A business plan is essential to any business, no matter how established or new. It helps you identify your market and customers, as well as your costs and revenue. A business plan will also be instrumental in helping to assess and predict your profit, which is essential to any business.
Unfortunately, most businesses don’t actually have a formal plan. That’s probably given the way many entrepreneurs don’t really find value in having a strict strategy in place only for it to be irrelevant within mere weeks of full completion. While that’s a valid point, rejecting the idea of planning as a whole is a major misstep.
Customer Development for Start-Ups
That said, business plans might not be ideal for start-ups. That’s only because they don’t have any data to go off of at the time. When traditional business planning methodology is followed, the template changes from an objective document that can assist businesses into a false assurance that an idea will work as a whole.
Filling out a template in words can also be intimidating that early on. This will be especially true for people who aren’t used to writing documents that are long-form. Plenty of business owners likely fall under this category, since they likely left university or school.
Customer development is a great alternative here. Instead of writing down prospects in order to grow quickly, get profit margins to widen and gain a loyal following, answer some key questions instead. These are great queries to ask yourself to get started:
- How will you reach them – for example, online, face-to-face or a mixture?
- What activities will generate revenue for the business?
- What resources do you need?
- Who are your customers, what do they like?
- Who will help you, for example a bank manager, accountant and suppliers?
- Why would anyone buy from you?
- Will you make a profit once costs are deducted from sales?
At this stage, it’s all about taking the basic idea from your creative brain down onto a tangible piece of paper. Making use of Post-It notes can get that done in a matter of hours! Afterwards, there can be a testing period where the hypothesis is tested with real customers. That way, there’s clear data to draw from as to whether or not the idea is actually viable over a long period of time.
The Business Plan
It will help to think of a business plan less like a formal document with psychic powers to see into the future and more as a set of guiding principles as you uncover tomorrow. Alternatively, you can think of it like a science experiment that creates a hypothesis, creates a methodology to test the hypothesis, and then collects evidence to gather conclusions.
Formatting has to match your personal approach to the business (are you quite creative or more into data)? Whether it’s pen and paper or a word processing document, as long as it’s flowing, you’re already in a good place.
Business plans don’t have to be rigid at all times. In fact, for start-ups, there’s something called customer development that will go a long way. Business plans are all about getting the creative thought and/or big idea from a person’s brain onto a piece of paper (or a digital screen, whatever works).
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