loss projection should be provided to help ensure, and demonstrate, the project is viable financially. If it looks as though the company will not make a profit, or even if the margins are fine, then it’s good to know this before you go ahead and start losing money. In many cases, you can make adjustments to the plan that will help ensure the bottom line stays in the black.
Be honest with your assessment. Take into account all expenses and be realistic with projected income. Being flexible with the truth might help make the business look better on paper, but it will not make your bank account look better in reality.
Being honest is also essential if you are looking for investors. You can be sure that they will be checking the figures, and if they find you have not been truthful, then you can say goodbye to an investment from them. Even if the figures show a loss, be honest about it. In many cases, an investor will still see an opportunity to work their magic and turn it around financially.
The executive summary will help to summarize the key points of your business plan. It will help to highlight the key points that should be considered and provide an overall vision into how the business will grow and develop in the future. Many investors will be interested in knowing how an investment opportunity might be scalable, so demonstrating that your business idea is scalable will likely turn a few heads.
If you are asking for an investment, this is where you should clarify the amount you are asking for. You should take this opportunity to let potential investors know exactly what they will get for their money. What assets, if any, will they be buying? How will their money be invested to take the company forward? When can they expect to see a financial return on their investment, and how much?
Remember that investors will ultimately want something in return, and they will want more than they put in, so it is essential to make it clear how and when they will benefit from investing with you.
A good business plan does not necessarily have to be produced by experts. However, it does need to demonstrate that you’ve considered the project in sufficient depth to be confident it will work. Have a look online and you will be able to find free business plan templates. These will help guide you in terms of what a business plan should consist of as well as helping to make it look professional. Remember to include the sections mentioned above and you are well on your way to creating a killer plan that will help you achieve your goals.