As the old saying goes, failing to plan is planning to fail. And never is that more true than when starting up a business. Having a great idea is not enough on its own. For a business to be successful you need to lay down strong foundations during the pre-launch period, researching and scrutinising your business idea before creating a detailed business plan.
Scrutinising your business idea
Let’s start with your business idea. No matter how failsafe you think your business idea might be, you’re going to need to scrutinise it. Before you press ahead, there are a number questions you need to ask in order to validate whether your idea is viable. The more unique and original your idea, the more you need to scrutinise.
Are people willing to pay for your product or service?
Needless to say, this is fairly fundamental.
Some business ventures have a proven track record in this department. Hairdressers remain one of the most popular ventures simply because people will always need their hair cutting and be willing to pay for it. Have you ever tried cutting your own hair? Bad idea. Similarly, tradespeople are always sought after, whether it’s someone to unblock the loo or fix a dodgy TV aerial.
It’s slightly different if you’re aiming to do something new and different. You need to know if there is a market and demand for what you’re offering, but that’s hard to do if it’s never been done before. So, how do you do that? There are a number of ways:
- Build a prototype and test it on prospective customers
- Get feedback online through surveys
- Go out there and speak to people
- Check on Google Trends to see if people are searching for related terms
What does the competition look like?
Every business will face some form of competition. Even if you think you’ve stumbled upon an entirely unique business idea, there’s only so much disposable income your target audience will have to spend. So, why would a customer spend it with you instead of another business? That business might not do exactly what you do, but, they are still vying for a slice of the pie.
What we’re saying, basically, is – every business is a competitor.
Now, doing competitor analysis on every single business might be a bit tricky. Instead, narrow your competitors down by location, industry, and target customers. Make a list of them and write up what they do well and what they’re not doing so well, checking out online feedback on Facebook, Google Reviews, Trustpilot and TripAdvisor. What are their prices? Who are their customers? Building up this picture of your competition will help you identify opportunities and risks, and, ultimately, shape your own offering.
What do you bring the table?
This might seem like an odd point, but it’s actually a pretty simple one. Running a business is all-consuming so you need to know that you have the right attributes and skills to make it a success. Equally, you need to be passionate about it. It’s probably not a good idea to launch a business that neither stirs your passions nor complements your skillset.
The better way of looking at it, though, is thinking about all the amazing things that you’re going to bring the table that will lift your product or service ahead of the competition. This is a great exercise because it will help you connect the dots and establish where your strengths and weaknesses lie.
Creating your business plan
Now, much is said about the importance of writing a business plan. We’re not going to dispute that; it is mighty important. It’s a document that will set out your vision and guide you on the path to stabilisation and growth. Your business plan will also help you to get buy-in from investors and key stakeholders such as staff and, well, actual stakeholders in the company.
However, one bad outcome of this well-trodden sentiment, is that people are often overawed by the processing of writing a business plan.
Don’t be overawed.
For a start, we didn’t mention it, but, you’ve already done a chunk of your plan by scrutinising your business idea. Through that, you’ve not only validated the idea, you’ve also acquired a load of information on your target market, customers, and competition. This will come in vitally important to your business plan.
Let’s go through it bit by bit.
There’s no one agreed structure for a business plan. In fact, there are plenty of more creative ideas that could work well. However, let’s stick to a fairly typical structure to follow.
This is pretty much the ‘I don’t have all day, cut to the chase’ section. If you have an elevator pitch: this is where you include it. Essentially, you’re giving a top line overview of all the key details that make your business idea viable:
- What the business is
- Why it’s going to fill a market demand
- Why people are going to go to you
- How you’ll make money
- Who will be buying from you
- Who you’re competing with
Now, we’re getting into the nitty gritty. This is very much a nuts and bolts section where you detail the product/service, brand, location, business model and size.
Marketing and sales strategy
You’re not going to get very far if people don’t know about your business. So, you need to have a marketing and sales strategy. This will detail much of the information you’ve gathered whilst scrutinising your business idea, i.e. the market conditions and competition. You’ll also want to outline your target market and how your brand will appeal to them. Then, last but not least, the details of the different marketing and sales channels you’re going to use (e.g. email, social media, referrals etc).
Management and employees
This doesn’t need too much explanation. In this section, lay out the personnel involved in your business and the skills and credentials that they’re bringing to the table.
Operational set up
Detail your required facilities, premises, systems and software.
Financial plan and projections
This section translates everything into numbers – your startup and running costs, funding, revenue projections with a cash flow forecast.
Tip: OK, that might sound like a lot of work, but, chip away at your business plan a little and often and you’ll soon get there. Once you’re done, don’t be scared to share versions with friends and family and get their feedback. You might also want to run your figures by an accountant, or, alternatively, seek out advice from local business support groups.
Nobody said launching a business would be a piece of cake. If this sounds like a daunting amount of work, then maybe this isn’t the lifestyle for you? The fact is: you’re going to need to put in the hours just to get to the point of launch – and these are essential tasks. But, if you’re passionate about your venture, all of this should be an enlightening, invigorating, and exciting. Work that will not only put you in great stead for a successful launch but also open your eyes to the very exhilarating reality of being your own boss.