So you’re ready to take your business from an idea to a formal operation. You want to make sure that everything is in place before you move forward. That’s when you need a business plan. But the thought of writing one — much less an effective one — can be overwhelming. An effective business plan will help accelerate your venture by giving you direction, analysis, and insight. It provides a framework for success and it’s essential for accessing capital, whether it be loans or investors. But where do you begin? Even if you have zero experience with business plans, don’t fret; we’ve got plenty of tips to get you started on the right track…
Define Your Goals
Before you even begin to draft your business plan, you need to know what you’re trying to accomplish. Your goals will help shape your business plan, and your business plan will, in turn, help you meet your goals. Your goals should be SMART: Specific, Measurable, Attainable, Relevant, and Time-bound. First, you need to define your goals. What is your business trying to accomplish? Why do you want to start a business in the first place? What do you want your business to be known for? How do you want potential customers to perceive you? Your goals should be more than just “We want to make a profit” or “We want to expand internationally”. Your goals must be specific and detailed so that you know exactly what you want to achieve. A specific goal will help you create a business plan that meets your needs and helps you reach your desired outcome.
Assess the Current Environment
If we were writing a business plan for a new cafe opening in New York City, we would have to take into account the booming cafe culture in the city. We’d also have to consider the fact that rent can be incredibly expensive. In San Francisco, we would have to look at the tech-driven culture and the high cost of living. These are all important things to keep in mind when assessing the current environment. And if you’re opening your business in a new city, you’ll have to take these things even more seriously. Are there other businesses in your industry that are thriving in the area? And what do they do differently from others that have failed? What are some of the challenges facing your industry right now? How will your business overcome them? Are there ways you can take advantage of current events or news stories that could help boost your business?
Research Your Target Audience
Every business needs a target audience — even if it’s just you. You can’t write an effective business plan unless you know whom you’re writing it for. Who is your target audience? How many people are in that group? Where do they live, work, socialize, and spend their free time? What are their interests? What are their motivations? What are their challenges? What are their pain points? What are their values? What are their desires? What are their preferences? Why do they do what they do? You have to know the answers to these questions because you need to identify who you’re targeting so you can appropriately reach them with your business plan. A portion of your business plan should focus on your customers and who they are. Explain who your customers are, what they like and dislike, and how you plan on attracting and retaining them.
Create a Solid Marketing Strategy
No business plan is complete without a solid marketing strategy. You need to outline how you plan to reach potential customers and turn them into paying clients. Where do you intend to advertise? How will you attract new customers? What marketing channels will you use? How much will each marketing channel cost? How will you measure their effectiveness? What are the best marketing practices for your industry? You don’t need to have all the answers right now, but you should have a general idea of how you plan to market your business so that you can include it in your business plan. Your marketing strategy should align with your goals, and it should be specific enough to help you create a plan of action. Don’t just say that you’ll use Facebook, Google Ads, and billboards. Be specific. Facebook alone has millions of users, and millions of businesses use Google Ads. Instead, say that you’ll post content that relates to your target audience on Facebook, promote your business on Google Ads by using keywords and relevant ads, and use billboards in high-traffic areas.
Estimate Your Operating Costs
While many people spend more time on the marketing strategy than on their operating costs, this is a critical aspect of your business plan that shouldn’t be overlooked. You need to know how much money you’ll need to operate your business on a monthly and yearly basis. Start by listing all of the expenses that you expect to incur in the first 12 months after you open your doors. Include salaries for all employees, utility bills, insurance costs, office supplies, website maintenance, travel costs (if applicable), etc. Don’t forget about taxes, either. Now look at your business model closely. Can you reduce your expenses in any way? Can you make your products or services cheaper? Can you produce your goods in a cheaper way? How can you reduce your taxes? You don’t have to know the exact numbers yet, but having a general idea will help you create a realistic budget for your business.
That’s all you need to know to create an effective business plan. There are many different templates and formats out there. Choose one that’s easy for you to write on and meets your unique needs. Remember, a business plan is supposed to help you, not hinder you. The most important thing is that you follow through with the plan you create. That’s when it will become effective.