Yes, we’ve all read that business plans are overrated. The traditional 50-page business plan featuring countless graphs and cliché phrases is out, for sure. But when you’re creating a minimum viable product (MVP), some planning is required.
Sure, you’re putting your idea out there to see if anyone will buy, but that also requires telling people that it exists. And the way you do that requires some sort of plan.
However, a business plan is never the answer to all the questions you have about business. Before you write a plan of any kind, you have to learn to think like a small business owner. That requires asking yourself some pretty tough questions about whatever it is you want to sell.
At a minimum, you’ll want to do these five things before you ever pull out a business plan template and start plugging numbers and words into it.
Drop the “If We Build It, They Will Come” mentality.
People who seem like overnight successes rarely are; and what seems to be immediate fame and wealth is usually the result of years of hard work, planning, and failures. Likewise, your product or service won’t get to a million in sales as fast as you think it will. Putting a product on the shelf or sending it to the App store will not attract any customers if that’s all you do. It doesn’t matter how innovative you are, it takes more than a minimum viable product to create a sustainable business.
Test and survey.
If you make amazing hot sauce and your grandmother loves it and is sure you’ll make millions (if you sell it) that’s not enough to develop a business plan. Take it to farmer’s markets. Give out samples. Get feedback and find out what flavour customers like best. Test out your branding and packaging while you’re at it. Creating an awesome new app? The same principles apply. Identify your customer’s problem, state your solution, and let potential users test it out as realistically as possible. With all of this information you can tweak the thing you want to sell until you’re pretty confident that people will buy it.
Figure out who you want to sell to.
“Everyone” is not the market for your product. “Women” isn’t specific enough. “American women who own dogs”? Nope. Visualize your perfect customer as if you could only ever have one, and simply clone them a million times over. When you’re making decisions about what to write in your business plan, or how to develop your product or service, keep this person in mind and it will be much easier to stay focused.
Check out the competition.
Better yet, try to find a company in your industry that tried, and failed. Figure out what they did wrong so you can avoid the same mistakes. Look at what other successful firms in your field are doing well, and consider how you might do it better. When you do this, put yourself in your customer’s shoes. What will make people choose you over the other options?
Decide to commit.
This is the biggest obstacle for new entrepreneurs … making the decision to focus on launching a business, and committing to a timeline to make it happen. Writing a business plan does not make a business happen. It takes dedication to get from idea to open for business. If you’re not dedicated, you can’t make your best decisions. So commit.
By the time you’ve done these five things, you’re in a good position to start preparing a plan to attract financing or lending. Banks usually still require a traditional business plan, but you can also create your own, and make it a vision board, a 1-page checklist, a series of Post-It notes or whatever works for you.
We may have seen the end of business plans as we knew them, but business planning is essential. Just don’t jump into it too soon, or you won’t be able to use your plan to help launch and grow your new company.
Jessica Oman helps entrepreneurs create business plans and financial projections that get them from Idea to Open faster! She’s a writer, consultant, and owner of Write Ahead Inc., who has helped her clients close millions in financing with business plans they can actually use to guide their growth. Click here to get 5 free tips you can use to improve your business plan right now.