Starting a new company is often accompanied by headaches. Smart preparation can greatly decrease the impact upcoming obstacles will have on your business.
One important step in preparing your startup you may face is writing a solid business plan. Make sure you consider the following five steps prior to drafting your business plan.
1. Determine Your Purpose
Having a plan to make a profit is important, but it’s far from the only thing that matters when you start a business.
As an entrepreneur you should take time to identify and articulate your business’ core values and purpose, which will serve as your organization’s compass for decision making. Looking at habits, beliefs, values and capability – so that you are going to work from a clear starting point and have a framework for discussion about working styles, strengths, and individual and collective blind spots.
2. Build Your Vision
The key to business success is having a clear vision of what you want to accomplish as a company. Before you write a business plan, you should come up with three to five key strategies that will enable you to achieve that vision.
Another crucial point, that is tied to the emergence of your vision, is the mission statement. The mission is the important “why”, the raison d’être of your company.
The first sentence of the mission statement you should ask yourself is, “Why am I in business?”. Everything you do, will be connected to the answer of your why. When you fully understand and discover the why, next you need to define what you are going to do and how you’re going to do it.
The third and last phase of the mission statement should explain the “who”. The who clarifies who you want to address as a your primary target group.
3. Identifying Your Target Market
Identifying a target market can be a tricky obstacle to get through. To help narrow down your market ask yourself, how can you position yourself uniquely to solve the problem you identified?
If you are unable to answer this question, you may have the wrong target market. In this case, more work will need to be done before you start targeting your potential customers.
If what you offer doesn’t suit the type of customer you want, you may need to change your offering or define your target market differently.
4. Clarify Your Model
A good financial model should include many of the details you would put in your formal business plan. For example, hiring, pricing, sales, cost of acquisition, expenses and growth. As with a business plan, your model should be revisited and updated as the realities of your business start to unfold.
5. Test Your Business Idea
A good way to kill your blind spots, is to go out and talk to industry experts, potential customers in your target market and other entrepreneurs to get feedback ton your business. What do they think about your business idea? How big is the market? Will your market buy what you are selling? Who is your competition?
Simply writing a business plan may give you a rough road map for your organization, but will not necessarily make it successful. Ideas are always good as long as they are thoughts in your head and sketches on your notebook. But the reality often times, proves your ideas wrong. Never spend fortunes on a software on idea, based just on thoughts wandering in your head, without getting any customer review.
The entrepreneurial life is though, and most people aren’t prepared. Don’t naively enter this world. Never test the depths of the waters with both feet, if you are not willing to lose it all. Always introduce your ideas fast in order to fail quickly, as long as you are small. This way it’s easier to optimize and adapt and scale in no time.