Business Plans
“Tell me, in one sentence, what your company does.”
(silence)
(more silence)
At this point you’re bound to start rattling off competitive advantages, lower costs and a myriad of other things that don’t answer the question - what does your company do?
If you’ve never been asked this before and unless you can think on your feet with the best of them, you likely don’t have a response that you can cram into one cohesive sentence. And that’s fine. The point is, unless you’ve practiced an answer, you won’t get it right straight away. That’s why you practice. And that’s why you start with a business plan.
Sure, there have been many very successful CEO’s that never had a business plan. But you’re not them. They’re running a business and you’re at the ground floor looking up. So start writing. And always know that you need to be answering these three questions. What does your company do? Why will it be successful? How will you be successful?
So let’s get writing!
- A business plan clearly articulates and delineates your vision. What your company does, who your company will sell or provide a service to, why they should give you their business, and why someone would invest in your idea.
When you’ve laid all of that out. Show someone, ask their opinion.
This serves two purposes. First and foremost, it’s a reality check. Is your business viable? Or is it a pipe-dream?
If it’s the former, great! The latter? Back to the drawing board.
That was the easy part. Now we need to flesh things out.
- We’ll start with the end. Summarize. You need an executuve summary that lays out for the reader what they’re about to digest. This is the easy part.
- Next is the company history. Your professional bio can serve here if this is your first time starting a company.
- Now we’re getting to the heart of the matter. Describe your business concept and value proposition. What’s a value proposition? I’ll rephrase it. Why are you better than the next guy? And no, because I said so won’t cut it here. Unless you’re independently wealthy, you need to be able to show this document to your banker or family or friends as the basis for them to invest in you.
- You’ve laid all of that out? Great. Now prove it. This is the numbers part. Next up is to prove, showing the analysis you’ve done, why you can be a success at what you’ve set out to do.
- Along with this are the financial projections. How long until you break even? How long until you’re profitable? Basically, how long until you’re profitable?
- After the numbers comes the nuts and bolts. How will you physically and literally, get this idea off the ground. How will you implement your idea?
- Resource allocation. Sounds fun, doesn’t it? Here we’re laying out how much the computers cost, rent for the warehouse, lease on the office space, how much the lights will cost, etc.
- It’s payback time. Assuming you take out a loan, when will you begin to pay your debtors back? At what point will you draw a salary? This section outlines the ‘deal’ for potential investors. Of course, you could always bootstrap it. That is, run a bare-bones operation, only expanding as profits allow, running on credit card debt and 401k savings in the most extreme cases…
- Growth. How will you grow your company?
- Survival. How will you maintain your competitive advantage?
- Exit Strategy. You’ve thought about this, right? You’re not going to work until you retire to the grave, are you? Of course not. Outline your exit strategy.
Doing all of this is a bit sobering, sure. But it’s necessary. And the sooner you get started, the more you can refine the product, so when someone asks, “what does your company do?” - You can answer, “we create web based guidebooks for commonly asked questions, providing solutions with a conversational voice and a you-can-do-it attitude.”