It’s one thing to have a smart business idea, but quite another to put it in practice. Every successful business starts with a sound business plan. A business plan is comprised of an executive summary and a description of the startup and products or services you’re going to offer. Moreover, it needs to include market research, an operational and management structure, and, of course, financial data. With a formal business plan in place, your chances of securing funding and attaining success significantly increase.
Here are some important things to consider in creating a good business plan.
Your company description should be as clear as possible. Moreover, you should be very specific about your products or services, and when you plan to start your business. Inform potential investors of the industry, in which you’ll be working. Also, be specific as to whether you’ll operate online, have a physical location, or both.
It’s also a good idea to include the reasons for launching the startup in your business plan. For example, if you’re selling food items, you can mention that no other business serves these types of dishes in the area.
What Market are You Targeting?
Unfortunately, “everyone” can’t be your target group. You must do market research to find out what your target group is going to be. Arguably, this is the most critical part of the business plan. It’s easy to be inspired by an idea and get carried away. In the absence of proper planning, your business prospects aren’t very good.
Sometimes, prospective founders discover the market for the startup is not particularly lucrative when they are already in the process of writing a plan.
To establish your target market, here are some ways to segment it:
- By demographics
- By geographic location
- By behavior
You might need to take age, income level, gender, and ethnicity into account. You can start by writing that your target market in the US, then narrow that down to the Midwest.
By the time you’re done, your audience could be: female millennials living in the area of Chicago with an annual income of $70,000-$90,000.
You want your numbers to be in order when you’re making your plan, particularly if you will be applying for financing. This is an important stage because a shortage of funds is the main reason startups fail. Therefore, you should consider equipment costs, legal fees, property, insurance, and inventory into account.
The information derived from a competitive analysis is crucial in terms of brand differentiation. It’s important to present your startup as offering something unique. If there are a thousand other companies selling the same thing, how’s that going to look to investors and customers? You will need to stand out from the entrepreneurial crowd.
This strategy could involve your quality and price. Better quality or lower prices can be a niche. Therefore, you should identify your target audience and do competitive analysis at about the same time.
Identify Cash Flow Projections
Financial projections can be based on the market share, which you believe you can attract. Alternatively, you can base them on the total target market population in your region. Growth strategies should be part of your business plan too.
Financial projections should cover the first four years of your company, and they need to be realistic. You might not be able to turn a profit in the first few years, but don’t let that stop you! Creating a successful business takes both patience and time.