Hey! Planning to start a business venture? Congratulations…after the initial excitement of your business idea, it now time to sit down and strategize your business planning phase and distilled what it takes to run a successful business.
It has been seen that Business planning can be very daunting but very essential to the success of any business endeavor in today’s world. In this post, we are going to look at business planning checklist as a startup entrepreneur before you launch out.
It is recorded that the success of any business enterprise is largely dependent on how solid the business planning phase was. So whether you are starting a new business, expanding an existing business or seeking for angel investors, or maybe you have a great idea, super attitude and a great entrepreneurial spirit, having a solid business planning in place is a guarantee for success.
Also, it will be noted that having a solid business plan is not the most important single requirement for starting a business. Many other things are much more important. For example,
- Knowing your customers
- Assessing the real risks of starting your own business and how it will be mitigated
- Choosing a business name
- Deciding on a business and legal structure
- Obtaining licenses, permits, and tax including relevant certifications
- Financial basics: getting funding, estimating start-up costs
It’s unsafe to fall in love with the idea of starting your own business instead of falling in love with the business itself. Therefore, it is expected that you go into this with a good idea of reality.
Let’s dive into the various business planning phases and what you need to do to start your business.
Starting Thoughts on Business Planning
The ﬁrst thing you truly need to start your business, maybe even the only thing you truly need, is customers. It all starts with having customers. Secondly, you need to define your customers need. Remember, your business must fulﬁll some type of customer need in order to be successful.
Sometimes customer needs can be intangible, like security or prestige. Some customer needs seem perky, but they still matter. Make sure there is a market for your service or product. Your business will fail if it doesn’t address a customer need.
Myths about Starting a Business
There are numerous myths about starting and operating a business that should be avoided at all costs if you must succeed. These common myths can cause a lot of problems for you and are:
Being Your Own Boss: You are not your own boss when you own a business. Your customers are your boss, likewise your bank and your ﬁxed costs.
Am now Independent: Owning a business doesn’t make you independent — not needing money makes you independent. As long as you need money, you can’t be independent.
Why should you do Business Planning?
- Your own thinking process is solidified through the planning process. It a process that leads you through answering a series of questions and issues that you should consider as you think and plan your business. Remember that you are an investor in your own business. You are the first person who must have confidence in the validity of your business concept.
- Your bank or financial institution will need to be convinced of the viability of your business, or your business expansion. Therefore, the output of this business planning serves as a communication tool to inform and influence them towards some action about your business.
- Your business planning document provides some guideposts in running your business. Here, you will set goals and then, once you are in business, you can measure those goals against the actual performance. Goals should be specific, measurable, achievable, and realistic and time-limited – SMART.
Business Startup Checklist
- Discover a good business idea:
A good business idea is not one that will fetch you money or turns an instant profit but one that will be profitable and sustainable owing to the fact that you’re going to be in business for the long haul. You need to get an idea that is a good fit for you personally, for your target market, and for your location.
Few things to do while searching for a good business idea:
- Conduct a SWOT analysis to identify your strengths and weaknesses
- Come up with a business idea that caters to your strengths
- Define what success looks like for you
- Do your research: What are popular businesses today?
- Evaluate Your Idea:
Is your idea feasible? Can you make money from this venture? Validate your idea by interviewing potential customers to ensure that they have the problem you are trying to solve, Interview potential customers to validate that your solution is something your customers will pay for, and determine if your initial price points will work for your customers.
- Market Research:
Test the viability of your idea by researching the market, industry, and competition. Start by Defining the “problem” your business is solving, Summarize the “solution” your business offers, Define your target market and ideal customer, Figure out the best place to set up shop and determine the advantages your solution have over your competitors?
- Develop A Business Strategy:
This is an essential step and critical for the planning and success of your business. Ensure you have a well-structured strategy on how you will execute your plan.
How will you finance your business? Banks and other lenders or investors will often require a written business plan. In that case, you will be required to submit a business plan. Simply ask if you can send a “one-page pitch” (also known as a one-page business plan) or if they’d like a traditional business plan with a detailed financial section (this is the part they pay most attention to).
While not every startup needs outside funding, most businesses do require some level of assistance, at least at the start. If you’ve worked through your business plan and have a sound handle on your financials, then the following should have been in place
- Estimated startup costs
- Sales forecast
- Profit and loss statement
- Cash flow statement
- Balance sheet
- Know your exit strategy
- Business Structure:
Consider and select the most appropriate legal structure or business structure to operate your business: either Sole Proprietorship, Partnership or Corporation.
- Business Name:
A sturdy brand is key to customer loyalty and higher sales. If you think it’s just for big business, think again; a brand is critical for businesses of all shapes and sizes. Submit your Business Name to the appropriate institutions for approval. For this is where you grab the attention of your audience.
Things to do to enable you to brand your business, First and foremost choose a name for your business which you can also trademark, decide on your unique selling proposition or value proposition, develop a tagline, and create a logo
- Register Business:
Register the business with your chosen structure using your name approval.
- Bank Account:
Open a business bank account for your business to make transactions trustworthy.
Consider reserving the domain name of your company to establish your website. Register for a domain name that matches your business name and ensures your business has an online presence.
- Business Licence:
Contact the necessary authorities for a business license.
- Laws & Regulations:
Determine whether there are any industry-specific licenses and/or regulations that may apply to your business.
Ensure your business is protected.
- Set up your business Shop:
Here you will find a business location, lease or build your business empire, furnish it and ready to serve your customers.
- Set up an Accounting/Record-Keeping System:
Setup your Record-keeping system and study about the taxes your business enterprise is responsible for paying.
- Develop a Business Identity:
Ensure you order for business cards, letterhead and promotional materials for your trade. A professionally designed logo can make your business look professional and established.
- Get Organize:
Organize the business as if someone will take it over and oversees its operations on your behalf. This implies that there must be a method to process orders, pay bills, pay employees, pay taxes, maintain your permits, etc. Essentially, ensure the operational aspect of the business is automated and efficient as possible so you can concentrate on growing your business.
- Market and launch your business:
At this stage of your business planning phase, you are required to Create a marketing plan, talk to people, create your marketing materials and use all the available means of marketing to showcase yourself to the world.
Creating a Business Plan for your Enterprise
A business plan is a guide—a roadmap for your business that outlines goals and details how you plan to achieve those goals. Mind you, never allow any resources or business planning software force you into doing more of a business plan than you need. It all depends on the nature of your business.
Although a plan can help you move forward, make decisions, and make your business successful. Not every plan is the same, and not every business needs the same level of detail.
The business planning process in itself should help you understand your business, deﬁne what you want from the business, understand what your customers want, and decide how to optimize your business on your own terms.
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Furthermore, your business plan should prove that the business will generate enough revenue to cover expenses and make a satisfactory return for bankers or investors (for those seeking grants). There are many ways of formulating a business plan but there are certain essential sections that they should all contain.
We are going to look at the different sections of a business plan and how they interrelate. Paying careful attention to what will be discussed in the different section is a sure-bet guarantee that your business plan document is halfway done.
Having said all that, let’s dive into the different sections of building a business plan
The purpose is to grab your reader’s attention by summarizing the key elements of the whole business plan. Since your executive summary is such a critical component, you’ll want to make sure it’s short, concise, to the point, very well written and as clear as possible.
This is perhaps the most vital part of the business plan and you want to cover the key highlights of your business but without going into too much detail.
It should be one to two pages long, designed to be a quick read that will spur interest and makes the investors willing to hear more. The critical components include One sentence business overview, Mission Statement, Problem statement, Solution, Target market, Competition, Team, Financial summary, Funding requirements, Milestones, and traction.
Ideally, most investors will request for your executive summary or a one-page business plan for evaluating your business. If what they see is attractive, they will then demand your full detailed business plan along with your elevator pitch presentation as well as other relevant data about your business.
The company overview section is where the company description is stated, mission statement, goals and objectives, the business location, a review of your company legal structure and ownership, and a brief history of the company. Therefore, your company description or overview section should state in details your business concept, core mandate including goals and objectives, management ownership and location.
Products and Services
The purpose of the product and service section is to detail exactly what your business does for the customer and what makes these oﬀerings desirable. This is where you will describe in detail the problem that you’re solving, your solution, and how your product or service fits into the existing competitive landscape. You’ll also demonstrate what sets your solution apart from others, and how you plan to expand your offerings in the future. Read more
Now that you have detailed your product and service offering in your business plan, it’s time to turn your focus towards your target market: Who are you selling your product or services to? The purpose is to prove that the market is large enough in your area to support the survival and growth of your business. Never make the mistake of assuming that everyone is your target market even if you are selling Water or some foodstuff.
Ensure you identify your target market segmentation and then provide some data to indicate how fast each segment is growing. Once you have identified your key market segments, you should discuss the trends for these markets. Are they growing or shrinking? Discuss the market’s evolving needs, tastes, or other upcoming changes to the market.
Here you will demonstrate how you plan to tap your market. This includes pricing, distribution channels, sales, and promotional strategies. Before you even think about writing your marketing plan, the first thing to do is to define your target market and have them well fleshed out.
Without truly understanding who you are marketing to, a marketing plan will have little value. Marketing is one of the most misunderstood aspects of the business. To many, marketing is sales and promotion. Sales and promotion are important elements of marketing, but marketing is a broader concept. It envelops the design and packaging of a product – the price and discounting strategies for the business – and the intimate knowledge of the current and future needs and wants of the target market.
To create a balanced approach, you should research all elements of marketing− not just advertising, sales, and promotion. Here are some of the key elements of marketing you want to address in your business plan. Positioning, Pricing strategy, Advertising & Promotion, Distribution, Location (online or offline), Strategic Alliances.
Milestones and Metrics
It’s critical that you take the time to look forward and schedule the next critical steps for your business. Investors will want to see that you understand what needs to happen to make your plans a reality and that you are working on a realistic schedule.
Start with a quick review of your milestones. Milestones are planned major goals. For example, if you are to develop a biometric device, you will have milestones associated with facial recognition testing and relevant approval processes.
While milestones look forward, you will also want to look back at major accomplishments that you have already had. Venture capitalist like to call this “traction.” which means that your company has shown some evidence of early success. Traction could be some initial sales, a successful pilot program, or a significant partnership. Sharing this proof that your company is more than just an idea—that it has actual evidence that it is going to be a success—can be critically important to landing the money you need to grow your business.
In addition to milestones and traction, your business plan should detail the key metrics that you will be watching as your business gets off the ground. Metrics are the numbers that you watch on a regular basis to judge the health of your business. They are the drivers of growth for your business model and your financial plan.
Finally, your business plan should detail the key assumptions you have made that are important for your businesses success. Another way to think about key assumptions is to think about risk. What risks are you taking with your business?
The core of this section is to outline how you intend to improve your business. It is often sadly under-developed in many business plans. Assuming you have a dynamic marketing plan and customers do indeed come flocking for your product/service, you must be able to deliver it to them.
Your Development plan is a road map of how you are going to get from where you are now to where you want to be in the future. If you are starting a business, what are all the steps that you need to accomplish to get the business up and running?
If you are expanding a business, what do you need to do to make it grow? These steps can be as routine as securing retail space, or as critical as applying for and getting an operating license on key technology.
Do not go into too much detail here. For example, the need to get business cards printed probably does not belong in a development plan (although you might include it in a detailed checklist in the appendices). Use your judgment.
Venture capitalists often assert that there are three attributes important for a successful start-up business: management, management, and management. Many venture capitalists claim they will invest in a strong management team with a mediocre idea but will decline to fund a weak management team with a great idea.
Here you convince potential investors and loan officers that you have a great management team to complement a great business concept. This is not the place for modesty or self-depreciation. Be honest, but highlight your accomplishments and your capabilities while mitigating any obvious shortcomings or weaknesses.
What this really means is that running a successful business all comes down to execution. Can you accomplish what you have planned? Do you have the right team in place to turn a good idea into a great business that will have customers banging down your doors? This section shows that you have thought about the important roles and responsibilities your business needs to grow and be successful.
Here you outline how you will run your business and deliver value to your customers. Operations are defined as the processes used to produce your products/services and deliver them to the marketplace and can include manufacturing, transportation, logistics, travel, printing, consulting, after-sales service, and so on.
Likely, about 80% of your expenses will be for operations, 80% of your employees will be working in operations, and 80% of your time will be spent worrying about operating problems and opportunities.
Be sure that you carefully link the design of your operations to your marketing plan. For example, if high quality will be one of your comparative advantages in the marketplace, then design your operations to deliver high quality, not low costs. Remember that you will probably have to make trade-offs with your operations.
This is where you state your financial needs and seek for the fund from investors or bankers if the purpose of your business plan is to seek funds in other to run the business. You are expected to include the total amount you are seeking to run the business.
Also, you should state how your business is expected to make profits from the said funds and be debt-free in either a short or long term. Always remember, presenting your funding request in a more realistic and detailed manner for your investors to digest can seal the deal for your business.
The estimate or analysis here will help you and/or potential investors estimate how much money will be required and how much profit and sales will be generated. This process will force you to think through the various scenarios that may arise through the course of business and the respective responses to each.
It is important to have strong, well-constructed financials. If you cannot show that your great concept is going to make (lots of) money, your potential investors will quickly lose interest.
As a rule of thumb, your financial projections should extend far enough into the future to the point where your business has achieved stable operations. The first year of your financial statement projections should be month-by-month since cash flows are critical in the early stages of any start-up. Second and third-year financial statements should be quarterly, and fourth and fifth years should be annual.
If possible, it is useful to include the best case, expected case, and worse case scenarios for your financials. This will give room for you and potential investors to explore the upside potential and downside risks of your venture.
therefore, your financial plan should have monthly projections for the first 12 months and then annual projections for the remaining three to five years. Three-year projections are typically adequate, but some investors will request a five-year forecast.
The appendices are to provide supporting documents for claims made in the business plan. which may not necessarily be read, but are there for reference purposes.
It isn’t a required chapter by any means, but it is a useful place to stick any charts, tables, definitions, legal notes, or other critical information that either felt too long or too out-of-place to include elsewhere in your business plan.
Now Over to You
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