Writing a business plan: The 12 steps
Building a business plan is no easy task. It requires that you have a very clear vision of your market, to understand where you are going to set foot. The objective is to help you show investors that your idea is well-grounded and that it will create value over time. And since this is an absolutely essential step when you want to launch your business, you will need a method to fully realize it. So, here are the steps you will need to look at!
PART 1: Understanding the market
When you set up your company, you must first and foremost understand the market you want to operate in. To do this, you have to proceed carefully.
Step 1: Market analysis
To begin, you need to define the scope of your market. So start by asking yourself if there is a demand for the offer you want to set up! Skip this step and you don't need to go any further in your analysis...
Next, define your field of action: are you limited to the national territory or do you plan to expand internationally as well? Your research depends greatly on this point.
Finally, define who you wish to propose your offer to? In order to analyse your market, define your target as precisely as possible: age, buying habits, socio-professional category, location, everything must be taken into account!
Step 2: The size of the market
Once you have defined your target and your scope of action, you need to ask yourself several questions about the competition. Are there many players on the market? Start by listing them, then analyze how they operate in the market. What is their communication strategy? How do they distribute their products? Also, analyze their pricing and the specific target(s) they are aiming to reach.
Take stock of the number of people who might be interested in your product or service, to be as accurate as possible. Cross-reference demographics and define the size of your market rigorously, without being overly optimistic, but factual!
Step 3: How do you get started?
Next, you need to establish what your business needs to get started. Minimum capital for articles of association, premises, offices, payroll charges, telephone, car, etc.: list everything, and be comprehensive, so as not to be surprised. If you find costs are getting too high, look for alternatives. In the beginning, don't necessarily try to purchase the best equipment. Start slowly with the bare essentials, and you'll invest as the business takes off.
Also factor in the amount of time you'll need for research and development to create your product. Time is money, indeed. In your business plan, every detail counts!
Step 4: The importance of the prototype
If you need investors, this is an essential step. You need to create a sample of your product, to show exactly what it will look like. To do this, determine what resources will be necessary to create your prototype: cost of materials, cost of research and development to improve the prototype, cost of design, etc.
Step 5: Where will you locate your business?
In your business plan, specify the location of your structure. Are you going to rent or buy? Compare prices and rents in several areas to make sure you make the right choice in terms of location. Also, ask yourself which professionals can be found in your target market. Are you faced with the direct competition? Could it represent a hindrance to your development?
Step 6: Understanding investors
When writing your business plan, you should have only one goal in mind: to make your idea as solid and viable as possible. Ask yourself what investors are looking for to put money into your business. Your concept must be attractive: be precise, factual, and talk about profitability. If your market is competitive, insist on what extra assets you have that your competitors lack!
And of course, once your arguments are ready, you will need to identify these potential investors. In order for banks to lend you money, they will analyze the risk your business represents. They need to be sure that they are investing money in a project that is capable of generating revenue.
PART 2: Structuring your business
After understanding the market, your customers, competitors and investors, you will need to start structuring your business.
Step 7: Define your company
To begin, you will need to make a short description of your business. Talk about the people behind the project and present your team. Explain where you want to go and what your objectives are. By reading this summary, you should have a very clear initial overview of your activity, and understand what your expectations are.
Once you have talked about your objectives and your team, talk about your products and services. Describe the functions they will perform and the needs they will meet. Also, emphasize their competitive advantages and what they bring to the market.
Step 8: Define your strategy
After analyzing your market at length, broadly, and across the board, you can now define a strategy to carve out a place for yourself in it. You know everything about your competitors and your targets. This enables you to define which strategy you need to succeed.
Are you going to opt for a differentiation strategy? Are you going to focus on design? On service? On a product that delivers better performance and impeccable quality? A strategy based on low prices? A strategy targeting the higher end of the market?
In short, define your guideline, the one you will determine to follow, no matter what!
Step 9: Organize your company
If your team includes many people, each person's role must be very clearly defined! You will have to shape and organize your team, based on each person's skills and qualities. Who will be in charge of sales? Who will manage marketing? Who will handle the financial side?
Also ask yourself if you will have to hire staff: How many? When? To carry out what tasks and meet what objectives? Also talk about the profile of the people you will need to employ, the skills they will need to have and the experience you will require from them.
Remember, a business plan is not just a matter of talking about the present: you have to project yourself over several years to make an accurate turnover forecast.
To convince investors, you will have to show that your managerial skills and your ability to develop a business are real.
Step 10: Put together the marketing plan
Thanks to the market analysis you have conducted, you will be able to define a marketing plan that will stand the test of time. Indeed, this is a crucial step. After all, what's the point of having the best product or service if you can't deliver to the right people, in the right place, and in the right way? Your marketing plan spells it all out!
Here, you will talk about the ways and means you will implement to reach your target:
Which market segment will this product appeal to?
What will the price of such a product be?
Which sales argument should be made for which segment of the customer base?
What communication plan will be set up? Which media will you opt for, how long, and on what budget?
Step 11: Building your sales pitch
A salesperson needs a sales pitch. In this part of your business plan, you will have to list and explain each of the sales arguments, which will also help you set up your marketing plan. You need to find a sales philosophy that attracts your customers. Build your slogan and define the lines you will rely on to create a privileged relationship with your customers and build your audience.
Step 12: The financial plan
Finally, you will create your financial plan in your business plan. It includes both your business model and all the figures that will help you assess the value creation of your business.
And here, the challenge is to leave nothing out. On a set of tables, you need to present essential data such as :
The amount of investment required
Amounts of expenses (salaries, rent, purchases, equipment...)
To ensure that all your data is clearly processed, you will need to create a profit and loss forecast, planned balance sheet, financing plan, and cash budget.
Your aim here is to supplement the editorial part you have already completed with concrete figures that show everything about your strategy. You will have to convince investors, showing them that your project will be profitable and will bring value.
Tools to help you create your business plan
Luckily, you're not alone in carrying out all these tedious steps! In order to organize yourself as well as possible and not to forget any data, you can resort to a number of solutions such as Liveplan or Strategyzer. These online tools will allow you to build your business plan quickly.
With Liveplan, you rely on concrete models and are surrounding yourself with professionals who are available to give you advice.
Strategyzer helps you build a canvas of all the blocks that make up your business plan: this way, you describe, designate and manage your project easily!
And to succeed in convincing your investors, this type of reliable tools might well make the difference! You integrate all your data, your market analyses, your segments, your financial, marketing and communication strategies, your differentiation keys and you steer your project from wherever you want.
And since all members of your team can have access to this data, and manage their own part, collaboration is now much easier: you clearly know where you're going, and how you're going to get there.
To operationalize your project and give you every chance to develop it, the business plan is an essential step: it brings together all the important data and all the strategies you need to put in place to make your business work. Don't hesitate, and be as precise as possible: you must be convincing and investors must have a clear idea of who you are, what you want to do and how you are going to deliver. So, get reliable tools to make your decisions and make your objectives clear!