Vision, drive and commitment are all important to starting a new business. However, focus is what is going to help your business be one that succeeds where others often fail. Your point of focus is your business plan.
Consider it your roadmap towards being profitable. Before you start lining up investors, or borrowing money for startup costs, here are some tips for creating a business plan that will help you map out your entrepreneurial journey.
1. Value proposition
What do you have to offer consumers that other companies do not? If you follow the 10 elements of a sound business plan, this should be part of your executive summary. It is important to keep in mind that your business has to serve a real need, preferably one that is not being met by many competitors. Your business will stand a much greater chance of being profitable if you can fulfill the needs of a niche market that others do not.
2. Financial analysis
Prospective investors have every right to know how you plan to spend their money. You want to show them a model that projects profitability as early as possible. Even if you are not courting investors, you need to know how you are going to make ends meet while you are building a viable business. Be meticulous about calculating your expenses and make sure that you have a plan to cover all of them, including unforeseen expenses.
If you are seeking out investors, do not just expect them to take your word for it. Even if you are funding a business by borrowing money, it is still good to have everything in writing, especially when it comes to lease proposals, material quotes and other items that you will need to start your business. Do not let a property owner or vendor promise you one thing and then change his or her terms. Get everything in writing and include it as part of your business plan.
4. Competition analysis
Every niche has competition. You need to size up your competitors and find a way to differentiate your business. Perhaps they do not have much of a presence online and you can build your business through online marketing. Another idea may be to offer products they do not. It is critical to know who your main competitors are and how you can gain an advantage over them and claim your fair share of the market.
5. Marketing plans
Simply put, how are you going to spread the word about your business? Are you going to buy ad space online? Do you plan to advertise on the radio or post flyers? If you want to make money, you cannot just expect customers to come to you. If marketing is not your strong point, then you may need to hire a marketing firm. Whatever your marketing plans are, include them in your marketing budget. Your costs can go way over your budget if you do not plan ahead carefully.
6. Target market
Marketing author, David Scott, told Inc. magazine that, “It’s always best to start with the people you’re trying to reach. Most organizations start with their product or their service, but that’s an egotistical approach to reaching potential customers.” You should know who your most likely potential customers are and build your marketing plan based on that. If you are having trouble figuring out whom your target market is, then you have not clearly identified the needs your business will meet.
This is the nuts and bolts of your business. How are you going to handle orders? Will you have to potentially deal with product returns? Do you intend to have any employees or are you outsourcing to another businesses? You need to include details about how you will handle the day-to-day operation of your business. How are you going to collect money from customers? How will you make sure your suppliers are paid on time? All of these things are important to know before you start your business.
No one will ever tell you that starting a business is easy. However, the things in life that are most worthwhile rarely come easy. Put serious time, thought and effort into your business plan. Do not leave out any important details or say, “I will deal with that later.” Consider your business plan like a blueprint for your business. If you create a strong business plan then you will be able to build a strong business as well.
Tony S. is a personal finance writer with creditloan.com. Tony enjoys writing about personal finances and helping people get out of debt. As an aspiring entrepreneur himself, Tony also likes learning and writing about what makes businesses successful. Connect with Creditloan.com on Twitter.