I am sure the first thing that comes to your mind is a 40-page business plan with a lot of market research and financial projections. A business plan is often thought of as a doctoral thesis. In my personal case, when I wrote my traditional business plan for my first business it felt like giving birth to a child!
I am not advising against writing a traditional business plan. In fact, the exercise was very helpful to me and I learned a lot about my business and what would work and what most likely wouldn't work. It had great value for me in understanding what my service was, my value proposition and my target audience, the market, my competition. However, it changed significantly after I started getting real customer feedback. I found that all the work I put into my detailed financial plans were wrong as soon as I changed my price point and features. But that doesn't mean that planning itself has no value.
Although in graduate school, while getting my MBA, I learned that every business should have a robust business plan to see how they are going to operate, grow and fund their business. However, times have changed. The trend now is the business startup world when writing a business plan is to go back to the basics or fundamentals. Meaning stripping it down to the bare bones of your business and what is needed to operate, grow and fund it. So, instead of writing that 40-page business plan I highly recommend writing a 1 page business plan with a 30-second sales pitch. I know that may sound crazy but that is truly all that is needed unless you are going to require funding from investors, bankers or venture capitalists.
There are a lot of great tools out there that will help you to do this. I highly recommend Live Plan. I used Live Plan to write my business plan when I embarked on my second startup and it made my life so much easier! What I really liked and continued to use even after my business was up and running was the One-Page Snapshot, which provides all of the essentials needed for you to operate and run your business. I can rave all day about how Live Plan makes it easier for entrepreneurs to write their business plan and also teaches you in so many ways what is required to run your business and what financial budgeting looks like as well. If some of you are afraid to create a business plan, you have nothing to fear. Live Plan provides videos, tutorials, explanations and more for the average person. You don't have to have an MBA to create your business plan with them. They make it super simple and user-friendly. Since it is an online software you can change your price points which will automatically change your financial projections for you! It truly helps you think through business strategy and is a tool that I still use even though my business has been running for years now.
Check it out:
Image shows an example of some of the One Page Snapshot. Your one page snapshot is updated when you update other components of your business plan and can also be printed out and is very nicely designed with color and charts. I have used this and sent it directly to people. Try it for only $9.95
What about your current employer?
I just wanted to throw in this side-bar. One thing you need to make sure is that your idea is not infringing in some legal way upon your current employer. Meaning, you need to check and make sure if you have signed any non-disclosure or other employment agreement and see what your company's policies are if you plan to still remain employed while you begin your startup. This all depends if you are working on a business startup that competes with them or something that came out of you working with them. If this is the case and you go along with your business startup, they could potentially sue you. Did you sign any non-compete agreements? It is in your best interest to determine this before you embark on anything. In addition, some employers want you to sign a form indicating that you have your own business just so that they can see if it is something that you can or cannot do while employed with them. So make sure you read your company's policy in this regard as well. If that all checks out then you are ready to get started on creating that One-Page business plan. I will show you the steps below:
What should you include in your One-Page business plan or pitch?
If you want to have a thriving business I cannot stress enough the need to set goals and hold yourself accountable. You have to plan your next steps with key milestones, dates and other specifics as much as possible. I am not saying that you have to create a very detailed plan for everything you plan to do for months on end because there will just simply be a lot that you don't know or are unsure about and that's okay. However, by at least knowing the next few steps and then keeping yourself accountable to a time schedule will help you push through and give you the clarity you need to keep going.
There are basically 3 concepts that a business plan should cover.
Business Structure
Marketplace
Financial
I will walk you through this using Live Plan's One Page Pitch feature because they literally help make this so much easier than anything else that is out there. Let's break this down even further into 12 sections that include:
Headline
Problem
Solution
Target Market
Competitors
Funding Needs
Sales Channels
Marketing Activities
Financial Projections
Milestones
Team and Key Roles
Partners and Resources
HEADLINE
"Start with a strong, compelling description of your company and its business opportunity. What are the keys to your success? Is it your innovative product or service? The unserved market you’ve identified? The proven team of people you’ve put together? Don’t try to cram everything into 140 characters. Just focus on what’s most important." - LivePlan.com
Describe the essence of your company in one sentence: 140 characters or less
PROBLEM YOU ARE TRYING TO SOLVE
"State the problem (or problems) that you solve for your target customers. “Problems” can also appear as unmet needs or wants — the lack of a good Caribbean restaurant in your town, for example. Be sure to tackle a problem that is important to your market. Just because a need is imperfectly met does not guarantee that anyone wants to pay for a better solution." - LivePlan.com
Create a list of the problems you solve (in priority order)
SOLUTIONS TO THE PROBLEMS
"Explain how you solve the problem that your customers face. What does your company offer? What is it about your solution that provides a uniquely effective remedy for their pain points? Don’t just name your products or services here. Give a sense of how they solve the problem in a novel or superior way." - LivePlan.com
Match your solution to every problem you listed above
DEFINE YOUR TARGET MARKET
"What types of potential customers do you intend to focus on? Which group represents your primary market? Which others are worth pursuing? Selling to “everyone” is not a good approach. Take Nike as an example. Their shoes are broadly useful, but that doesn’t mean their target market is just “people with feet.” It’s tough to craft marketing messages and find sales channels to address nearly everyone in the world at once. Instead, Nike focuses on their best potential customers — aiming, say, the new Air Jordan's at athletes, sports fans, young people with a sporty sense of style, and so on."
"As you identify the best segments of the market for your solution, make your best guess at how many prospects are available in each segment and how much they typically spend each year to address the problem you solve. If you don’t know enough to put together these estimates, this is a great opportunity to do market research, talk to knowledgeable people in your industry, and get in conversation with potential customers. The more you know about your market now, the less chance you have of missing the mark later." - LivePlan.com
WHO ARE YOUR COMPETITORS?
"Make a short list of your competitors. If you don’t have obvious direct competitors, focus on other ways that your target customers satisfy their needs now. You may have the only bowling alley in town, for example, but you’re still competing for entertainment spending that might otherwise go to movie theaters or restaurants or the local skating rink. As you add competitors, describe what makes your offering more attractive. Do you offer a lower price? A unique experience? A better location? A more tailored solution for your particular customers?" - LivePlan.com
List about 4 competitors and write out how your solution is better than theirs
WHAT ARE YOUR FUNDING NEEDS?
"If your company is seeking funding, include the amount you would like to raise and describe how you intend to use that money to reach your goals. Keep in mind that some countries have strict laws about soliciting investments. To be safe, limit your description to the planned use of funds. Do not describe what equity or other benefits you are offering in return for that funding. If you are not seeking funding, you can skip this section of your pitch." - LivePlan.com
How much funding are you seeking?
How will you use these funds?
HOW WILL YOU GET YOUR PRODUCTS OR SERVICES TO YOUR TARGET AUDIENCE?
"Describe how you plan to get your products or services to market. Are you selling and delivering to your target customers directly through a retail store, website, or catalog? Do you have a sales team? Do you sell through intermediaries — distributors, dealers, resellers, or others? Identifying your sales channels is important to understanding the economics of your business model." - LivePlan.com
List about 4 or 5 ways of what your sales channels will be
WHAT ABOUT MARKETING ACTIVITIES?
"Explain how you plan to attract attention, build interest in your offerings, and convert prospects into customers. Describe your web presence. What sort of online marketing do you do? Do you advertise online, in print, or elsewhere? Do you attend trade shows or sponsor events? If your direct marketing is largely done by resellers or dealers, what kind of marketing will you do to attract and keep those key partners?" - LivePlan.com
List about 4 or 5 marketing activities (in priority order)
WHAT ABOUT FINANCIAL PROJECTIONS OR FORECASTS?
"When you are confident that you have identified a market with a problem worth solving, it's time to put together a quick financial forecast for your solution. Can you actually turn a profit? Some opportunities look good at a glance, but don't hold up to financial scrutiny. If you are planning for an already established company, setting financial targets is just as important so you can track your progress in the coming year. You need to think about how much you are going to charge for your product or service and also how much of that will actually be a profit?" - LivePlan.com. You can go into greater detail if you like inside Live Plan but for now you will need to list out:
Revenue streams
Expenses and costs
Profit
WHAT ARE SOME OF YOUR MOST IMPORTANT MILESTONES?
"Make a quick list of important milestones for your business. Choose major events or achievements that need to happen on time to keep your plan on track. Good examples might include launching a new product, entering a new market, adding a key hire to your management team, or finding the right location for your new store." - LivePlan.com
List out at least 4 milestones to feature in your pitch with dates and deadlines
WHO WILL BE A PART OF YOUR ORGANIZATION AND WHAT WILL THEY DO?
"Identify the key members of your organization, and explain why their involvement is important to your future success. Definitely include company owners and members of the management team. You may also want to add key employees with strategically valuable skills or connections, noteworthy roles you plan to fill later, trusted advisors, or other valuable contributors." - LivePlan.com
WHO WILL BE YOUR KEY PARTNERS AND RESOURCES?
"Use this section to identify any relationships, equipment, facilities, patents, or other resources that are strategically important to your business model. You can use this section to cover almost anything of note that is not addressed in the rest of the pitch. " - LivePlan.com
Phew! That wasn't so bad now was it?! I know that may have seemed like a lot but that is basically what you need to get started. Again, if you are looking for funding you will most likely need to present an investor more than just a one-page pitch. You can cross that road when you get to it but for now this will suffice. Live Plan also has a feature that you can export your pitch to a slide deck or presentation to show others if needed.
Phew! That wasn't so bad now was it?! I know that may have seemed like a lot but that is basically what you need to get started. Again, if you are looking for funding you will most likely need to present an investor more than just a one-page pitch. You can cross that road when you get to it but for now this will suffice. Live Plan also has a feature that you can export your pitch to a slide deck or presentation to show others if needed.
So, go ahead and get started with it today. You may not know all the answers right now but at least you are making an effort to do something in regards to making your business a reality and if anything else, doing this exercise will help give you A LOT more clarity than you ever had before.
NEXT STEPS
Download or purchase a hardcopy of my book & complete the exercises for step 6
Read the next article - Step 7 "9 Easy Steps That Will Turn Your Side Hustle Into A Real Business"
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Take my Side Hustle Masterclass where I not only walk you through all the 7 steps with videos and other exclusive content. You will also be setting up your own business using just 9 easy steps, and at the end, you will be ready to accept your first paying customer.