There is no solid business without a master plan. You MUST know a few things beforehand when starting a business if you want to improve your success rate and not lead things by chance. Things like what is your target audience, which risks you may experience, what are the contingency plans associated with each risk and how you are going to monetize things, are just samples of what you need to know before diving into the deep waters of business.
And that’s why the first action you need to take when starting your entrepreneurial journey, is to create a very nice, pretty, amazing and colorful…
It all begins with it.
A Business Plan will put EVERYTHING that you M-U-S-T know about your own business into a piece of paper. You’ll see things entirely different about your own business proposal and it will open your eyes and show you which are the paths you may explore in order to gain true growth.
It will give you a HUGE overview of all your business strategies, all your weaknesses and all your possible outcome so every action you take, will have more chance to succeed in the market.
This single document can prevent you from unnecessary money losses and bad unnecessary experiences. It changes everything and prevents failure, and therefore, saves time. And we all care about our precious time right?
That’s why I will give you a hands-on business plan so you can skip this step in your business adventures doing research and trying to create a master business plan. SO I saved you the time by writing this.
But enough chit-chat and let’s cut to the chase.
To create a professional business plan you’ll need to answer yourself these questions I’m about to show you below. They are simple, direct, and very intuitive. If you need help, ask in the comments.
#1: WHAT’S YOUR BUSINESS IDEA ABOUT?
First things first: know what problem you are solving with your business. If it’s an NEW solution for a problem no one has addressed before — which is the case of Startups — then you must define that even better. But in both cases, you have to ask yourself:
- 1. What is the problem that I’m solving?
- 2. How my solution will solve this problem?
- 3. Why my solution is better than the others out there?
- 4. Who’s problem am I solving?
- 5. How will I monetize my business?
These are the basics you must ask to understand the CORE of your business idea. You’ll need to check if the problem you think you’re solving is REALLY a problem because sometimes you are just missing things. You’ll need to check if your solution really solves the problem and that it leaves no angles for the problem bypass your solution.
You’ll need to compare your solution with the ones of your competitors, check if yours is better and WHY is it better. You’ll need to understand whom’s problem you are solving — or in other words — who are your …..customers?
And of course, you’ll need to know HOW you’ll make money.
#2: HOW DID YOU COME UP WITH THE IDEA?
Why is this important? Simple. This is important because of one reason:
“What a hell are you talking about PETERSON!?”.
Relax. I’ll clear this out for you in the next sentence.
Look, if you had your business idea by observing something, chances are that you may have missed one detail or another that could POWER UP your current business idea! If you think you already have the perfect idea for a solution, imagine if you could find out that you could transcend that limit?
Your business can turn into something LEGENDARY just because you looked back and observed the same event or problem in action from a different perspective. With the overall picture already in your head, you can focus on the details. But the best part is that finding those details….can be like finding diamonds.
#3: DID YOU VALIDATED THIS IDEA?
This part is V-E-R-Y important and that’s why it’s right at the beginning of this article. After you had structured your idea and you answered the basic questions, is time to answer a very important one:
Many entrepreneurs get all happy and cheerful about an idea without validating it in the market FIRST. That’s normal. Excitement brings all kinds of stupid actions sometimes. But regarding the business you want to build, it’s actually very easy to validate your idea before you jump into the business realm. It’s really simple, just do this below:
- 1. Ask your target audience if the problem you think they have, IS a problem
- 2. Ask your target audience if your SOLUTION could solve that problem
- 3. Try to create a Minimal Viable Product (MVP) that can simulate your solution
The last point is very useful and if you could do that is even better when talking with your target audience. For example, if you have a business idea that involves an App, then try to create a sketch of your product, a way that can emulate your app through a Wireframe etc. If you could check which buttons the user would prefer to click, which screen styles the user hates and his preferences BEFORE you launch your product, then your final product will be EXTREMELY ACCURATE!
I learned it from this awesome book: The Lean Startup.
A very useful approach for entrepreneurs who can create a “sketch” of their final product.
But remember: the important part is to validate the idea. The rest is a plus. A “nitro” if you prefer.
#4: WHAT’S YOUR TECHNICAL BACKGROUND EXPERIENCE?
If you know your stuff and you have most of the necessary knowledge to START and RUN your business, then you won’t have to do these things below:
- 1. Find too many professionals to help you
- 2. Consult several professionals to check that you are not being deceived
- 3. Research market prices to check that you are not paying extremely high prices
- 4. Try to find a friend who you can trust and can help you along the way
That all costs time, and therefore, costs……money. If you have a whole bunch of technical background experience AND knowledge related to the business you are about to open, then you are a good amount of steps ahead because you don’t need to keep worrying and constantly checking everything others will tell you about your business.
If you are a programmer and you want to open a gym, you are going to face additional barriers. Have that in mind before opening a business that you can’t use your own knowledge. This is not a “DON’T OPEN A BUSINESS you have no technical background or experience” warning. It’s just a heads-up.
If you find the right people, go for it.
#5: WHAT ARE YOUR NATURAL TALENTS, GIFTS AND INNER STRENGTHS?
I don’t see a lot of business plans out there include this as part of the plan itself, and I find it very weird not do so. Just as the background experience part matters, so does the natural talents, gifts, and strengths. Why?
This is VERY important because it’s about the Human Factor.
A competitor may be on the market for YEARS and things may be going very well for him, BUT if for you the work is actually something you are PASSIONATE about, then you’ll overcome him sooner or later. If you put hard work allied to determination, creativity and passion, you are unbeatable because you found your PURPOSE!
So if you have the TALENT to create software, if you have the talent to write, if you have the talent to negotiation or any other skill, you don’t have to worry that much about your background experience. Just keep the hard work consistently and you’ll meet success at the end of the corner.
If you don’t easily give up and you have a strong hunger for learning then you can make this work if the business idea is good enough to take it out of the paper.
#6: WHAT ARE YOUR INNER WEAKNESSES?
Understanding yourself is key because companies thrive because of the people, not the ideas. You must really uncover all your weaknesses and be totally honest with yourself, so you don’t lose money or time a few months from now.
You must cover the key areas of a business and see if your personality has GAPS that can block your ascension! You must answer these questions:
- Sales – Do you have a problem with selling products or services to people?
- Finances – Can you deal with numbers without a problem?
- Reports – Do you focus on the details?
- People – Can you deal with people? Are you a people-person?
- Determination – Are you determined to win when a task is assigned to you?
You may need more questions if there is a problem you are aware of about yourself. Just be honest, because after you have started you don’t want to lose your business just because you are not a people person or you because you can’t analyze the monthly report thoroughly right?
See if your weaknesses will be barriers for the business you are planning to open. The more your business can’t be affected by your inner weaknesses, the better.
#7: WHO ARE YOUR CUSTOMERS AND HOW YOU WILL REACH THEM?
WHO is going to reward you financially for solving their problems? Is this a problem that the common person, the average joe has or is a problem that only businesses have? In other words, the solution you provide is:
- B2B – Business to Business
- B2C – Business to Customers
You need to know all that first because, without a well-set target audience, your marketing efforts are useless. Besides, even if you know PART of your customers it’s still not enough because you are losing a share of the market. If you are fully aware of all the types of customers your business solution can attend to, your market is bigger.
Also, know HOW you are going to reach them. For instance, if your customers are above 50 years old, they aren’t on social media as often as you would like. So marketing on those channels shouldn’t be your main strategy.
#8: WHO ARE YOUR COMPETITORS AND HOW WILL YOU BEAT THEM ALL?
Who will be the sharks fighting for the fishes in the market with you? Are they big companies? Are they small businesses? Are they world-wide? If you have competitors is a good sign because it points that the niche you picked for doing business has a demand.
But if you have picked a niche where your only shot against your competitors is the amazing strategy of “low price”, then you are done. You must think of intelligent ways to outwork them, such as:
- 1. Curatorship
- 2. Deliver extreme quality
- 3. Focus on subniches
- 4. Focus only at certain places
To establish yourself in the market, it’s necessary to know HOW you are going to fight the big sharks and get your share of food. So you must answer these questions:
- 1. Why do customers buy from them?
- 2. What they are doing entirely different?
- 3. Why would customers switch and buy from you?
- 4. Which steps you need to take to be “the better man”?
- 5. How much will you spend by doing those steps? Does the ROI worth it?
It’s very important to acknowledge who is also playing the game.
Do your homework and find a good strategic advantage, or otherwise, your endeavor will be just an adventure that will only burn out money.
#9: HOW YOUR LOGISTICAL MATTERS WILL BE APPROACHED?
A good amount of the quality of your brand remains in this subject. Logistics. If your business is around delivering a product to the end customer, then you need to think this through with more care because it’s the heart of your business.
Neglect this area, and see your brand reach the bottom.
So you must answer these questions regarding logistical issues:
- 1. How will you produce your product?
- 2. How will you deliver?
- 3. How will you ensure and maintain quality?
This part needs to be given an extra thought since the quality and the trustfulness of your brand is involved here and you can’t compromise either of them. Clarify and define your logistical process well with this matter.
#10: HOW YOU’LL SALE AND MARKET YOUR PRODUCT?
You now have a great product, a well-defined structure, and great organization. Now, what? Now….you must SHOUT to the market the great product you have. So you are going to do this? Here, let’s make it more objective:
- 1. How much will you charge for your product?
- 2. How did you set this price level and why?
- 3. Are you going to market your product offline and online?
- 4. Which channels are you going to use for both online and offline marketing?
- 5. How much investment power will you allocate for each channel?
- 6. Do you have legal restrictions if you market your product?
PS: Channels means Social Media, TV, Outdoors, Google Adwords etc.
Think hard on this topic too and spend time defining your marketing strategies, because marketing is the face of your business to the world. Take care of it.
#11: HOW MUCH DO YOU NEED TO SELL TO BREAK EVEN IN A TYPICAL MONTH?
This is a math you should have ready as soon as you figure out every financial detail about your business. You need to know how much does your business costs in order to SURVIVE! That’s business 101.
Let’s suppose you earned $10.000 in this month.
And your business costs 15.000 per month to pay the bills and stay alive.
Well, you got yourself a problem.
Paying the bills should be your first mission in the month to only then look at how much you profited. So do the math and check what is the financial goal for every month first and then worry about profits.
#12: ARE YOU EXPECTING HIGHER OR LOWER DEMAND IN CERTAIN SEASONS?
There are certain months and dates where you can leverage your business and profit more and that happens for almost every business. For instance, if you have an e-commerce that sells watches for men, you surely will have a window of opportunity to earn more money in Father’s Day for example.
Another example is regarding taxes. Almost every year, in January, Brazil removes a few taxes from cars to incentivize the car industry to sell more cars which is good for GM, Audi and other companies.
Find all the window opportunities of higher demand you may have that is related to:
- 1. All the holidays and other opportunities of your own country
- 2. All the opportunities of your own target audience
If you are focusing on being worldwide, obviously point 1 will give you a lot more work.
#13: WHAT’S YOUR MONTHLY COSTS TO MAINTAIN YOUR BUSINESS?
This is different from the “break even” question if that is what’s on your mind. Here, you’ll DETAIL which are the bills that add a cost to your business on every month. For instance, a few basic ones would be:
Find all the window opportunities of higher demand you may have that is related to:
- 1. Energy
- 2. Rent
- 3. Internet
Of course, this could change from business to business since some businesses may need a few basic things that others won’t. Knowing this is VEEEEEEEEEERY important because it will give you a hand in difficult financial times and when you see your list of basic costs, you can cut costs easier.
For instance, some business owners may include “Internet” as part of the “basic costs package” since this is a basic service for everyone nowadays. But, let’s suppose you own a restaurant. If you are experiencing a financial crisis then there’s no need for internet.
That’s why that by having this detailed list of your monthly costs, a business owner will be able to see which costs are easier to cut off, without harming the business. Understand the difference now?
Good. We are almost done.
Stay with me.
#14: DO YOU NEED ANY LICENSE OR SPECIFIC QUALIFICATIONS TO OPERATE IN THE MARKET?
Legal requirements may block you from doing certain types of businesses if you don’t have an especial qualification or some kind of license. If that’s your case, you must know this:
- 1. How will you obtain these licenses and qualifications?
- 2. Is there any costs associated with them?
Remember that you must be OK with the government in order to operate in the market, otherwise, you’ll just bring death upon you. People from niches like Health, Security, and Animals usually will need a certain type of qualification or license.
Stay friendly with the law and fulfill all the necessary requirements.
#15: WHAT ARE THE TAXES AND INSURANCES THAT ARE NECESSARY TO RUN YOUR BUSINESS?
Does your business require you to pay certain types of taxes or insurances for the government in order to stay alive on the market? You must list your taxes together with your accountant and check if you are considering every single one of them as well as the necessary insurances you must have to operate.
#16: WHAT IS YOUR CONTINGENCY PLAN?
Plan B! We all love those right? Just as in movies, the “final hope” is necessary on businesses as well and that’s where the contingency plan comes in. When you build a solid risks list you’ll need to categorize each and every one of them with one of the following categories:
- 1. Strong risk
- 2. Medium risk
- 3. Low risk
From there, you’ll need to define which categories will be “ACCEPTABLE risks” and which ones will have a “CONTINGENCY PLAN”. So let’s play a little with examples here.
RISK: Your company’s data center and all its computers can catch on fire
CONTINGENCY PLAN: Have a device ready to create a vacuum and remove the air from the room whenever a spark of fire pops up, thus, stopping the fire immediately
You can ACCEPT that risk and assume your data center will never catch on fire.
Dangerous bet right? But now you understand what a contingency plan is.
#17: DO YOU NEED TO PROTECT YOUR BUSINESS WITH PATENTS, TRADEMARK OR COPYRIGHT?
If you invented a piece of code, a machine or anything revolutionary then you’ll need to get yourself a patent for it. If you don’t want other businesses using the name of your brand, then you’ll need to get a trademark and if you don’t want people copying and using your own piece of information, you must get a copyright to be protected.
If you have intellectual property or if you want to protect anything related to your brand then you should also pay attention to this topic and include it in your business plan. We already know how painful this can be even for the big companies, so starting things the right way is the least you can do.
ONE BIG WORK AND EVERYTHING IS DONE
All this can take a good amount of work that may take you days or even weeks to accomplish, after all, some of the topics involve taxes and other types of bureaucracy and you need to make everything clear so you can stay away from trouble.
But the end result is a solid base to know every single part of your business.