Putting off writing your business plan because it seems to be a dry difficult task? Well, I understand that writing a business plan can seem like an unnerving task. But, it doesn’t have to be…
In order to plan your business, you may want to start with a Lean Plan, also known as a one-page business plan. Lean Plan itself is very similar to a good executive summary and the only real possible difference is that a one-page business plan must fit completely in one page while not impacting readability.
Investors don’t have lots of time to read and a one-page executive summary will get the idea of your business across concisely. So, the whole idea of Lean Plan is to enable you to communicate your business idea clearly and with minimal clutter.
Let’s break down this daunting task into 8 simple steps that you can apply to make a comprehensive one-page business plan:
Note Down Business Plan Modules:
Your business plan should include the following segments:
Problem Identification:
The problem that you have identified.
Problem Solution:
The products or services that you are providing to solve this problem.
Target Market:
Who your customers are and how many of them are there?
How will you earn:
How would you make money by doing what you do?
Initial Cost:
How much will it cost to start your business?
Investment:
Okay, so this is the hard part. Depending upon the type of your business, you will have a long list of things that you really need and the ones that you can work without. To make it easier, you can make two lists; one for your personal cash needs and the other for the cash needs of your business.
The common expenses of personal needs may include rent, utilities, food gas, etc. Business needs, on the other hand, may include startup costs, equipment, insurance, license, inventory burn rate, etc.
You must make your initial costs as lean as possible
Basic Calculations:
There are some basic numbers that you want to calculate as part of your lean plan:
Running Room:
Running room or runway is how much cash you need to have until your business starts to make money. This is your deadline for making a profit. This is probably less money than you imagine.
More than 40% of small businesses are started for less than $5,000 and 64% started with less than $10,000.
Break Even:
Your break-even number lets you know how much you have to make monthly or yearly to cover your costs. To calculate this number you need to know the value of the three variables
Fixed Costs:
These are things that have to be paid no matter how the business is doing rent.
Variable Costs:
These are things that depend on how much you’re selling, and the cost to make the product (if you’re a consultant, for example, you won’t have these costs, your cost is your time).
Price:
The selling price of your product or service.
The formula to arrive at that number is Fixed Costs/ (Price-Variable Costs) = Break Even Number.
Burn Rate:
Burn rate is the rate at which a new company is spending money to finance itself before it starts making money. It’s usually calculated on a per-month basis. If you have $20,000 to spend and you spend $3,000 a month, the burn rate is $3,000.
Consult field Experts:
No matter what you want to do, someone has almost certainly already done it. These people can be a great source of research and advice. Especially for things that you can’t get a hard number on. Most people love to talk about themselves, so in many cases, all you have to do is ask.
They will tell you about what worked and what didn’t.
They will tell you about expenses they did not anticipate. No matter how well thought out your business, until you are actually involved in running that business day today, you just can’t think of all the variables. Talking to someone who is already doing it can fill in some of those gaps.
Don’t Dive In:
You don’t have to dive straight into your business. You can test the waters a bit first in most cases. A brick-and-mortar business is always going to come with the most expenses. But you don’t necessarily have to have a storefront to test your product. You can sell your product on Etsy, farmer’s markets, or craft fairs first to see how good the demand is. This solution will allow you to progress your business in small, testable increments. And if one fails, you can try another.
Maybe it was just a bad location, and the farmer’s market two towns over won’t be able to get enough of your bespoke lollipops. The point is, you haven’t gone the whole hog and set up a brick-and-mortar store on an idea that won’t work in a particular place.
Crowdfunding:
If you needed business funding in the past and didn’t have friends or family willing to give or loan you the money, you had two choices, find an investor or take out a bank loan. Now you have another option to raise money; crowdfunding.
Sites like Kickstarter allow you to solicit donations in return for something; a free product or service for example. A good round of crowdfunding raises cash, but as importantly, it creates customers, customers who have a stake in your success. Even if your campaign is a flop, you can collect information that can help you improve your business and try again.
Focus on Content, Not Design:
The content of your plan is by far the most important thing—don’t stress about the design. Think carefully about what you are trying to communicate. Too many companies spend time focusing on presentation and graphical display of their plans when what they are saying and how they are saying it is really the most critical aspect of it all.
Don’t get me wrong—you don’t want to have an ugly presentation. But focus on the content, because it’s more important than anything else.
Remember: The executive summary (or Lean Plan, or a one-page business plan) is usually your introductory communication with investors, so it will be your first impression. So, you should spend more time on this part of your plan than on any other section.
Your one-page plan will be an extremely useful tool to help you refine your business strategy quickly and easily. It might even be all the business plan that you need.
Adding Value:
You know what your core business is but how can you add value for your customers on top of that?
Think of all the reasons people go to Starbucks that have nothing to do with buying a drink. People who work from home might go there to get out of the house because they have reliable WiFi. People use it as a place to meet friends. Parents use it to get out of the house with the kids. People use the excuse of needing an expensive cup of coffee to get out of their office for a few minutes.
Think of reasons other than just the thing that you’re selling that will be appealing to customers.
You Can’t Plan for Everything:
There are a lot of unknown problems when you are starting a business. Things will crop up that you could never have planned for. But having a simple one-page business plan can help you deal with those eventualities. Requiring Business Plan writing services? Get your one-page business plan created within 24 hours!
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