Key Questions for Developing a Solid Business Plan
Starting a new business requires plenty of forethought. Before you place the first order or run the first ad, it’s critical to think through exactly what you plan to do. The generally accepted way to accomplish this is to write a business plan.
If you are looking to start a business, know this: you’ll need a solid business plan in order to secure financing. No bank or early-stage investor will give you a dime if you don’t have some sort of plan in place. The good news is that writing a business plan isn’t as hard as it sounds.
A business plan lays out what your business does, how you intend to produce products and services, how you plan to reach customers, and how all of your plans translate into profit. Also note that there is no standard template for writing a business plan. You can make it whatever you want it to be, as long as it gives lenders and investors enough detail to make a decision.
Here are some key questions that can help you develop a solid business plan:
What industry am I entering?
Though this question seems simple, it is actually deceiving. Let’s say you want to sell sunglasses made from recycled plastics. What industry would you be entering? Perhaps it’s the eyewear industry. Maybe it’s retail. Perhaps you believe you’re entering the sustainability industry.
You ultimately get to decide. Here is why it is important: your decision will impact every other business decision you make moving forward. You have to decide what industry you are in so that you know what to do next.
What products or services will I sell?
Every business sells something. Your product or service may be defined by your industry, or vice-versa. Do you plan to sell wholesale sunglasses as a distributor, or are you thinking about selling at retail? It makes a difference. Olympic Eyewear is a Salt Lake City distributor of wholesale sunglasses. While they sometimes sell to consumers, retailers make up the bulk of their business.
How will my product or service be produced?
Next up, how do you intend to produce your product or service? If your plan is to be a strict retailer, there is no production involved. You’ll buy your wholesale sunglasses from Olympic or some other distributor. On the other hand, you might want to be a distributor. Now you have to decide if you are going to manufacture sunglasses or buy white label products you can stick your own name on.
How will I market my product or service?
Banks and investors will not be satisfied just knowing what you intend to sell. They will also want to know how you intend to sell it. They want to know your marketing plans. There are both effective and ineffective ways to market. If you don’t demonstrate an understanding of how to best market your product or service, you may have trouble securing financing.
Who is my target audience?
Hand-in-hand with marketing is identifying a target audience. Who are you looking to sell your sunglasses too? Once you know that, you’ll have a better idea of how to frame your marketing messages. You might use one message to sell sunglasses to baby boomers and a completely different message to sell to millennials.
Writing a business plan is really a matter of sitting down and thinking things through. Present a solid business plan to financial backers and you should be able to secure financing. And if your business plan isn’t solid, perhaps the people you are pitching it to will offer to help you improve it.
