Congratulations! You have a great idea and you have decided to do something about it. That in itself is a great first step. In this post, let’s go through some other important steps before your start this adventure. Let’s go!
Refine your idea with competitive analysis and market research:
Before you get too excited with your own idea and jump right in, it’s important to look around and do a thorough research to understand your market. How would you stand out? What are your differentiators?
It may sound crazy but even if you plan to start your own grocery store, you may want to think about what your customers would know you for: e.g. fresh groceries, the cheapest gallon of milk, friendly staff, or great service. Every business should have a differentiator that customers can easily identify with and help your business stand out among the alternatives.
A good way to think about differentiators for your business is by answering these key questions:
- Who is your target customer?
- Who are the competitors in the market (big and small)?
- What is the biggest pain point of your target customers?
- How would your idea or your business provide a solution to their pain point?
- How is your solution different from other solutions for your target customers?
- If you believe your solution is more effective, can you provide it in a cost-effective way?
How to write a Business Plan?
Once you have solid answers to the above questions, you are ready to write your business plan as the next step. Writing a business plan sounds daunting, but it will help you clearly think about the potential for your business before you commit a lot of resources.
Whether you write an elaborate business plan or a lean business plan, you may want to think about these essential elements of the business plan:
- Executive Summary: This is your executive pitch. Imagine describing your business in a 2 minutes long elevator pitch in front of investors. That’s exactly the purpose of the Executive summary.
- Market Research and Analysis: Here you would explain how your product is bridging the gap in the market? Why your product/idea is superior? It is a good idea to invest some time in a SWOT (Strengths, Weakness, Opportunity, and Threat) analysis to get a very clear picture of the competitive landscape of your business as compared to the overall industry.
- Legal Structure and Organization: You will have to spend some time thinking about your team structure. Do you want to incorporate or want to start as a sole proprietorship? We will delve deeper into the comparison of different types of entities in our next article.
- Product Description: In this section, you will describe the product or service you want to offer to the market. The level of detail in this section depends on your audience. For your own and your team’s guidance, it’s best practice to dig deeper into the products or services. However, when you are raising funds, you would want to describe your products or services in as few words, and as clearly as possible at a very high level. You could always elaborate, if asked, but you don’t want to get them drowned into technical or tactical details at early traction stage.
- Marketing Plan: The marketing plan is the backbone of any business plan. As a business owner, it will serve you well to know your target customers well, and how to get them to use your product or services. In this section, think about how you will find your first customers, and how will you scale your business?
- Costs and Financial projection: Map your investment needs with business demands for marketing and operations. You should try to have a clear goal of how much money you would need for the next three years and what will you use it for. You should also project your plan to repay borrowed funds.
SBA.gov has a lot of resources here for starting a business, and is a great place to look for templates.