by Suzanne Duval d’Adrian
When a house is built, the strength of its foundation is key. This is the anchor that supports the entire structure, preventing it from blowing away and holding it strong and steady despite potentially changing climates and conditions.
You wouldn’t think of building a house without putting that essential first layer into place, would you? Well, the same is true if you’ve got a great idea and want to promote your product or service to the rest of the world. One of the first things you’ll need to do is lay a foundation for your enterprise — a strong business plan.
To successfully create the document, you’ll need to know why it’s so important and what it can do for you:
- A business plan helps you create a strong description of your venture so that you can intelligently explain it to others, including investors. By nature, a business plan details the ‘who,’ ‘what,’ ‘when,’ ‘where’ and ‘how’ for your business. The process provides a closer look at your goals and purpose, refamiliarizing you with why you’re doing it all in the first place. This puts you in a better position to speak with others about your organization — and get them excited.
- Your business plan defines your target audience. It pinpoints who will be interested in what your business has to offer and what segment of the market you will want to speak to. Without a well-defined target audience, a business can easily find itself trying to be all things to all people and never fully connecting with any one group to drive sales. This means that the business will never reach its full potential.
- Preparing a business plan ensures that you’re fully aware of potential competitors and the competitive landscape. It’s so easy to get caught in the “I’ve got such a great idea” mentality that sometimes entrepreneurs forget to identify who they might be competing against. This critical information will shape how you most effectively reach your target audience. Look at your competitor’s strategies to see what is, or isn’t working for them. You’ll need a solid plan to break into the marketplace and knowing about your competition is an important first step.
- Creating a business plan also encourages you to closely examine elements that you may have previously overlooked. You’ll take a closer look at the financials and pinpoint what your product will need to cost to ensure its profitability. Your management team will also be defined and you’ll plan where the day-to-day business operations will occur. Things like distribution and marketing can often get lost in the shuffle, but they are essential to building your business and getting your product or service into the marketplace.
- One of the most exciting aspects of a good business plan is that it envisions future growth. You’ll have the opportunity to forecast what additional products or services might look like in the years to come.
As you’re setting up your business plan, here are some helpful tips:
- Make sure you can clearly explain what your product or service is and communicate why the consumer will want to purchase it. Closely examine each aspect of your offering and develop a shortened version of the description. Establish how your product or service is unique and different from your competition — what sets you apart. Often, it helps to ask someone not directly involved in the day-to-day operations of your enterprise with this.
- Be realistic about what you can charge for your product or service. You’ll need to closely look at your competitors, how they are marketing their offerings and what they’re charging. Your product or service may be superior, but if the price point is significantly higher and the features and benefits aren’t clearly communicated, consumers won’t understand the value they’re getting. When setting your price, don’t forget to take your operating costs into consideration. If your price is highly competitive but you can’t keep your doors open, that’s a problem.
- When developing your budgets, remember to set funds aside for important components like branding and marketing. Most people realize that a product needs to be attractively packaged to prompt a consumer to pick it up off the shelf or click the ‘order now’ button, but you’ll also need a well-designed brochure or website to effectively communicate your organization’s goals, mission and services. If you’re offering a service, you’ll need strong materials explaining the features and benefits. It’s important to speak with a design professional to help you develop and implement a solid brand strategy that will work alongside your business plan.
- Realistically look at the strengths and closely examine the weaknesses of your plan. This is your opportunity to fix something BEFORE it’s broken.
- Don’t get too carried away with envisioning future products or services. Putting your effort solidly behind one, or even two offerings is a stronger approach than giving a half-hearted effort across a larger variety of products or services. It’s important to remember the adage, “Do one thing and do it well.”