Writing a Business Plan
Have you always dreamed of starting a business?
Today, more than ever, people are looking for additional ways to make money. It seems like the days of one source of income are long gone. You’ve probably dabbled in a few things to make extra cash, but maybe it didn’t quite pan out – or it was too much time for too little return.
Starting a successful business takes deep thought, consideration, and planning. Most people dive into projects without fully understanding their strengths and weaknesses. With JournalOwl, we guide you through a methodical 21-day process of writing a business plan that considers your strengths and weaknesses. With journaling, you’ll uncover what your true strengths are – which will help you identify, with clarity, what market opportunities to pursue.
At the end of this challenge, you’ll have a working business plan that you can execute upon.
Thomas Edison said it best,
“A vision without execution is hallucination.”
So, let’s get to work.
Step 1: What do you sell?
Start by asking yourself what you intend to sell. You must clearly define your products or services to run a successful business. When you write it out, you can explore the various features, getting a much better idea of what you offer.
Step 2: Product Delivery
If you only sell products from inside of a brick-and-mortar business, delivery will be easy. People will come into your store, pick up a product, take it to the register, and pay for it. However, if you sell products online, you need to think about delivering those products.
What shipping service will you use? How much will you charge for shipping? How fast will you deliver products?
Remember, delivery is a big part of the customer experience. Take your time to go over this topic, weighing the benefits and drawbacks of various methods. Don’t just explore the benefits and drawbacks from a business standpoint, either. Put yourself in your customer’s shoes and see it from their standpoint as well.
Step 3: What is your vision for the business?
Every business needs to have a vision. You should create a vision statement that your employees know by heart. While a vision statement needs to be concise, you need to begin by explaining your entire vision. You might have to write pages and pages to explore this topic thoroughly. Then, read over the writing, looking for crucial concepts you can use to create a vision statement.
Thomas Edison said it best: "A vision without execution is hallucination." As you move through this challenge, you'll start to back this vision with actionable steps that you'll execute upon very soon.
Step 4: Who are you customers?
Defining your customer base is one of the most challenging yet essential aspects of writing a business plan. No matter how fantastic your product or service is, your audience won’t consist of everyone. Instead, you need to narrow it down to reach the people who are most interested in what you offer.
There are four things to keep in mind when defining your customer base (Steven D. Peterson, n.d.). First, you need to think in terms of geography. Where do your prospects live? If you’re going to open a local business, you need to stick to your local area. However, if you run an online business, you can reach even more people.
Next, think in terms of demographics. Consider gender, age, marital status, and more. As you do this, you’ll begin to build a customer avatar you can use when marketing and developing products.
Then, write about your audience’s lifestyle characteristics. What opinions do your prospects have? Do they have specific beliefs? What attitudes do they share? These characteristics will bring your customer avatar to life.
Finally, you’ll need to consider their behavioral patterns. When do people in your market typically shop? How much do they spend? What do they need to become loyal customers?
As you write your journal entry, you will notice your customer base taking shape. Instead of just floating around as an idea in your brain, they will become real people.
Step 5: How will you reach the customers?
Your business plan also needs to include a marketing component. That means you need to determine how you will reach your customers and then include that in the plan.
Writing is an excellent way to come up with ideas for reaching your customers. Like Jeff Bezos uses six-page memos to explain ideas, you can use your journal to cover different options and see if they will work.
There are lots of ways you reach new customers (Lesonsky, 2017). You can network, offer discounts, partner with other businesses, leverage online reviews, and more. You can even participate in community events.
As you write it out, you’ll realize that some options will work for your business and others won’t. That’s what’s so great about writing. You get to explore every aspect of the idea to see if it’s a fit for your business. If it isn’t a fit, you can discard it before approaching your business partners with it. That’s a great way to save time.
Step 6: Is there an unmet need in the market?
You need to make sure the market is strong before you open your business. That’s why it’s so important to ask yourself if there is an unmet need in the market that you can fill (Weintraub, 2013). This requires more than a yes or no answer. You need to go over your answer in detail to make sure it’s correct.
Step 7: Who is the competition?
Never jump into a new business opportunity without knowing who the competition is. You need to go beyond a list of names and analyze your competitors. Create a journal entry that includes everything you know about your competitors. Explain how the competition reaches customers and why people choose them. Knowing your competition is a critical step in getting a foothold in the market.
As you write your journal entry, you might realize that you don’t know as much as you should. That means it’s time to do some competitive research. You can conduct the research yourself or hire an outside business to do it for you. Then, you can revisit the journal entry once you have more information.
Step 8: How will we stand out from the competition?
You need a competitive edge to stand out in the business world. That means you need to determine what sets you apart from the competition (Totka, 2013). Don’t just think of the obvious. Look for all the ways your business differs from the competition. Then, write about why those differences matter. This information will help you market your company.
Step 9: What are your strengths?
You and your partners have specific strengths you can bring to your company. When you know those strengths before you write your business plan, you can create a strategy that plays to them. For instance, if you’re a strong fundraiser, you can consider that when writing your business plan. When you write your strengths, add details to fully understand why they make you stand out and how they are an asset.
Step 10: What are your weaknesses?
You also have weaknesses that you need to consider. Just like with strengths, write them down and go into the details. However, this time, explain how you can overcome your weaknesses. Maybe one of your weaknesses is one of your business partner’s strengths. Knowing that going in will help you choose roles and ensure that your business needs are met.
Step 11: What challenges do you anticipate?
You can expect to face challenges when starting a new business (Forbes Business Council, 2020). Common challenges include getting the capital you need, building a framework for your company, determining demand, and more. Each business has its own set of challenges, so think about what you’re trying to overcome. Write down all of the challenges, along with strategies to overcome them. When you address your challenges ahead of time, you’ll be better equipped to create a realistic plan.
Step 12: How will you promote the business?
You want to hit the ground running when you start a business, so you need to consider your marketing efforts. What will you do to attract people to your company? There are more marketing opportunities than ever before right now. Think about both online and offline marketing options and write plans for both. Don’t just look at it broadly, though. You need to explore each possible idea. For instance, if you intend to run pay-per-click ads, think about how you will do it.
- Do you know how to handle a marketing campaign, or will you hire someone?
- Will that person be in-house, or will you outsource it?
- How much will you allot to your marketing budget?
- When you answer all the essential questions in detail, you’ll finally be ready to define your marketing strategy in your business plan.
Step 13: Who are the key players?
When you write your business plan, you need to decide who will be the key players. Who will be part of the management team? Will you have a board? If so, who will the members be? What about the advisors? You’ll need to name them as well.
Far too many business owners mess up when it comes to defining roles. They choose people who are ill-suited to run a company or give people too much leeway and control. You can avoid these problems by spending time journaling about the key roles in your business. Explore different people and ideas. Who will be the best fit for each job? What will that role entail? By going over each detail before you write your plan, you can avoid serious problems down the road.
Step 14: How will you staff the company?
You need to know how you will staff your company before writing a business plan. Developing a staffing plan is relatively complex, so it’s a good idea to write it out. First, begin by thinking about your ideal employee. Who is most likely to be a good fit in your company? Next, you need to think about how you’ll attract employees. Will you post job openings? If so, who will write the job descriptions? If you don’t want to post job openings, will you use a staffing agency? What agency will you use? How will you budget for paying the staffing agency and the employee? Will you pay employees less if they come from a staffing agency and pay them more if you hire them as full-time employees? As you can see, you have quite a bit to unpack, so you should spend some time journaling about the topic.
Step 15: How will you train staff?
Finding staff is one thing, but training them is another. If someone were to ask you how you intend to train the staff, you might say, “I’ll just teach everyone what I know.” That sounds easy enough, but in reality, training is hard work. You need to have a plan in place that you can utilize when you onboard employees. Write out what you expect from your employees and what they need to know to meet those expectations. That will help you onboard your team.
Step 16: How much do we need to charge to earn a profit?
You need to determine how to cover your overhead and turn a profit when writing a business plan (Newtek - Your Business Solutions Company, 2012). Before you write your business plan, spend some time exploring your expenses and pricing structure. You might have to change prices a few times before you turn a profit. While this might seem like it’s just about facts and figures, you need to write it out, so you can justify the pricing structure.
Step 17: How do we get the money we need to start the business?
You have an idea, but you need money to turn it into a business. How will you get that money? There are lots of places to get the funds you need to start a new business (Hannon, 2014). You can use your personal savings, ask friends and family, or get a loan from a bank or credit union. You can also try to get money from a venture capital firm, an angel investor, or a crowdfunding site. These are just some of the options, and each comes with unique pros and cons. Explore each possible choice through your writing until you decide how your company will obtain funding.
Step 18: How will you use investor funds?
If you choose to get funds from investors, you must decide how you will use the money. Investors won’t just hand over the cash without looking over your financial strategy. Write down ideas that you can use to limit your cash-burn rate. Also, detail your financial projections, so investors will know your spending plans for your company’s first year. Don’t be surprised if it takes some time to explore all of these ideas. As you write, you will find yourself vetoing ideas that sounded good at first. That’s what’s so great about writing. You can weed out the bad ideas before presenting them to others.
Step 19: How will you measure success?
Businesses can measure success in numerous ways (Kappel, 2017). You need to choose methods based on your business and goals. Some possibilities include analyzing financial statements, evaluating customer satisfaction, looking at the number of customers, and conducting performance reviews. These are just a handful of ways you can measure your company’s success. Begin by brainstorming for options. Then, write about each one. Keep in mind that you can pick more than one way to measure your success. After you write about your options, it will be easy for you to know which ones suit your business.
Step 20: What are your future goals?
While your business plan has lots of components, it’s really about where your company is headed. Where will your business be in the future? What are your goals? You have to define your objectives to have a successful business plan (Entrepreneur, n.d.).
Take the time to write about your different business goals. Think about where you want your business to be in five and 10 years. Do you intend to grow quickly? What benchmarks do you want to meet? Answering these questions will help you prepare for the future.
Step 21: What is your exit strategy?
When you’re in the process of building a business, closing down is the furthest thing from your mind. However, you need to consider an exit strategy before writing your business plan. Your exit strategy will allow you to make a tidy profit when you close your doors. You have different exit strategy options, and you’ll need to consider which one is best for you (Robbins, n.d.) By writing it out, you can explore each strategy’s pros and cons and determine which makes the most sense for your needs.
Liquidation is one exit strategy option. If you choose this route, you’ll liquidate your business, pay your creditors, and divide the proceeds among your shareholders, if applicable. Then, you can take the rest of the money.
If you don’t like the idea of liquidation, you can consider selling your business or passing it on to your kids. It’s wise to go over each option now when you don’t feel emotional about exiting your business. This will allow you to analyze the facts and choose the right one. Then, you can include it in your business plan.