So you have a cool business idea that you believe will work. It’s so great that you can’t wait to start! But before you charge right into it, here’s something you should know: More than half of start-ups fail within the first five years. This is not meant to pour cold water on your plans, but rather as a reflection that a successful business requires a lot of hard work and to maximize the opportunities that come your way. Also, having a business plan will help you in more ways than one.
Why do I need my first business plan?
As the saying goes, if you fail to plan, you plan to fail. By writing a business plan, you will be guided to think through important aspects of your business, thus improving your chances of succeeding in your venture:
Research – it helps you systematically research the market size and prospects of your business before you even start.
Review – it helps you see if your business idea is viable. It’s also a benchmark against the actual performance of the business.
Resources – it helps you plan for resources that you need to put in place to run your business based on strategies laid out within its framework.
Reference – it serves as a valid reference point of discussion with prospective investors, financial institutions and shareholders. They take one look at it and know what your business is about and where it is heading.
The best thing is, you don’t need an MBA or to hire a consultant to write a business plan. A simple one-page plan, like the one by Chris Guillebeau, author of The $100 Startup, is good enough for most small businesses to start from. You can modify and add on to the plan as your business grows.
Basic Components of a Business Plan
Regardless of its complexity, a compelling business plan will contain the following main components. For simplicity’s sake, let’s assume that you are starting a healthy snacks business called “Real Pasta Snack” -not the real name.
A one-liner that summarize why your business exists, how it will help people and what makes your offering unique
Real Pasta aims to bring organic, healthy snacks to every Italian at an affordable price by shortening the gap between health food suppliers and consumers.
About The Business
Explain in brief the problem or pain point your business addresses. Share how your business would solve this problem.
Problem: Given the option, people would prefer buying organic and healthy snacks compared to junk food. Unfortunately, organic snacks are too expensive for the masses due to inefficient marketing and distribution chains caused by relatively small volumes.
Solution: We source directly from the suppliers and market directly to consumers from our efficient online marketplace platform. This will reduce the overall cost of the organic snacks.
You and Your Team Members (if any)
The background of your core team members is important to ensure that your skill sets complement each other. Investors and banks will fund your business if they are confident that you are the best person to run it. As such, the more credible your background is in starting this particular business, the better.
Piere as Founder, CEO 5 years of digital marketing experience in a marketplace platform for online groceries and a fitness enthusiast.
Description Of Products/Services
A brief description of the products/services that you are selling.
We sell organic, healthy snacks online with efficient marketing to achieve a low customer acquisition cost.
Industry & Competition Analysis
Outline your target market demographics and size, the competitors within this space as well as the threats and risks present, and opportunities to do it better than the competition.
Target Market & Market Size: Italian, aged 22-35: 7.0 million.
Competition: Other organic food companies, such as JustLife, BMS Organics and Signature Snack.
Your strategies to achieve your vision and mission. What is your unique selling point or secret sauce?
Our strong relationship with our suppliers guarantees the continuous supply of fresh, delicious and healthy snacks that are priced affordably for our consumers. The quality and price can’t be found anywhere else and can be conveniently accessed through our online marketplace.
Sales & Marketing Strategies
Share how customers will know about your business and how to ensure that they return.
We will start a monthly subscription programme that allows customers to try our products without much risk as they can stop at any time. Subscribers will also earn points, which can be redeemed as rebates on their subscription rates. Those who refer friends to us will get additional reward points.
Key Metrics Of Success
How will you know if your business is a success?
No. of subscribers: Once we reach 1,000 subscribers.
Revenue: Once we hit a revenue of Euro30,000 per month.
Forecast of projected sales, break-even point, profit/loss account, cash flow.
Funding requirements (overheads, salaries, cost of sales, etc.) and sources including loans.
Once the business plan is completed, you are now an entrepreneur who understands your business well and can realistically project its growth path. This makes you stand out in the eyes of investors and bankers, which helps when you want to raise funds for your business. You are now ready to embark on an exciting chapter of your life!
Don’t forget to Planning For Emergencies
While it’s important to plan for your business, it’s also equally crucial to plan for the emergencies that may come your way.