A stroke of genius hits and you get a business idea that lights you up like Broadway. You’re determined and are going to do it! Sounds great in your head, and the passion you have speaking to others about what you’re doing builds buzz and excitement. However, not having owned a business before, you feel pretty lost as to where to start to make this a reality. Now if I were you, I would work up a business plan as the first line of strategy.
A well thought out plan helps clarify ideas and gives a roadmap for direction, helping build confidence in your concept. Regardless of which format is used to write a business plan, there are several key components to the plan that I feel are most important to focus on and think through. Is it a financially viable idea? This is the Financial Section. What value will you be delivering? This is the Value Proposition. And, how do you plan to connect to customers? This is the Marketing Plan. Articulating these key components in a plan will help you strategize and navigate moving forward with your business.
First of all, it’s vital to examine if your business concept is feasible. When building a business plan, I recommend starting with the Financials. You need to know what it is going to cost to be in business as well as what the potential is for making money. Bottom line, is the venture going to be profitable.
The Financial section is where you define financial goals and when you expect to reach those goals by plotting projected sales revenue and anticipated expenses. You want to know what it will take to break even and then move into the black.
Whether you plan to start this business with your own capital or with other financing, this section is most critical. A lender is going to want to see that you thought through how to make it viable, that it is realistic, and of course that they will eventually be reimbursed. And if it’s your own capital, you don’t want to be throwing money down the drain with an idea that’s doomed from the start.
Once you have examined the financials and have a good indication that this business is feasible, then you can put some time and energy in figuring out the other key elements.
Next, define your value proposition. I like to break this into two concepts. Part one, what is the need you plan to fill or problem that’s being solved? What is the customer seeking that will drive them to your door? This is identifying the pain point of your customer or client. Part two, what makes you special in filling that need. What is your unique offering? Find out what it is that your business will offer the marketplace that is different from all the others.
Here are a couple examples of a Value Proposition. Perhaps there’s a specialized skillset you bring to the table as a culmination of your background and experience. Only you bring all that into practice with your clients so that a massage from you will relieve lower back pain unlike any other. Maybe your value proposition is product sourcing, making available exquisite, hard to find, hand made goods. It could be that you source those hand made goods from a small village in Africa that empowers women, giving them a source of income they wouldn’t typically be able to earn otherwise. Defining your value proposition highlights the impact you plan to make by being in business.
Now that you have a clear idea of how you are going to set yourself apart in the market, it’s time to plan out how to communicate that offering. This is the Marketing Plan. What’s your message, how do you plan to communicate that message, and to whom are you communicating? Marketing is basically anything that connects your business with the customer or client. Not only is it branding and advertising, but also your website, social media, business cards, uniforms, color schemes, how you greet someone and how you answer the phone. Marketing is anything your customer experiences of your business. The Marketing Plan instructs how to communicate your message and through what avenues. Marketing is also how you can directly impact your financial goals.
A business plan doesn’t have to be complicated if broken down into basic elements—the numbers, the value, the customer connection. By clearly defining these key components, you have discovered if your business is worth starting in the first place by examining the financials, how you are differentiating yourself in the marketplace with your value proposition, and how you are going to attract customers with your marketing plan. That’s why the first strategy in a startup should be your business plan.