Sometimes in life, it pays to leap before you look—but planning a business is not one of those times. No matter how clever you may be or how groundbreaking your business idea is, you can’t hit the ground running without a proper business plan.
To get you started, we picked a few key areas that newbie entrepreneurs need to focus on when building their initial business plan. These five important steps to creating your business plan will help you take action towards molding your ideas into marketable commodities.
1. Don’t Quit Your Day Job Before Conducting Market Research
Many entrepreneurs make the mistake of jumping the gun on their business in order to gain freedom and independence from their day job. However, staying at a job while you build your business on the side is a smart way to ensure your business is viable before taking on the risk. While you’re still at your day job you can connect to potential customers and conduct market research to see if people will pay for what you’re offering—and how much they’re willing to pay on top of that.
2. Make Long Term Goals
Don’t fall prey to tunnel vision by focusing only on starting your business; you also must have one eye looking out towards the future so that your business will grow. Plan out long-term goals and decide which business milestones you want to reach by what date. Have a realistic outlook and plan achievable goals that each build into your long term plans.
3. Perfect Your Elevator Pitch
You know your business plan has legs when you can pitch it to someone in 60 seconds or less and still manage to pique their interest. A good elevator pitch is concise—the shorter, the better—so the process of creating your elevator pitch can help you spot the redundant or overly complex areas of your business plan. An easy template for creating a usable elevator pitch is to identify a problem and position your product or service as the solution to that problem.
4. Study the Competition
Look at your competitors in the industry. What are they doing right? How do people respond to their brand? Most importantly—what are you going to offer your customers that sets you apart from the competition? If possible, try to look into the financial history of your competition: their projected growth, their annual profit, how long it took for them to grow and what happened to them during different market trends.
5. Plan For All Financial Possibilities
The most important step towards planning your business is crunching the numbers—factoring in all possible expenditures, projecting profit expectations based on industry research and adjusting your prices accordingly. But it’s not enough to plan for optimal conditions; you have to have financial contingency plans in place for when the unexpected happens. Run through several disaster scenarios, such as a vendor price inflation, accidental loss of merchandise, or a rent increase in your commercial space, to see if your budget can handle the worst case scenario.
Creating a business plan takes time and attention to detail. Let these five overarching considerations guide you to success.