One very essential step to starting a business is having a good business plan. A good number of business failures can be attributed to no business plan. Many people get a business idea and then start making purchases and putting things in place to start operating. This is the easiest way to fail.
I have come across many people who are into one form of business or the other, but if you ask them what a business plan looks like, they have no idea. Some wonder if it is even important. However, in the past decade, a lot more people have become aware of the need for a good business plan, before starting a business.
The benefits of having a good business_plan for your business are many and cannot be overemphasized. Building a business without a plan is not different from building a house without a plan. You have nothing to guide you as you build on. You stand a great chance of building a house that you won’t want to live in, if ever it even stands.
Benefits of having a good business plan include:
- A business plan helps you see the clearer picture, making you more objective
- A business plan helps you see how prepared you really are, to start
- A business plan helps you make better decisions at the beginning and during the life of the business
- A business plan gives you clear direction for your business as you go on
- A business plan helps you monitor your progress and evaluate your performance better
- A business plan helps you secure business capital
- A business plan helps you manage the business better
- A business plan helps you understand the market better
It is one thing to know that a business plan is important and another thing to know how to write one. Now that you know just how important it is to have a good business plan, I will go on to guide you in the process of writing your plan.
One very important step in this process is to answer the vital questions about your business. In answering these questions, you will be making clearer your business idea and at the end of it, writing your business plan will be made very simple. Some of the questions you will be answering here are questions you cannot answer without doing a market research. This means that you are not expected to answer all these questions in one sit-down session.
The following are ten important questions which when answered, will make writing your business plan, simple. In answering these questions, write out your answers in a book as if you are already writing the plan.
1. What Is My Purpose/Vision?
Life is built around purpose; and so is business. Some businesses exist primarily to meet a need, others to maximize profit and others still exist for both reasons. Some want to reach out to the less privileged; some want to model a standard; some to feed nations and some exist just to feed a household. This is why they were ever started, and so, this will always be their purpose of existing. The purpose of your business is simply the reason why you have decided to do the business.
Your vision on the other hand is where you see the business in some years to come. When Bill Gates started Microsoft, his vision was that in some time to come, every household in America will own a computer. While purpose is why you are going into the business, vision is where you are going with the business. It is the picture in your mind when you think of where the business should be in many years.
Do you have a purpose/vision for the business you want to do? What is it? Think seriously about it, write it down and make it very clear. Get used to it by memorizing it.
2. What Is My Strategy?
This question is about how you intend to realize your vision. When you have a vision, you need to strategize on how you will attain it. Answering this question, you will be doing a great deal for yourself because it will entail deep thinking. You will be thinking about how to set the business up and how to build and expand it.
Think about the strategy you will use to set a standard and culture for your business, recruit the best workers, grow your customer base, face competition, manage growth and expansion, and so on. Have a strategy in place for each of these aspects of your business.
3. What Will Be My Style/Model?
There are different kinds of businesses that exist. Some businesses offer goods to customers while some others offer services and others still, offer both. Some who are into goods business go into production, others distribute already produced goods. Some who distribute are into wholesale and others into retail. Some offer support services to already existing businesses, others are independent. Some businesses are sole-proprietary, others go for partnership or share-holding. All these and more are important for you to decide on.
This question is for you to think deeply on the style of your business. You don’t have to do what others do. Think about how to do something different and unique somehow.
4. Who Will Be My Customers?
There is no business without customers. Customers are those who will keep the business alive. Before starting a business, it is crucial to know who you are targeting with the goods/services you have to offer. Ask yourself: Who are those I intend to offer my goods/service to (women, children, workers, students, families, people of a particular age, people with a particular uniqueness, etc.)
Also ask yourself where they are found, how they have been coping without what you plan to offer, why they will want what you plan to offer, how they think, etc. Ask as many questions about your target customers as possible. Don’t assume; go out and ask questions.
5. Who Will Be My Competitors?
Every business must face competition. In fact, competition is very necessary in the market. Without competition there will be monopoly and the quality of goods and services provided in the market will be low while cost will be high.
Your competitors are those who are doing the same or similar business as yours. Their businesses affect yours seriously. They have indirect influence on your price, your standard of service, the quality of your goods, the quality of your staff and the marketing strategy of your goods and services. Make a list of your five-ten biggest potential rivals and find out more about them: Their strengths and weaknesses, their strategies and style.
As you consider competition for your business, you are certainly going to start considering how to make a difference in your business. A business is known through its Product, Price, Packaging, Place, Promotion and People. Decide on how to meet up with your other competitors, on these aspects or how to exploit their weaknesses in them. This is DIFFERENTIATION.
6. How Will I Promote The Business?
Marketing is a very key aspect for any business. Without a good marketing strategy, it will be difficult to experience the desired growth. Many big companies spend huge amounts of money to promote their products; but they reap many times over.
Even if you are just starting and don’t have much money to buy time for Media advert, you need to figure out how to promote your products in the cheapest ways possible. This should be a big part of your business plan and a major aspect under your business strategy.
SEE ALSO: How To Promote Your Small Business
7. What Will I Need For A Start?
In order to start the business you intend to set up, you need resources. Resources are either money, men, materials, machines, information or space. You need to think deeply about the minimal requirement of all these, that will be able to start up the business.
How many workers must you have for a start and how qualified should they be? What machines and materials will you need to get and what should be their quality? Will you need an office space? How much information will you need and where will you get them? What documents do I need for the business and what processes do you need to follow to set it up? And above all, how much money will you need for all these?
The question of resources is one that is a little challenging to answer. It requires some good research on prices of certain goods and services as well as some information gathered about how other persons in the same market, started. Whatever the case, avoid starting with more than you really need. Try to begin just with what you cannot do without.
8. Where Will Funds Come From?
Most, if not all the resources you must have listed in point 7 above will be handled with money. And so now that you are clear about what you need, you have to monetize your needs and see how much it will take to meet them. After which you will be asking the question, how do I raise the money needed to start and operate till I break even?
If you don’t have the money saved for this, you may be going in for a loan, deciding for partnership or sourcing for support or funding from a friend, family member or formal funding body.
9. What Are My Future Expectations?
The first thing you will be working hard and looking forward to is your business’ Break Even Point (BEP). This is when all that has been spent on the business or a product has been realized by the business/product. At this point there is neither profit nor loss but you look forward to start making profit from the business/product.
When do you expect to break even and what will it take for your expectation to be met? How many customers will you be targeting for every defined period and how much sales should you be making for every defined period. All these will direct your efforts towards meeting your expectations. Where do you see your business in the next 2, 4, 6 years to come?
10. When Can I Start?
After all the analyses above, you will have a clearer picture of how prepared you are and thus how soon you could start. At this point you are more realistic about what it will entail to set up the business. Decide on a deadline to start and write it down, working towards meeting that deadline.
After answering all the above questions, you will be far more prepared for the business you want to start. At this point, go ahead and decide on the NAME of your business. The name of your business should not just be chosen anyhow.
SEE ALSO: How To Choose Your Business Name
I am sure after answering the above ten questions, you now have all the details for your business plan. Make your comments below please.