Before reading this article, we recommend that you read the essential requirements of a business plan, which you can find here “Creating a Business Plan – The Essentials.”
A business plan is a magical document that will help you along the way in establishing your start-up. This document is your first aid kit in many ways and your identity card in many others. Having a business plan not only shows that you are down to do business but also demonstrates how well you know and understand your business, which is both useful as an opportunity to learn and a good way to seduce investors.
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
However, business plans aren’t easy to write. Business plans take time and effort, you can’t just open up Microsoft Word and start typing. Knowing what goes into a business plan is important. There is a lot of preliminary work you need to do before creating your business plan. Doing your homework will significantly improve your business plan. Furthermore, the process involved in creating a business plan will change the way you think about your business. It is one of the most critical aspects of the business plan. Not only will it strengthen your knowledge, but it will take you down a road that will reshape your approach to doing business, maybe even illuminating game-changing ideas.
“Good business planning is 9 parts execution for every 1 part strategy.” – Tim Berry
The majority of the process involves gathering information and doing market research; however, it also demands the owner to think about plausible execution strategies and ideas that will take the business towards the success it deserves. Here are a few tips to get you started:
1. Gathering Information
Information gathering can be a tedious task, but it is a necessity to get your business plan going. A business plan needs accurate, reliable, and precise information. All the necessary information that you gather will correlate and affect the entire process. It is also necessary to verify information that you have gathered by cross-referencing it through different sources or, better yet, using a reliable source. Some of the major information includes:
- The trade registration process
- Local laws and regulatory requirements governing your industry/business type
- Any other legal implications for your business
- Trade license requirements
- Consultation on how to establish and register your legal identity.
- On-line web domain
- Market research (discussed below)
This process will help you better understand the legal requirements of operating a business and may even open you up to learning things that you may not have known were needed. This process can save you from a lot of unexpected legal setbacks.
2. Business Analysis
You may think you know your business. Nevertheless, you need to sit down and go through all the ideas, making sure to note down this process. This will help you generate ideas and force you to think about how you will execute your plans. This process will help you determine exactly what it is you want to do. You may have a great idea, but that idea will not get you anywhere until you know how to execute it. Things that you need to analyze about your business will include:
- How will you set up your organization?
- What is the legal structure of your company?
- What key roles and responsibilities will you handle yourself?
- What key positions will you need to hire employees for?
- How will you position yourself in the market? Will you compete on the basis that your product is unique, or will you use a pricing strategy to penetrate the market?
- Who will your customers be?
- Will you compete in a niche segment or is your target market global?
- What marketing strategies are plausible for your business type
- How will you differentiate yourself from your competitors
Some of the points from this step will become clearer during market research, but it is important to think about it beforehand as well, as it will make you realize what you had in mind and what is actually possible.
“Unless commitment is made, there are only promises and hopes; but no plans.” – Peter F. Drucker
3. Market Research
You can’t operate a business without knowing your market. This does not only include the industry/country you are operating in, but it also involves a wider approach, allowing you to analyze and understand global trends. The Internet and communication technology have made market research simple and cost-effective. The only drawback here is that it may be difficult to obtain reliable and accurate information. Therefore, it is always important to cross-check your research. If you have the resources, you can even hire a professional market analyst to do this for you. However, it is recommended that you try this step for yourself first, as it is part of a holistic learning experience and will give you more confidence. Topics you need to research include:
- All the points from your business analysis.
- Global trends and industry statistics (how much revenue the industry earns, what is the future potential prospects are etc.)
- Detailed research in the country you will be operating in (how are current existing businesses doing, general market trends, customer behavior, etc.)
- Research the demographic of your target market in the region and their attitude in correlation to your business
- Financial information (average salary rates, utility expense rates, tax rates, pricing of similar businesses, overhead costs, etc.)
“If you don’t know where you are going, you’ll end up someplace else.” – Yogi Berra
The quote by Yogi Berra perfectly describes the business planning process. Knowing what you are doing is important and it will ensure that you are heading in the right direction. Do the homework, understand your business, and execute with passion!
