Writing a business plan is the first step to realizing a successful business idea. Even if you already have all the money you need to start a new company, without a well-thought-out business plan, you’ll make risky decisions that might end up costing you everything.
When you start writing a business plan, it’s a great opportunity to review all your assumptions and come up with ideas you hadn’t considered previously. A detailed business plan is the blueprint to putting your business together, allowing you to attract investors and employees, monitor progress, and think through difficult decision-making.
In order to help you with writing a business plan, here are some basic dos and don’ts for the best chances of success.
Understand what you are selling
Your business is going to offer a product or service. But that’s not what you’re really selling. You’re really selling a combination of product or service, value, ambience and brand experience. For example, both Payless Shoes and Jimmy Choo sell shoes. However, what Payless Shoes really sells is savings, while Jimmy Choo sells luxury and status.
Identify your niche
Once you understand what you are really selling, you will have an easier time carving out your company’s niche. The US Small Business Administration (SBA) advises entrepreneurs to think about what makes your product or service unique. When writing a business plan, define the clientele you are targeting and their specific unmet needs that you are fulfilling.
The SBA recommends you answer the following questions to identify your niche:
- In which areas are your competitors already well-established?
- Which areas are being ignored by your competitors?
- What are the potential opportunities for your business?
By doing this market research, you will be able to spot the customers who have unmet needs. By positioning your business to cater to this untapped market, you can better set yourself up for success.
Determine your main objective
Often when writing a business plan, you have many great ideas. However, it’s easy for too many ideas to start complicating your vision. If your business plan becomes too complex, it becomes difficult for investors and customers to understand what you’re trying to sell, says Entrepreneur contributor Larry Alton.
In order to simplify your business plan, determine the main objective of your company. Once you understand the central goal you want to achieve, you can start eliminating all aspects of your business plan that don’t support that ambition. For example, if your main objective is to provide affordable shoes to middle class families, you probably have to remove your idea to put on a runway show during New York Fashion Week.
Forget to strategize
You might see the potential for your new business to offer a wide range of goods or services to a broad consumer base. However, initially attempting to sell to a mass market is a bad strategy that could hurt growth prospects, says the SBA. You end up being a jack-of-all trades and a master of none.
So when writing a business plan, think about the best strategy to make your product or service extremely attractive to a specific group of customers. Use the previous work you did — understanding exactly what you’re selling, identifying your niche — to come up with specialized goods or services that will do well with a smaller, more manageable market. By employing a strategy that starts small, you are more likely to sustain your business and its future growth into larger markets.
Ignore content expectations
While there is no one standard business plan, advisors and investors expect one to contain certain content, Alton says. Otherwise, you might not be taken seriously.
Make sure your business plan includes a:
- Business summary page
- Growth model that includes financials
- Target market description and explanation why they need your product
- List of competitors and reasons your company is better than each one
- Hiring plan
Neglect the research component
No worthwhile investor, partner, or employee will join your business without seeing hard data that your idea has potential. It might take a lot of time to research, but providing objective evidence that supports your concept is crucial to writing a business plan. Spell out statistics like highly detailed target demographics, competitor financials, and projected industry growth rates.
The more facts you include, the more professional you’ll look, and the stronger first impression you’ll make, says Alton.
Need help writing a standout business plan? Contact an UpCounsel Business Formation Attorney to assist you through all the details that investors and entrepreneurs want to see.