7 Steps to an Effective Business Plan

Do you want to write business plan for your start up business or business idea, but you feel overwhelmed and don’t know where to start? In this blog post we are providing you with guidance and practical steps on how to write an effective business plan. Download the free guide linked below for more detailed explanations.

Why is it important to write a business plan?

• The process of writing your plan will help you focus, clarify your ideas and identify priorities, saving both time and effort.

• A business plan is crucial if you are raising finance from a bank or outside investors as potential investors.

The biggest tip we can give is just to start. Even if you do not have all the information readily available, start by writing down everything you do know, and then you can go ahead and do research to fill in the blanks.

The goal of a business plan is to firstly convince yourself, and secondly potential investors, that you have a viable idea that can turn into a sustainable business that can create value. This will enable you to make an informed go/no-go decision!

Step 1: Verify your market

Before you start your business, the first thing to do is prove there is sustainable demand for your product or service. If there is no demand, your business will never succeed. Conducting market research allows you to form a clearer picture.

TAKE ACTION

1. Estimate the size of the market.

2. Run a focus group.

3. Find international examples if there are no local businesses doing the same thing.

4. Use marketing consultants and agencies.

5. Trust your intuition and gut feel.

Step 2: Identify any capacity and delivery issues

You need to be sure that you can actually provide what you are offering. So it’s important to do your due diligence here – show that you are able to make the product you’re offering, or deliver the service you’re advertising.

TAKE ACTION

1. Ensure suppliers will sell to you.

2. Outline how you will handle production including potential issues with production.

3. Prove that you can provide what you’re offering.

4. Outline the customs process, duties and fees as well as potential issues.

Step 3: Analyze financial feasibility

You need to know how much money you will need to start up and to grow, and whether you would be able to make money with your idea. Performing a break-even analysis as well as preparing cash flow forecasts are vital steps. Download our useful break-even analysis tool to get you started by clicking this link.

TAKE ACTION

1. Outline why you think your idea is financially feasible.

2. Perform a break-even analysis.

3. Describe how you intend to handle debts owed to you.

4. Prepare a cash flow forecast.

Step 4: Show you can compete

Here’s where you need to research your competition and demonstrate what it is that you do better than anyone else – your competitive advantage. You should also illustrate what your unique selling points are.

TAKE ACTION

1. Perform a SWOT (strengths, weaknesses, opportunities, threats) analysis on your competition.

2. Perform a SWOT analysis on your own business.

3. Outline your competitive advantage – your unique value proposition.

4. Describe your key competitors and what differentiates you from them.

Step 5: Outline your pricing and margins

In order to prove that your business can make a sustainable profit, you will have to outline your your pricing strategy, your market position and share, and how you’ve determined what people will pay.

TAKE ACTION

1. Understand the factors that impact your costs and what the total costs come to.

2. Consider the market you’re about to enter – what is your market position and how will it affect your pricing?

3. Research your competitor’s pricing.

Step 6: Become business compliant

You need to ensure there are no regulations or legal requirements that will stop you from starting up. Have you protected your intellectual property (IP)? Do you have all the required permissions and licenses?

TAKE ACTION

1. Outline how you have protected your IP.

2. Describe how you intend to handle any environmental concerns.

3. Research any legal restrictions on what you are doing – anything that might prevent you from starting your business.

4. Plan for any Health and Safety issues that might prevent you from opening.

5. Research and describe any relevant local regulations that you need to comply with.

Step 7: Create a marketing plan

Create a coordinated marketing plan in which you define your market, target customers and competition. It should illustrate who your customers are and what they want, as well as how you intend to boost awareness of your brand and business.

TAKE ACTION

1. State your methods for creating awareness around your new business and brand.

2. Include your advertising strategy – which combination of methods will you use and why?

3. Outline your customer loyalty strategies.

Conclusion

We hope you found our 7 steps to an effective business plan guide useful. If you’d like detailed help with your plan or any aspect of your business, we’re here to help. Schedule a free consultation by clicking this link and we can be in touch to discuss how we can best support you.