If you’re just starting out as an entrepreneur, or you’re wanting to structure a plan to enable applications for funding or to firm up your business’ direction, here are your first steps to creating a business plan.
What is a business plan?
A business plan is a detailed guide for your business, including your business goals, targets, and the steps you are going to take in order to achieve those goals. Whether you’re an entrepreneur, or a full-fledged business, creating a business plan is an extremely important aspect for any venture.
However, before you start creating your business plan, there are a number of steps you must take.
10 steps to creating a business plan:
Understand what your business plan must include
The first thing you must do before creating your business plan is to identify the purpose of your plan. You should then look to include all the relevant sections that make it fit for your specific purpose, i.e. a more detailed financial forecasting section if you’re trying to achieve funding, or a longer section on market and industry state of play if you are defining objectives for a change in business direction. For more information on what your business plan should include, please click here.
Consider getting a mentor
When creating a business plan, particularly if you’re a first time entrepreneur, it can be a good idea to find a mentor. A mentor has ‘been there, done that’ and can help instruct and advise you on issues you may come up against. They don’t necessarily have to be in your industry, but should be outside of your organisation so as to offer a different perspective. You could look to find a mentor through networking, on LinkedIn, or through mentoring groups designed for your industry.
Research the market
An important step before creating your business plan is to research your marketplace to discover how other businesses are positioning themselves. This helps you to find out how competitive it is , whether there are dominant companies already in the space, or whether you need to carve out a new niche, based on the demand and competition for what your business offers. Consider also if you are creating a ‘new’ market – it can often be more of a challenge to create a need state and understanding for a new product or service proposition, than to enter an existing marketplace. . Your competitive research will help you to understand your Unique Selling Point (your USP) – see number 7.
Choose your route to market
After your market research, it is then time for you to choose your route to market. Many new businesses often decide to take a multi-channel route to reach a wider audience, however this can be very expensive (in budget and effort levels), particularly for start-ups. Things to consider before choosing your route are: how your current or ideal customers shop. Do they prefer shopping online or physically? Do they buy frequently or rarely? Impulse buy or repeat purchase? Will you be going direct to market, through a distributor, or both? Considering all of these will allow you to prioritise the best channels to reach your audience, and allow them to interact with your business as well as purchase.
Identify your target audience
Identifying your target audience is one of the most vital steps to creating your business plan. No matter what product or service you plan to sell, it’s likely you’ll have some idea of who your ideal target audience is. But if you really want your business plan to work, it’s not enough to just have an idea, you need to know your audience inside out, including their buying behaviour and interests. Consider developing an ‘avatar’: a representative of your target audience with a determined age, gender, occupation, location, etc. Layer additional information onto demographics such as attitudinal and behavioural inferences from your market such as the way they shop (weekend in person, or weeknight on their smartphone) or they way they view your product or service (a painful chore, or an exciting new addition to their day ) By really narrowing down who your target audience are, you’ll be in a far better position to market your product or services relevance to them in a more engaging way.
Decide what your core values are
It’s helpful to decide what your business’ core values are as part of your business plan. Identifying your core values will help you to determine what sets your business apart from the competition, communicate what is important, inspire people to take action, and shape the culture of your business. Are you passionate, ethical, innovative, diverse? If you have employees, involve them in this process – it’s proven that employee satisfaction and performance is improved when they believe in, and actively support, the wider values of the business they work for. Document your values and share them with the rest of your company.
Define your USP & customer benefits
It is much easier for your business to be successful if it offers something that makes it different from your competitors. Once you’ve defined your USP, it’s important to identify how this translates into benefits your customers care about, Being clear as to why the difference is important will help you emphasise your benefits in the most relevant and appealing way for your desired audience and optimise your chances of success..
Understand your legal structure
Whilst understanding the legal structure of your business venture isn’t the most exciting topic to discuss, it’s a crucial element to think about. The legal structure of your business includes operational and logistical requirements, complying with HMRC and VAT rules, terms and conditions, employment contracts, and even registering a trademark or trade name. Having a solid legal framework can ensure you are protected in all areas of your business and whilst it does require investment at the outset, it can save you a fortune in the long term.
Clarify your business’ financial model
The next step in your business plan is to clarify your business’ financial model, including details on pricing, sales, cost of acquisition, expenses, hiring, and growth. All of this information can be included in the business plan, and revised and revisited as your business develops. Understanding your financial model will give your greater confidence in control over budgets for marketing and other vital business growth areas.
Continue to review your business plan
Lastly, it’s important to continually review your business plan for further improvement. For example, building a review cycle to refine your business plan every 6 months or even every quarter ensures that you are still on track. Reviewing your business plan also helps you to highlight any key areas that have changed, either due to market changes, or a difference in the product and services you are selling, and update your business plan accordingly.
Once you feel confident with your first steps to creating a business plan, click here to discover how to start planning your business plan outline.
Still unsure how to approach creating a business plan? Why not call the Focus7 team on 01462 262020 or email firstname.lastname@example.org for more help and guidance on the steps you should be taking to create your business plan.