I’m guessing that as you’ve clicked on this post, you’re considering starting your own business. Perhaps lockdown has taught you what you’re passionate about. Perhaps you’ve lost your job. Or, maybe you just fancy a change. Whatever the reason, with 20% of business failing within their first year and 50% by their fifth, it is crucial to have a successful business plan to follow.
The importance of a business plan
Before I tell you how to write a successful business plan, it will, of course help to understand why you need one.
Having a business plan is like having a road map of how you want to get from A to B. Sure, without a map you might be able to navigate from A to B. However, not having a map will take you a lot longer and lead to more mistakes than if you had a planned route. In fact, not having a road map can cause you to get completely lost on your journey. In this scenario, a business plan helps create a smooth journey by:
- Aiding you with making critical decisions with confidence
- Ironing out any of the bumpy roads that may cause problems
- Helping you to avoid big mistakes, such as targeting the wrong market, over pricing, underpricing, hiring the wrong people or facing competition that is too tough
- Setting better and more realistic objectives, benchmarks and goals
- Securing finances, as a detail business plan is essential for seeking investments or loans
- Reducing the risk of failure as can uncover weak spots, highlight the flaws and notice the gaps in the assumptions you’ve made
- Finally, it has been proven that companies that have plans, and review then continue to review these, grow 30% faster
How to write your successful business plan
Now you know why you should be writing one, here are 5 tips on how to write a SUCCESSFUL business plan…
Start by describing objectives and mission
If any of you are regular readers, you’ll remember I wrote about how to write a personal mission statement. Well, a business plan is a little bit like a personal mission statement post as what they both must do is highlight clearly what you want to do.
When writing a business plan, start with figuring out what you want to do, and then writing it in a compelling and engaging way. Ask yourself:
- Who will benefit from your business?
- What are you going to change with your work?
- How are you different?
Your business plan need to make people want to invest in you. And by knowing your mission, you’re encouraging them to take a chance.
Identify your target market
One of the greatest mistakes that new business owners make is that they assume that their idea will be loved by everyone. The harsh reality: your business is NOT for everyone.
Therefore, in order to ensure you’re not wasting your marketing efforts by trying to reach the wrong type of people, do your market research first. Lots of people recommend splitting your target audience into four categories: geographic, demographic, psychographic and behavioral. You should start broad, and then begin to narrow it down. Are you targeting males or females? Specifically what age range are they? Do you want to target those who can afford to pay more, or is your business supposed to be affordable? Do you want to keep things local, or do you want to reach the wider community?
Once you’ve thought about this, send around surveys and gather feedback from your perceived target market to see whether they would actually use your services. Indeed, you might do market research and discover that there’s not a viable market for your idea. Soul destroying, I know, but it is far better to spot this right at the very beginning.
Analyze your competition
Of course, there will always be competition. But don’t let that scare you… embrace it, work with it, challenge it. In order to be successful, you must figure out in your business plan how you can separate yourself from the crowd. What is your unique selling point? The thing that persuades others that you will able to complete with other, already well established, businesses?
To do this, you need to spend time (and a lot of it!) investigating and researching your direct and indirect competitors. Find out who your competition is. How much do they charge for a similar product/service? What do they do to make them different to others? How are you going to be different and unique to them?
Numbers, numbers… numbers
Surprisingly, calculating a budget is often overlooked by many aspiring business owners. And, rather unsurprisingly, running out of cash is one of the main reasons why start ups fail. When creating a business plan, figure out how much money you will need for your business. Consider everything: equipment costs, property costs, legal fees, payroll fees, insurance… the list goes on.
Note that while you should be conservative when estimating costs (absolutely everything will cost more than you expect), you must be able to justify your calculated costs.
Create a products and services portfolio
This should always do this when writing a business plan, but it is extra important to do if you’re trying to gain funding. You need to clearly and precisely define your products and services to match the needs of potential clients, which you identified by conducting market research. You then need to think about the motivation your clients would have to buy your products and services.
Once this is identified, you need to create a portfolio. In this portfolio, explain what services you are offering, the features and benefits of each service and how this matches the expectations of the target market. On top of this, go into detail about how these services/products give you a competitive advantage and how they are better than other services.
One final tip: KEEP IT SHORT… you want to wow anyone who reads it, not bore them.
I hope you have found this post informative and insightful and that you now feel ready to go and write a KILLER business plan.
Have you ever written a business plan? Are you a business owner who wishes they’d written a business plan? Let me know in the comments section below!