How To Write A Startup Business Plan
Why Do I Need A Business Plan? Why do you need to write a business plan? There are a number of reasons. Writing a plan dramatically increases your chances of success as an entrepreneur. Here are just a few reasons why you would want to write a business plan. 1. Evaluating initial startup costs. Determining what it will take to make a profit. Analyzing your competition and it's success and failures (which you can capitalize on) 4. Well defined rolls of all people involved in the company. Investigating your market and developing a strategy. Anticipating problems before they occur. Defining a clear goal and exit strategy for your business. Convincing investors to fund your business Some may scoff at all of the parts of a business plan, but remember that you are undertaking this endeavor to make money, not to just produce a product or service. Most businesses fail because they are hit by unforeseen expenses -- or situations -- that they should have anticipated ahead of times. To give yourself the best chance of success, do your homework ahead of time and you'll be way ahead of most people. Plan Your Work, Work Your Plan A business plan is not a document set in stone and you will probably change it in the future as your business develops.
When you are stuck on an issue refer back to your business plan and remember what your initial goals were and whether the situation has changed significantly enough that the plan needs to be reworked. Planning your work is when you write your plan, but you can't just stop there. You must work the plan and stick to it as you move forward in order to meet your exit strategy or other goals for the company. Step 1: Defining Your Product Or Service The first step to writing your business plan is defining exactly what your product or service is. This is what you will approach a potential customer with. How would you explain your product or service to a potential client? What would you tell them about it? How would your product or service relate to other businesses? Describing your product or service should fit within 1 paragraph with supporting paragraphs underneath it. Most people, when dealing with something innovative or something that is identical to a competitor, try to cop out of this and say "it's just too complex for my product to be described". That's hogwash. Every product or service can be defined. If your product or service is so innovative that it can't be defined then the chance of it succeeding is very low.
Here are a few examples. * Google was simply "a better search engine that works" * Apple was simply "a computer that can fit on a desk" * Microsoft was "an operating system that can be mass distributed" * Amazon.com was "a mail order bookstore with an online front end" Describing your product is not a hard thing to do. Implementing a strategy to sell, distribute or market your product in the long run has the most impact on whether your business will succeed. Step 2: Who Are Your Customers? Defining your target market may be a little difficult if you think your product can be used by anyone, but it can be done. Simply putting "everyone on Earth" is not a practical target market. Whether your product or service can be used by everyone is not the key, it's who can afford and needs your product. Is it small businesses? Does it fit the consumer market that cooks a lot? Is it Internet users who are looking for dolls? Defining your exact target market is key to setting up a proper marketing strategy. Without knowing who your potential customers are you will be casting your line into a vast ocean rather than a stocked pond. Another part of this is determining if your target market can afford your product and will they purchase it from you.
If your product can only be used by boys age 14-18 and the price of your product is $1000 your market will probably be very small. This is all part of the plan, don't be discouraged if you find that upon doing research your product or service doesn't make sense. It's better to evaluate things now and scrap the whole thing than to accept money from investors and finding out later that your business doesn't stand a chance. Step 3: Market Strategy Who is your competition? How will you reach your target customer or client? These are all questions that need to be defined. Find two or three competitors and evaluate them. Where are they successful? Where is their main revenue coming from? What things have they tried and failed? What things do they lack that you will provide? Analyzing the competitive landscape is an important part of determining if you can succeed. You may even realize other areas that your product or service needs to focus on to have a chance of succeeding. How are you going to reach your customer? Will it be through catalogs? Advertising in the local paper? Word of Mouth? Direct sales? Investigate the costs of implementing a strategy of reaching your customer and client base. If you are selling a product how much will it cost to get your products on shelves or to set up a e-commerce website? What are the costs involved to place advertisements? Simply having a product or service and not having people even knowing that it exists is a certain road to failure from the start.
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