As a budding entrepreneur, you will face endless uncertainties as you navigate the process of starting a business. Thankfully, you also have an ally in your business plan: When crafted with care, it can become an invaluable resource as you search for potential partners and make critical decisions that will shape the future of your organization. In fact, research suggests that simply writing a business plan will make you 16 per cent more likely to succeed than not doing so.
Your mission statement serves as the foundation of your company culture and helps shape the decisions and actions of its personnel for its entire existence. It even informs the shape of the business plan itself.
It’s vital to remember that your mission statement is so much more than just a simple summary or rudimentary statement about the company. It should clearly communicate your organization’s value to everyone, including employees, customers, stakeholders, and others. It’s the statement from which your value proposition will ultimately emerge and drive your relationships.
The best mission statements describe what value your company brings to the equation, how it delivers that value, and, perhaps most importantly, why you are doing it in the first place. It also has to be a set of values that you and your employees can embody every day, and you must make the commitment to do so. Studies show that when leaders actually abide by the company mission statement, it has a profound effect on employee engagement and well-being.
One of the fundamental tenets of business is the more you know about your customers, the better prepared you are to deliver the specific kind of value they look for in a transaction. As a corollary, researching your customer base as a part of your business plan gives you a significant head start toward this end.
Most successful companies rely heavily on customer research and data in order to fine tune various activities such as marketing, sales, product development, and customer service. Most of them have access to a wide swath of customer data thanks to the existing relationships they have built. As an entrepreneur, you likely don’t yet have the luxury of this kind of data-gathering operation, but there are still plenty of methods you can use to build a detailed profile of your potential buyers.
One excellent way to connect with real-world potential buyers is to commission focus groups. With them, you have the ability to ask participants a wide range of questions about your brand, product, pricing, competitors, and much more. While this does require a financial investment, it can be well worth the money when you start out and don’t have many sources of detailed buyer information. For less costly ways to research, you can use social media listening to source opinions from customers who interact with other companies in your industry. Another option is to send out surveys to select groups of people who meet the criteria of your proposed typical customer.
Your business is never just about your business. It’s part of a complex ecosystem that lies at the intersection of the industry it operates in; the other companies in that industry; the customers that inhabit the industry; and the local, national, and global economic realities. Therefore, your business plan must encompass more than just your business and potential customers in order for it to be complete.
Part of this involves including an objective assessment of your competition, your overall market, and your company’s place in that market. You need to map out your competitors’ strengths and weaknesses, understand what types of market strategies they use to maintain and grow their share, and evaluate their potential responses when you enter the market. You should use any and all tools at your disposal for this task, including monitoring social channels, analyzing marketing materials and ads, and visiting physical storefronts if applicable.
Another aspect of a competitive analysis is an explanation of the size of your target market and how much market share you can realistically expect to acquire once you begin to operate. Objectivity is paramount because realistic analyses are actionable, as opposed to pie-in-the-sky fantasies about cornering an entire market.
The following elements answer five essential questions about your business:
As long as you can answer these questions in a coherent and actionable manner, you have a business plan that will work with you as you guide the company through its infancy.
The executive summary is a roadmap for the reader to navigate the full business plan. It needs to clearly articulate what you hope to achieve and should include a brief overview of the various sections ahead.
The business description is where you start to get into the details. It’s where you should add your mission statement as well. This section also typically includes a look at the industry in question and introduces ideas that will be fleshed out in the following section. In general, the reader should finish the business description knowing who you are, what you plan to do, and the scope of your target industry.
This is the section where you can expand, in detail, on the state of your target market, the strengths and weaknesses of your competitors, and your potential impact on that market.
Here you describe what tools and channels you will use to communicate your value proposition to prospective buyers. Additionally, you should detail pricing plans for any products, as well as explore potential sales models you plan to employ.
The operational plan is an overview of how you will produce the product or service and fulfill orders for customers. This includes what operational tasks will be assigned to which units, and it can also feature the organization of the management team and their assigned responsibilities.
How much will all the aforementioned activities cost? How much revenue do you expect to earn from your sales? Will you be able to sustain a healthy cash flow? Your readers need to know that you have realistic expectations for managing expenses and earning revenue once your business gets off the ground.
A business plan is little more than a time-consuming and intriguing thought experiment unless it is actionable. In other words, you must be able to make realistic claims in order for it to have value. The business plan lays the groundwork for success, but the next steps in the process will be crucial as well.
Make your business plan a part of your normal networking routine. Look for potential partners, investors, or employees, and share your conclusions with them when you can. You never know when you might meet someone who will have something valuable to contribute once they see you’ve done your due diligence.
Keep in mind that a business plan is a living document that is never truly complete. Continue to perform research and look for ways to update your information and projections to make the conclusions more accurate and complete. Your business plan will act as a guide as you face difficult decisions throughout the establishment and operation of your company, so keep working to make it as valuable as it can possibly be for you.