I Don't Need a Business Plan...Do I?
Business plans are often a requirement for startups. But if you’re just looking to test your idea, building one might be overkill. And while you may not need a formal business plan, that doesn’t mean there isn’t anything else you should do to make sure that your idea is up-and-running and profitable. In this blog post we will explore what some of those steps are and when it might be worth your time to invest in a well-thought out plan for your new business venture!
Do I Need a Business Plan?
"Do I need a Business Plan?" The answer isn't always simple. Business plans are often a requirement for startups. But if you’re just looking to test your idea, building one might be overkill. And while you may not need a formal business plan, that doesn’t mean there isn’t anything else you should do to make sure that your idea is up-and-running and profitable.
In this blog post we will explore what some of those steps are and when it might be worth your time to invest in a well-thought out plan for your new business venture!
What is a Business Plan?
The purpose of a business plan is to clearly show how the entrepreneur will start and grow their business. The purpose is to demonstrate how you will leave the world a better place than you found it. By creating a business plan, you are creating an outline of how you will achieve this feat.
When writing your business plan, you’re aiming for clarity, not perfection. You don’t need to be a grammar guru or use fancy language to help your idea sell. The best business plans are written quickly and simply.
What's in a Good Business Plan?
A good business plan should include:
The best businesses have one central idea that drives everything they do.
Research: Who is your target audience? What do you know about them already? Where will you find them? What are their biggest problems? How might they solve these problems with your product or service?
Marketing: How will people find out about your business and/or product? What will make them excited to buy it right now, right here, right this very moment? What are you going to say that is compelling enough for them to take action and buy your product or service now - even if they are not 100% sure they need it.
Competitors: Why should customers choose you over a competitor with a similar product or service.
How much will it cost to get started? What are the costs of production, marketing, and distribution? What are your projections for growth? Do you have a finance plan in place? How is your cash flow going to work?
What’s the timeline for accomplishing all this. Are you going to do it yourself or outsource some of the tasks? Who will be producing your product or service, where will they be located, and what are you going to pay them. Who is responsible for providing warranty service and customer support. What kinds of insurance do you need and when do you need it.
Who or what is going to help build your product or service and when will they start working.
A good business plan should feel like a blueprint for your new venture. It needs to be clear and concise. But you don’t want to overthink it - the less details there are in your plan, the better.
Why do I Need a Business Plan?
One of the many reasons you may need a business plan is to help you raise money from investors who believe in you and your idea enough to give you money in exchange for equity that could potentially be worth millions or even billions of dollars if successful. The plan should also help you in making a strong case for funds and to convince investors that you know what you’re doing.
You’ll need a business plan if your idea is risky or has the potential to be profitable, but the odds are currently stacked against it. If the odds are not in your favor, think about why that is - is there anything about your idea that could make it more successful? A business plan can help answer this question.
Another reason to plan your business is to understand your potential for growth. Does your startup idea have the potential to become a multi-million dollar venture? If you think the answer is “yes,” you may want to write out a simple business plan. You’ll use it to help figure out how and when you might be able to fulfill that vision.
How do I Write a Business Plan?
One of the easiest ways to write a business plan is to go through the five basic steps of marketing. These steps will help you uncover your product's USP - Unique Selling Proposition, which is really what your business plan is for. The USP will help you understand what about your product or service is distinct and different from that of a competitor. It can be an aspect of your company style, the way that you market, or the prices that you charge. Whatever it is, it’s going to set you apart from everyone else out there in an industry with hundreds if not thousands of people trying to sell similar products or services.
Step 1: Understanding the Market You’re Trying to Enter
The first step in creating a great plan is understanding who your customers are and what they value. You may not have 100% figured this out just yet, but you need to know that there is a customer for your product or service somewhere, and that they are willing to pay money for it.
Step 2: Why Should I Buy From You?
Now that you know who your customer is, why should they buy from you and not someone else? If competition exists, does it offer anything better than what you can provide? What about price? Price can be very important if there are similar products out there like yours. If the price is almost identical, why should your customers take their business elsewhere or not shop at all?
Step 3: Strategies to Help Me Reach My Customers
This step is about your unique selling proposition. The point of this step is to brainstorm ways that you can help your customers by presenting them with the benefits of using your product or service. All challengers must present a USP - something different than what they’re offering in order to be successful.
Conclusion
There aren’t many things that can help you succeed in business if you only have a product, but if you also have a business plan, you can build your business successfully.
It’s important to meet with an advisor or mentor to discuss how you can begin (or continue) working on writing a business plan to better understand what your startup needs and how it might be possible. If there’s one thing that can help new businesses succeed, it’s as simple as having a great product or service and being able to sell it successfully at the right price point. Use the five basic steps of creating a business plan to discover your USP and reach success.