A solid business plan sets out your goals and steps you’re going to take to get there. You’ll need to be able to articulate this plan to investors, vendors and distributors in order to be taken seriously. It doesn’t matter how small or big your business is going to be, to get started the first thing you should have is your business plan.
Here are eight things you must do before writing a business plan.
Find a mentor
As a young entrepreneur, you should find a mentor to guide you along your private business journey. A mentor is a valuable resource, because an experienced professional can guide you through some of the pitfalls that may occur when starting a new business.
Appointing a mentor, can help you avoid making crucial early mistakes with your business that can often lead to financial hardships.
Here is a list of places where you can look for finding a mentor:
- Talk to family and friends to find you potential mentors
- Professional online networks
- Industry boards or associations
- College or university professors
- Other local entrepreneurs
- Professionals and consultancy firms
Analyze your initial business plan with your mentor and team members to determine what has worked well so far and what has not.
Learn from your competitors
Once you have committed to your new business idea, you will need to understand who you are competing with. Learning more about your competitors can be a great way to learn what has worked for their business, as well as what you should avoid for your business.
Define your business Legal structure
An appropriate legal structure provides an important foundation for your startup. There are different types of business structures, each offering distinct advantages and potential drawbacks.
We suggest you to incorporate a corporation/company to help you;
- establishes a foundation to support company’s growth,
- limit potential business liability,
- to develop appropriate tax strategies, safeguard its intellectual property,
- attract outside investors to invest in exchange of equity shares, and
- reduce potential disputes
Evaluating your options carefully is important because it’s easier and more cost effective to make the correct choice early, instead of revising your legal structure later.
Do Market analysis – To include in business plan
Before getting into any kind of business, you should analyze the market potential. To analyse market, you must find answer to following things first:
- which geography, population and segment of the market will be buying or using your products and services.
- is the market a viable option for your type of products or services.
- what your customers do for living and how much they can afford to buy your products or services.
- can you expand your products or services to other part of your state or country. If yes, what is the market potential.
- who are your competitors and what is their market share.
- if yours is a service oriented company, then how are you going to hire more to expand your presence,
- how you intend to penetrate the market, manage growth, communicate with customers and distribute your product or services.
While answering these questions, it’s very important to be specific and honest about your products or services and the market potential it has. At least write down top 5 reasons why people will buy or use your product or services.
Write down things you need to get started
To get started, you should have certain things ready and to dominate the market share, you must continue to have all those things that is required for your business.
To find out your requirements or needs, here are few possible questions that you should answer to note down your business needs before getting started:
- How many employees you need to get started and what should be their skills.
- Do you need a office space. If yes, where should you have it and how much you can afford.
- If yours is a product based company, then do you require to prepare product samples for customers.
- Should you patent your innovation.
- Should you take Trademark for your brand name used for business.
- Write down all specific needs your company will do in order to satisfy customers.
Don’t forget to attend trade shows. You can get lots of information from trade shows.
Write down your marketing strategy
In your marketing strategy, you need to know how to reach your customers. How are you going to persuade and convince your customers. If yours is a new product, then how are you going to explain the purpose and need of your products or services.
What will be your advertising and promotional strategy to persuade customers. In your business plan, you must mention how you are going to attract customers for your product or services. Have a budget for it in your business plan.
Find out initial cost for your startup
Finding your startup cost is the most important part of your business plan. You and your investors must know the estimated startup cost. To find out your initial cost, we suggest you to do following things:
- List down cost of all tangible and intangible things you need to get started.
- In case of machinery or use of costly assets, try to get quotations from vendors.
- List down all the expenses you may incur during the initial phase of startup life cycle.
The total estimated cost of all these items will be your startup cost.
Know how to fund your business
If the startup cost is beyond your savings, then find out all possible ways to fund your business. You can fund your business from outsiders such as bank, financial institutions, VCs or angel investors.
To raise capital, you need to make sure that your business plan is specifically written to their needs. You can use your business plan as a toll to attract capital.
- How your product or service can help customers to do better safely and cheaply.
- What competitive advantage your products or services has in comparison to your competitors.
- How you can distinguish your products or services from others.
- What are the special features of your product or services.
- How much money you need to start and maintain your existing business.
- When your startup will start generating revenue and what will be its trend.
While preparing financial projections of your business, you must ensure that it’s understandable and accurate. If you lack business or financial education, then it’s better to take help of a finance professional to prepare estimated and projected financial details for your startup.
Government agencies have many programs specifically designed to assist young entrepreneurs in the startup phase. It’s beneficial for you to research what incentive programs your business may qualify to get government assistance.