You’ve got an idea, and it’s a great one, too! So, what’s next? Contact a commercial property broker? Post “We’re hiring!” on your Facebook page? Maybe purchase some materials? Well, not exactly.
As excited as you might be right now (and you should be excited!), it’s important to ‘aim’ before you ‘fire’. In other words, before you launch your new business, you need a business plan.
A business plan can be helpful on a number of levels. First, it’s a great tool for communicating your vision to employees, partners and customers.
Second, if you’re looking for investors, they’re going to want to know that you’re serious; that you’ve studied your market, thought carefully about the value of your product or service, found the best suppliers, and done the math. In other words, they’re going to want to see your business plan.
Third (and here comes the boom), planning pays. That’s right. Harvard Business review reported that entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don’t. You do want a viable business, right?
There’s something else, though, and perhaps Dwight Eisenhower said it best when he said “Plans are nothing. Planning is everything”. What he meant is that the process of planning is often more valuable than the plan itself. So, even if you aren’t looking for investors, creating your business plan is bound to take you on a journey of discovery that will help you launch your business with strength, profitability and longevity.
We’re not saying that your business plan should be set in stone. As a startup, you’ll need to be flexible, responsive, and learn by doing. So, tweaking your plan over time isn’t just okay, it’s expected. Still, a plan provides a firm foundation for your business to grow.
Okay, I’m sold. Now how do I do it?
Business plans come in more shapes and sizes than plants, dogs and, well, anything else that comes in many shapes and sizes! The good news is that you can start simply, and focus on the questions that are most relevant to your personal startup journey.
Here we go!
What drives you?
If you’ve taken the bold step toward entrepreneurship, it’s probably because you’ve found something you’re passionate about. After all, you’re not starting a business simply to start a business. Rather, you’re driven to solve a problem, create beauty or make a difference in the world.
Simon Sinek nailed it when he spoke about finding your ‘why’. Your ‘why’ is the fuel that moves you forward everyday, even when you’ve been rejected, pushed aside or made a huge mistake.
Without this fuel, and this purpose, your success as an entrepreneur is all but doomed. You’ll grow tired, and lose motivation, because being a startup boss is hard (like really hard) work. On the other hand, if you know your purpose, and believe in it, you’ll be resilient, inspired and determined. Success is an eventual reality!
Who is your audience, and what problem are you solving for them?
Do you know your target audience – as in really know them? Because until you do, you won’t know how to reach them with the right message, about the right product/service, and in the right way.
After all, the world is a great big space, and you can’t make everyone happy. So, the more targeted you are about who you’re talking to, and how, the more likely you are to build a strong customer base.
Think about their story, their challenges, their motivators. How do you add value, or offer a solution, that they actually want? How old are they, where do they live, what do they love? Do they prefer stores with walls, or do they like to shop online? Do they use social media, and if so, which platforms are their favourite? Do they use industry-specific lingo, do they prefer formal or casual communication?
The more you know about your audience, the more strategic you can be about your sales and marketing strategy, product strategy and hiring strategy. In other words, set your target, and then focus on it!
How will you price your product/service, and will people pay?
In truth, startup pricing strategies deserve their own article. There’s just so much to consider.
For example, are you looking for high volumes or big margins? Maybe it’s both? Do you want your brand to represent a premium purchase, or value for money? Will you offer different purchasing tiers? Will there be a free trial? Is your service off-the-shelf or tailored?
Price your product/service too high, and you’ll lose sales. Price it too low, and you’ll also lose sales. For example, customers often perceive a product as being of low quality when it’s ‘cheap’. So, even if you know they’d be getting a great deal, customers won’t make the purchase. Hike your price up a little, and viola!
This is probably enough to get your head spinning! So, if you need more clarity on pricing your product or service, here’s an article that does just that.
Who is your competition?
Hmm, the competition. It’s not always what you think! For example, Coca Cola competes with other cold drinks, right? How about real fruit juices? Sparkling waters? What about ice creams?
Let’s test this scenario. You pop into an Engen Quick Stop on a hot summer day. You grab a Coke from the fridge and head to the till. There’s a guy in the queue ahead of you, and while you wait for him to finish, you spot a Jive ice cream. It’s fruity, it’s fresh and it doesn’t come colder than frozen! So, you put the Coke back and say “Just this, please” as you hand a Jive to the teller.
The point is, your competition doesn’t just include brands that sell the same thing as you do. It includes any business that solves the same problem, for the same people, as you do.
Which key milestones are you working towards?
Planning targets, KPIs and strategic priorities for the next year, or even quarter, can be tough when you’re just starting out. You’re still finding your feet, and making mistakes. Agility is the only ‘strategy’ you need right now, right? Sort of. You still need an idea of where you’re going (or you’ll end up someplace else!).
So, while you might not have the precise numbers crunched, you should still have an idea of what you would like to achieve in the short and medium term. Like, maybe you want to launch your app in the next 12 months, grow your social media following by 300%, or get your product into 5 local stores?
And here’s a tip. Be ambitious! Often, when we aim high, we achieve so much more than we thought we could.
Tools for getting the answers you need
If you answered all of the questions above with confidence, then you’re ready to start organising that information into a business plan. If you need a template, there are loads available (for free!) online. Just like this one.
If you hesitated, ummed and ahhed for one or more of the questions above, then you still have some work to do. You need to find answers that you can count on. Luckily, there are many ways to do this!
To start with, there are loads of free survey tools, like Survey Monkey, to help you collect data about your target market and competition. There’s also good old Google for a simple web search. Don’t underestimate the amount of information already available online.
And lastly (and this is our favourite) there are mentors and industry experts with a wealth of knowledge to share. Sometimes you just need to ask! Or, you could join Investec Startup School’s flagship Entrepreneurship course, where we offer practical online education, business coaching, one-on-one sessions with a business mentor, and the opportunity to win R100,000 in business funding. Did we mention that we offer full bursaries, too?
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