Having a business idea is an amazing thing. But do you think an idea is enough to start a business? Definitely NOT! How to make a business plan is one of the most important things one needs to know. Starting a new business is a very frantic task. Many people can have an idea. But only a few can put it into practical sculpt. Even after its practical execution, they fail. This not only causes them a financial loss but a loss of confidence and psychological problems may also follow.
So, what’s important? Having an idea, execution of the idea, or not executing it from the fear of failure.
Definitely, putting your idea with a perfect execution to minimize all the risks! And how to do this? By perfect planning before launching your business. Yes!
Importance of planning
We all know that planning matters. Starting from wanting to have a perfect day, to trying hard to achieve a big goal, planning can have a big impact on your life. It also helps to manage your activities effectively and save time. This can help you achieve your goal as early as possible.
You can also learn about managing your time effectively here.
One can never deny how important planning is. So that’s exactly why starting work on a big aim, i.e., Launching your own business requires a perfectly made plan. That’s the reason why many of the businesses hire experts to do this work for you and pay them a big deal of money for this. However, one may want to save that money simply by doing this themselves.
Following analytics have been taken from recent research that highlighted the importance of planning in a business:
- Planning makes a business’s growth rate 30% faster than a business without a plan.
- Having a business plan can double your chances to get investments and grow.
- More than a half business fail after initial startup phase because of poor or no planning.
What is a business plan?
So the very first question that might have stroked your mind is ‘what a business plan actually is?’
A business plan is a comprehensive document that contains the goals of the business and all the methods that can be used to achieve them. It can also highlight the time-frame in which you need to do each step to achieve efficiency. Moreover, it can help you grow and attract the investors for your startup idea.
You might also question about why and when do you need a business plan?
Whenever you are looking for funding, investments, or loans, you have to first present your business plan to make the investor satisfied and convinced to invest in your business. Not only this, it can help you search for a new partner or co-founder for your business. You know the importance of your team and crew who will be working with you in future. A good and hardworking team is the best asset of any business. That’s where your plan will help you out. It can help you in attracting and hiring top talents.
1. Executive Summary
Executive Summary is used to briefly describe the whole idea behind your business. It’s a short summary of the whole business plan you have discussed in the document. It usually helps the reader to get the main essence of the whole startup strategy.
One may think: Why is executive summary important? The answer is simple. Many businessmen and investors are really busy. They don’t have time to get into long texts just to reject the whole plan. They read out the executive summary. If they feel good enough about it from this mere start, they get to read the next.
Now, you also have an idea of how important the executive summary is! It’s your very first impression on the second person reading the business plan. You have to make it interesting and engaging also to secure enough attention so the other person will keep reading it. If it is boring and is not presenting the information right, the other person will leave it. And here you lose the whole game.
For writing an Executive Summary, it is preferred to write it after you have written the whole document and then add it on the first page of it. It is because while writing the document, you research, you learn many new things and ideas. These ideas and innovations can help you write a better and more engaging executive summary. Even after done with writing the document, you should give it a read and gather all the important points. You can then discuss those points in the executive summary later on.
An Executive Summary must have the following characteristics:
- Set a clear objective
- Define your power structure
- Compose a short description for your company
- Summarize the potential in the market
- Keep it short and professional
Executive summary of Nestle is as follows:
2. Product and Services
The product and services section is actually linked between your offering and customer needs. You must ensure that what you are offering is in correspondence with what the customer is asking for.
An interesting fact that comes here is that even when you are offering something different than the need of the customer, you are ready to market it in a way that it will become their need. In fact, it is the most useful tactic used by marketers in the past.
So getting an insight into your product offering is critical before starting to write your marketing plan. Ensure that you have got a good idea of what your company actually is selling and how it is going to satisfy customer needs.
Remember that your product is for the customer! Therefore, you must keep your reader in mind while writing about your product. Think of him/her as a layperson, who has no idea of what the product is. Firstly, write a background history of your product, then write all of its features in a way that the reader actually develops an interest in the product and wants to know more about it.
This portion can highlight following properties of the product:
- The Product or Service Description
- Unique Selling Point
- Product Lifecycle
- Product Pricing
- Selling and Distribution
This is how Nescafe explains one of its products (Nescafe 3in1):
3. Target Market
Your target market consists of the potential customers, whom you are going to sell your products or services to. It is a small part of the whole goods and services market.
Your target market is based upon different characteristics such as their age, gender, buying power, income, demography or geography etc.
It is one of the most important steps to get complete insight into your target market. The basic purpose of business after profit-making is to satisfy the customer. So, to satisfy customer, you must know who they are, where they belong from and definitely what they need.
The process of categorizing your target market into groups and subgroups is known as market segmentation. You can categorize your target market based on:
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- Behavioral Segmentation
- Benefit Segmentation
- Volume Segmentation
- Product-space Segmentation
After this step, you have got enough information about your customers. This can help you out in positioning your product and satisfy your customers’ needs better.
Target Market of Coca Cola:
4. Global Industrial View
One might question that if you are selling your product in one country or one area, why do you need to get a global view? The answer is that in a dynamic business environment like it is today, it is necessary to check what tactics global industry is using. Also to see where your business can take you in future and how far.
In this section, you study and summarize how your market is doing on the world level. You come up with a lot of researches and ideas to implement in your business to make it more acceptable and unique among others. You can also check what makes the businesses like yours successful and what fails them to thrive longer.
However, it may not be necessary for what works for the global market may also work for you. Sometimes, the culture of an area is deep-rooted, and it may affect how to business in such an environment.
Growth of Industry
Get to know your industry before stepping into a business. You must do a good industrial analysis. Find out how much the related industry grew in past years and with what pace. This is going to help you recognize how far you can go more. It helps you predict the survival of your business from start to end.
To make your business successful, having this insight is really important.
Take an example of starting an automobile business in 2020, you must check the growth of the automobile industry in the past with the present and predict its future. You see that automobile selling rate decreased as the COVID-19 kicked in. It is seen that the growth rate of the automobile industry declined by almost 8.1%. Thus stepping in this field will be a great risk these days.
Major Innovation in that field
To develop competency amongst other businesses of your competition, you must be able to deliver your products and services in their latest design. This can not only help you to cater your audience best but also saves you from spending an extra amount in future to get the updates done.
If you are starting with any digital business, you must be aware of the latest technologies in fashion. None of your audience will like to spend money on outdated tools. So for this, you must know the major innovations in Digitalization which are:
- AI-Boosted, Predictive Cyber Protection
- Self-Protecting Applications
- AI-driven automation
- Blockchain technology
- Artificial Intelligence
It is one of the difficult but most rewarding things you are going to do for your business plan! Research which challenges your business industry is facing already. This can help you overcome those challenges yours through proper research and strategy.
A recent challenge faced by eyelash industry was the reveal that the mink lashes were made by killing minks. This led to an outburst of anger in people banning eyelash industry for this cruelty. Now, if one wants to start a business in eyelash selling, they must ensure their audience first that the lashes they are making are free from any such accusation. This is not only going to help them write their mission statements but also win them their customers’ confidence and trust.
5. Competitor Analysis
Competitor analysis is a strategy used to analyze the products, sales, strengths and weaknesses, as well as marketing strategy of your major competitors.
By doing competitor analysis, you get a full grip on what other businesses are doing in the market. By checking out their weaknesses and doing better than them, you can get a competitive advantage over them. You can make your marketing and business strategies overcoming their faults and utilizing the best use of their strengths.
Start collecting data of your competitor either from their websites or by doing proper research on this project to gather sensitive information of them.
You can make your analysis either in the form of paragraphs, charts and graphics or in spreadsheet form. A basic analysis can include:
- Name of competitor
- Products offered
- Price range
- SWOT analysis
Let’s dig into the global online leather jackets selling business:
Let's end this reading on an interesting case study.
Why planning and marketing is so important?
You may think about how planning and marketing your business can have a good impact on your business! Why businesses spend a large amount on marketing and R&D department.
Consider the case study below about how the milk industry grew so fast and is one of the most flourishing industries in the world.
Lets find it out in the video below:
If you are thinking of starting your new business or upgrading the one already, you must start it with a business plan. Planning your business with proper tools can help you reach the full potential and rock with a boom. You can not imagine how small and simple tricks can help your business top the world.
I really hope this article was helpful. Drop your ideas and suggestions below 🙂