The process of creating, developing and writing your business plan is as fun and valuable as the product itself – this is the document that will be the blueprint that covers your business priorities, potential and much-needed sanity (yes) as you’ll need to start up your business. The first most important reader and audience of the business plan is yourself – you’re accountable to the statements, claims, statistics and facts printed within it. Later, you may even use your business plan as a tool to woo investors or potential buyers and partners.
There is three aspects of business planning: The 12 Defining Questions, the Key Components and the actual process of writing the business plan.
Table Of Contents
The 12 Defining Questions
You need to go through these 12 questions, and to be able to answer them as much as you can. Herein, I’ve prepared them with more space in case you’d like to be able to print them out and write it as you go along.
1. What’s your business idea?
Write down in your business idea as simple as basic as possible, and keep summarizing it until you can say it in less than 15 seconds. Work at this until you do. Someone listening to your explanation should be able to get it immediately. Your description *must* highlight the qualities that make your idea stand out.
2. What problem does your idea solve?
This is the exploration of your idea and its potential. In the market, there are two kinds of demands – a “want” and a “need”. A “want” need provides pleasure, a “need” takes away pain. The business of addressing “needs” are always in demand, but the business of addressing “wants” often always have higher yields. How does your idea help solve problems? Whose problems does it solve? Also, is your business an “evolution” model or a “revolution” model (evolution refers to businesses that are providing known services and/or products in a new way; revolution refers to businesses that are pioneering change)
3. Which business model best suits you?
Which one do you prefer? This is crucial and even critial, so take your time to think things through. Investigate and research. It’s great to be innovative, but be cautious (I tend to favor erring on the side of caution). Find out the business model that best suits your life plan, lowests costs and risks with highest returns. The clearer your business model approach, the easier to figure out your revenue model and practices.
4. What’s different about what offer?
Research and investigate competitors and current models and brands in the market. Know what they offer and come from a different perspective to answer the market’s needs and wants. You have to be the expert of your domain (this is crucial to investors, buyers and customers later). They want someone who knows what they’re doing. Focus on your strong points and value proposition.
5. How big is your market, and how big you want to grow?
How big is the pie? How big or small will you grow to? You should explore and understand the market sentiments, its needs and see how your idea can deliver value to them and at what level. Understand the demographics of your target audience according to their needs (categorize them into low – mid – high level need of your services and products) and delineate your sweet, sweet spot. This will help you determine your marketing strategies and approach. Which market is easiest to penetrate? How big is it? Can it grow some more? If yes, how much more?
6. What’s your role in the plan?
To answer this, you should refer to your life plan – review all your strengths, passions, visions and what your ideal life is. Maybe you’d want to step back and oversee everything. Maybe you’d want a partner. Maybe you’d want to get down and dirty doing all of it. Maybe you want to sell it later. Whatever your role is, refer to your life plan to guide to to strategize your decision making. Allow yourself breathing space and be real to yourself.
7. Who’s on your team?
Think about who you’d want and need on your team to ensure your efficiency, productivity and profitability and ability to stand out from the rest of the competition. Think and review this seriously. Your business plan is where you can sort your areas of expertise. Get people to do what you’re not good at – you stick to what you’re good at. Even if you can’t hire people now, at least create a list of potential people you’d like to hire later.
8. How will customers buy? How much will they pay?
How will you manufacture, sell and deliver your products or services? Will it be sold online? Will it be sold in retail? What is your price? Too high and people might not buy. Too low and you’d be overworking and leaving money on the table. If possible, have a middle and higher tiered products and services for different demographics.
9. How much do you need and how much do you want to make?
How much do you need and how much would you like to make? Here you think about the numbers. Basically, profit = revenue – expenses. The goal is to maximize profits and cutting down unnecessary expenses. You’d need to think about necessary business expenses such as rental, staffing, inventory, utilities and overheads, marketing, telecommunications and transportations. You can talk to other people in your field and pick their brains to estimate and project. This is often exciting, but have it taken with a pinch of salt.
10. How to raise start-up funds?
As you answer question 9, you’ll know how much you need to begin with, and how much you need to buffer and tide over the initial start-up phase. Some sources you can consider is personal savings, banks, friends, families and angel investors/venture capitalist.
11. How to measure success?
Of course, profitability can be one of the yardsticks, but don’t limit it to just that. Define what success means to you, and aim to achieve. Perhaps you’d like to make regular contributions to a charity, to adopt a nursing home, to research into cancer cure or to build hospitals and libraries. You may even want to adopt entrepreneur-fledgelings to guide them. Know what drives you, and keep doing it.
12. Identify your key milestones.
Have a timeline/chart that shows the dates of key events and milestones as your business launches and grows. It’s okay eventhough at times they are off the mark, but having milestones keep you grounded and focused and most importantly, accountable. If you’re not hitting your milestones, it’d force you to get real and buck up, or re-think about your progress and approaches.
KEY COMPONENTS OF A BUSINESS PLAN
- Executive Summary: summarizes the most important and crucial information of the entire business plan – the business idea, the people, the market, the competition, the strategy and the exit plan. No longer than 2 pages long, it is written last.
- Business Description: includes the vision, mission, goals, values, value proposition, business model and key assets of the business. A reader must be able to understand what you’re offering when they read this.
- Market Analysis: understand the needs and wants of potential customers and target audience in the market, as well as the percentage by competition and the percentage of market you’re targeting. Cite your sources and research.
- Marketing and Distribution: demonstrates the timeline and strategy to
- achieve you sales and marketing goals and delineates what you offer to your customers. Use novel ideas for marketing and distributing your products and services.
- Staffing And Personnel: details the team involved in the entire business, from the founder, to the managing team, to key members and other related staff, as well as their roles and responsibilities.
- Exit Strategy: Your ultimate plan and destiny for the company. This particularly affects how you run the business, and how investors and potential buyers see the company.
- Financials and Numbers: you put an estimated numbering to your costings/expenses and how much money they will make for you in the new business. This section should map out the first few years and contain (i) key business assumptions, (ii) income statement, (iii) balance sheet, (iv) cash flow statement and (v) cash management report.
WRITING YOUR BUSINESS PLAN
Your business plan should be neat and concise. Use a word processor such as Microsoft for most of the document, with attached relevant financial documents or embedded spreadsheets from Excel.
You don’t need the fancy graphics or flowery language. Make it sweet and simple to read, understand and follow. Finish the document, and review it periodically to update it, to see if you’re on track.
Do not forget your exit strategy when the opportunity comes.
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I’m the founder and writer here at NigelChua.com; as well as serial entrepreneur, therapy business entrepreneur, digital entrepreneur, investor and also happy husband, father and Christian. Loves good success and freedom.
Learned early in life on importance of making more and entrepreneurship. Started and sold off a business for 7-figures; built another 7-figure one and growing it further, as well as building/investing into other businesses.
I help and consult people how to diversify their income by starting offline or online business to create financial freedom for themselves plus achieve balanced good success in their lives.