November 2016 Women’s Start-up Club Recap: Business Plans: Why They Are Essential
On Wednesday, November 30, the FEW Women’s Start-Up Club welcomed entrepreneur Joanne Wilkinson to share her insights on business plans and why every startup should have one. Here are the key takeaways on the advantages of having a business plan and how to create one that will help your business.
What is a Business Plan?
A business plan is a decision making tool that will help you define what you want to do and what your return on investment will be. A strong business plan can help to make a business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure.
Business plans can come in many different forms, ranging from long formal documents to a one-pager. It all depends on your needs.
The elevator pitch is a short summary of the business plan’s executive summary and it is often used as a teaser to spark the interest of potential investors, customers, and/or strategic partners.
Why Do You Need a Business Plan?
A business plan will help you understand how your business is put together. You can use it to monitor progress, hold yourself accountable and control the fate of your business. In order to expand, you need a business plan.
It also is a sales and recruiting tool for choosing key employees or future investors. Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. You will end up spotting connections you otherwise would have missed.
7 Points to Include in a Business Plan
- Product/Service Simplicity
- What does your business do – product or service? Keep it simple to be effective.
- Think about Product differentiation: The HOW and/or WHAT makes your product/service different: Example: delivery – price – return policy.
- Price differentiation: Be careful as this has a potentially long-term impact on your business and the industry.
- Target Market
- Who is your target market? Are there any geographical constraints?
- Competitors
- Who are your competitors?
- How much share will you take from your competitors?
- What are your competitors charging for product/services (gives you a starting pricing point for entering the market)
- Sales Channels
- a) Online: Either own store or marketplace
- b) Retail: Own shop or larger retailer
- c) Whole sale/distribution (recommended for Franchises only)
- d) Direct: The key to direct sales channel is to know your market segmentation so you can direct your efforts accordingly.
- Cost
- CapEx (Capital Expenses): Includes all fixed assets, usually large scale investments, such as machinery, large equipment, software development etc.
- OpEx (Operational Expenses): Includes anything related to running your business, such as printers, PCs, stationary, office rent, staff, etc.
- CoGs (Cost of Goods): This includes anything related to making your product (inventory) or providing your service, including shipping, raw materials, duty. This increases as you produce more. CoGs needs to be including in the pricing of your product/service, and the product price should be at least double of CoGs.
- Branding/Advertising (MarCom: Marketing Communication)
- a) Print media
- b) Online: social media (groups), banners, etc.
- c) Flyers/junk mail/direct e-mail
- d) Billboard space/posters (local only)
- e) Blogs/testimonials
- f) Websites: link to social media for greatest exposure and control your own content
- Financing
- a) Bank loans (cheap in Japan)
- b) Crowd-funding
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Typical Questions Addressed by a Business Plan for a Startup Venture
- What problem does the company’s product or service solve? What niche will it fill?
- What is the company’s solution to the problem?
- Who are the company’s customers, and how will the company market and sell its products to them?
- What is the size of the market for this solution?
- What is the company’s business model (how will it make money)?
- Who are the competitors and how will the company maintain a competitive advantage?
- How does the company plan to manage its operations as it grows?
- Who will run the company and what makes them qualified to do so?
- What are the risks and threats confronting the business, and what can be done to mitigate them?
- What are the company’s capital and resource requirements?
- What are the company’s historical and projected financial statements?
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