I’ve worked in the entrepreneurship support space for many years so I’ve been to my fair share of workshops, conferences, and roundtables with economic development professionals and one of the most frustrating aspects of these get-togethers for me has always been the desire of some to spend an inordinate amount of time discussing useless crap that doesn’t matter at all. Continue Reading
Our guest post this week is from Erika Brookes and she has some tips for writing a business plan. Also, don’t forget to check out my ebook if you need a more in-depth walk through of how to plan your business’ launch. Here’s Erika:
If you’re starting to get serious about launching your own small business, it’s important that you first craft a detailed business plan. Not only are business plans necessary in order to get funding from investors, but they are also helpful tools that keep you on the right path when you finally launch your business.
However, business plans can also be a harsh wake-up call for some entrepreneurs. These documents require you to think hard about the logistics of opening your own business—something that is often overlooked in the early stages. Because of this, it’s important that you craft a well-thought out business plan that covers everything your business needs to ensure its success.
With the following top tips, you can be on your way to creating a winning business plan:
Know Your Industry’s Market
Deciding to start an online store that sells eco-friendly t-shirts sounds good in your head, but how crowded is the current market? What is your industry projected to look like in the next five years? Knowing the answers to these questions is beneficial for many reasons. Not only does it show potential investors that you are able to define your target market and know what’s in store, it also gives you a better idea as to whether or not your business is going to come out on top.
Know Your Target Audience
Similarly, you need to know as much as you can about your target audience and the problems they’re facing. How does your product hope to solve their problems? If you have trouble answering that question or can’t seem to articulate what value your target audience has to gain from your product, it may not be such a good idea. Additionally, you need to make sure that your product has some distinct and unique advantage that will cause your target audience to choose you over your competition.
When in Doubt, Be Cautious with Estimates
Ideally, you don’t want to overestimate or underestimate your financial projections. However, being overly optimistic about your financial goals may make them seem less attainable to investors. When it comes to your market share, it’s better to underestimate to make you seem more credible. For example, while you hope to capture as much of the market as possible, it’s more realistic to plan for a smaller percentage, especially in the first year.
Factor in Marketing
Your product may be amazing, but this hardly matters if no one knows about it. In your business plan, it’s important to factor in the cost of marketing your product or service. Additionally, you need a way to track the results of your marketing actions so that you know what’s working in order to increase conversions and grow your revenue. By including this in your business plan, you can describe to investors how you plan to generate sales and a better ROI.
Support Your Claims with Facts
If you are seeking funds from investors or lenders, backing up your claims with industry facts is essential. Explaining how you arrived at certain numbers, and that your educated guesses are based on facts gives you more credibility. Sources of free data that you can use include the U.S. Census Bureau, the Small Business Association (SBA) Business Data and Statistics page, and the U.S. Bureau of Economic Analysis.
Don’t Be Too Vague or Too Detailed
Being too vague in your business plan isn’t going to do you or your investors any favors. Your business plan should be concise and have enough detail that no one is confused or left with big questions after reading it.
Likewise, you also don’t want to be too detailed in your business plan. Going too far into technical aspects of your business is an easy way to become side-tracked, and anyone reading it may lose focus on what really matters. If you want to include the nitty gritty details, include an appendix at the end of your business plan with this information.
Check Off All the Key Areas
Every aspect of starting a business needs to be covered in your business plan. This includes the following areas:
Including all of these areas in your business plan ensures that you have thought about starting your business from every angle and will help get it off the ground when the time comes.
Anticipate Challenges
Starting a business is a risk, and it’s up to you to accurately evaluate the risks in your business plan. If you’re worried about scaring off investors by including a risk analysis in your plan, rest assured that it may do the opposite. Most investors know that investing in a startup is a risky endeavor. By including a risk analysis in your business plan, you are showing them that you are knowledgeable and realistic about the challenges that your business may face.
This doesn’t mean that you should list every single risk out there. Just pick the risks that pertain to your business the most, and address them accordingly. By explaining how you plan on addressing these risks, investors will have greater confidence in your business.
Conclusion
Launching your own business isn’t easy—but it is significantly easier when you have a well-crafted business plan that paves the way for your success. To improve your chances of reaching your goals, ask yourself the right questions and answer them in your business plan.
Erika is the Chief Marketing Officer at Springbot where she leads all brand, product, marketing campaigns and communications. Before joining Springbot, Erika was the vice president of product strategy for Oracle, the vice president of marketing and communications at Vitrue, and other executive-level marketing positions at leading technology companies like MindSpring, Earthlink and Rackspace. In her limited free time, you’ll find Erika running through Atlanta with her yellow labrador Sunny or sharing marketing insights on Twitter @ebrookes.