The VERY BEST thing you can do if you want a successful business is to write a business plan. Maybe easier said than done if you don’t know how to write a business plan.
So, let’s get started on the what, the why and the how of writing a business plan.
The Four Key Questions Your Business Plan Needs to Answer
Question 1: What Am I Selling?
The answer to this question seems obvious at first! But in order to make money and be successful, you’ll need to think about the products and services you offer in more detail.
In your business plan it isn’t enough to describe what you’re selling, you also need to explain it in a way that demonstrates the outcome for your customers and how your products or services benefit them.
Remember: People don’t care about your business, they care about their problems, so your need to be the SOLUTION they are looking for.
Question 2: Who Am I Selling It To?
Take some time to really think about your ideal customer. Who are they, where do they live and what do they do? How old are they? Are they likely to have a family, or live on their own?
Build a clear picture that will help you understand more about the people who will be buying your products or services.
Then, try casting your net a little bit wider. Are there other types of customer who could benefit from your idea? Why will these people come to you, and not your competition?
The question of who you’re selling to is especially important when it comes to writing the competitor and marketing sections of your business plan.
Question 3: Do They Want What I’m Selling?
Once you’ve built a picture of your ideal customer groups, you’ll have to find out how interested they are in the products or services you’re going to offer.
Note: the most important advice I can give here is not to rely on your friends and family for advice! For the best, most impartial results, you’ll need to speak to people who don’t already know you.
Start by looking at where your potential customers spend their time. Could you go there too, and approach them for feedback?
One of my clients planted herself in a coffee shop all day, offering to buy her ideal customers a drink in exchange for some feedback on her business idea. Most were very happy to help!
If the idea of approaching people face-to-face sounds too scary, you could try designing an anonymous feedback survey (sites like Survey Monkey are fantastic for this).
Post a survey link to social media groups or pages where your ideal customers are likely to spend their time, and perhaps offer an incentive, such as a discount or a gift card draw, to complete it.
Make sure people know that their feedback will be completely anonymous. If they know their comments can’t be attributed to them, they will be more likely to answer honestly.
Market research is essential if your business plan is going to do its ‘job’
Question 4: How Much Will They Pay?
You could cover this question during your feedback sessions or survey responses, but it will always help to do some extra research. You need to know if your idea has the potential to make money.
Take a closer look at your market, and at typical customer spending patterns for the type of products or services you’re going to offer.
Which ones make the most profit, and why?
Be careful not to price your own offering too low. This is such a common mistake and I see it all the time – and it’s not only when people are starting out.
So, How to Write a Business Plan that Answers those Four Questions?
Answering these four, key questions in detail, backing your answers up with market research, will enable you to create a really useful business plan.
If you can’t answer the questions fully and you don’t carry out market research, your business plan is likely to be built on gut-instinct and assumptions.
Both of those things are less than useful when business planning.
Which Type of Business Plan Do You Want to Write?
There are two types of business plan:
- The formal business plan – the type of business plan you take to a bank or financial organisation to obtain funding
- The simple business plan – the type of business plan you write to start-up and grow your business, without going out for finance
Before you start writing your business plan, you will need to decide which type of plan you will need.
How to Write a ‘Formal’ Business Plan
If your business needs funding, either as a start-up or as an established business that is looking for finance to grow and develop, you will need a more formalised business plan.
The banks or funding organisations will require a much more in-depth analysis of your business, the market and the ability of your products and services to make money.
Why?
Because they want to make sure that, if the lend you the money, that they ate going to get it back
The content of a formal business plan should include:
- Executive Summary: A full description of your business – what it sells, to who, for what price, evidence that your products sell, the size of the market
- Skills and Experience: An outline of your personal goals, skills and experience (and those of any others involved in the business)
- The Market: A description of the market you are entering (research and statistical evidence)
- Your Customers: An in-depth description of your ideal customer / client groups
- Marketing: A description of your proposed marketing methods (how you are going to get your message out to your target market
- Prices and Sales – an outline of your pricing policy and sales methods
- Business Management Processes: A description of your management processes; who will do what and how will you make sure things get done?
- Risk: An outline of any business risks you have identified
- Your Business and The Law: An explanation of the laws you need to be aware of and abide by in your specific business
- Financials: Your cashflow forecast for years one, two and thre
How to Write a Simple, One-Page Business Plan
I created a One Page Business Plan for those business owners who want a simple planning process that will take their business from start-up to scale-up – without the need to create a formal, finance-driven business plan.
This simple plan is as rigorous as the more formal business plan but it is built around the business owner and their vision of success. The focus is on the outcomes and impact of the business, rather than the need to pay back a loan.
It asks:
- What is your WHAT – what is your business idea?
- What is your WHY – why you? why this business? why now?
- What is your WHO – who are you and what do you bring to the table? what are your skills and experience? you won’t be able to do it all alone, so what other skills will you need to bring in or develop?
- What are your OBJECTIVES – what do you want to achieve? What are your long terms objectives, but also, what are your specific, measurable goals?
- What is your BRAND – what are your personal and business values? what is your key message? What is the look and feel you want to achieve for your business?
- What is your MARKET – who is your competition? what else is going on in your market sector?
- Who are your CUSTOMERS – who are your ideal customers?
- What are your PRODUCTS & PRICES – what are you selling and for how much? How will you MARKET – what are you going to do to make people take notice?
- How will you manage your MONEY – how are you going to make sure you get paid?
- What are your RISKS – what could go wrong and how will you deal with problems?
- Who is your SUPPORT – who will be guiding you from passion to profit?
It May Be a Cliché, But …
There are so many clichés about planning, these are some of my favourites:
“If you fail to plan you are planning to fail“
“Always plan ahead. It wasn’t raining when Noah built the ark”
“Your plan is your best friend, not your enemy!”
The thing with clichés is that they are based in truth. So, when we hear the statistic that 70% of the businesses in the UK that fail don’t have a business plan, should we be surprised.
Probably not!
If you need to know more about how to write a business plan, or are unsure about how to get started, book a Breakthrough Session and let’s have a chat.