How do I draw up a business plan?
‘An idiot with a plan can beat a genius without a plan’ – a pearl of wisdom from Warren Buffett. So, before taking the plunge and going self-employed, spend time putting together a business plan. It’s indispensable for convincing investors, but also for helping you assess the feasibility of your venture. The only thing is ... where do you start?
5 key components of a business plan
Although it doesn’t have a fixed structure, a business plan always contains a number of basic elements:
1. A thorough market analysis
This forms the basis for the rest of your plan. Developing and commercialising a strong offering is only possible if you understand your target market, your competitors, potential risks and so on. Make sure, therefore, that you devote sufficient attention to this step!
- Ascertain what your target group needs and why they would choose your product or service. Who are your customers and in which region do they live? What is their education level, lifestyle and buying habits?
- Compile a list of potential suppliers. Are you sure they’re not about to go bust? Do they offer good value for money and do they have a trustworthy reputation?
- Identify your competitors. If you know what and how your competitors are doing, you also know what you should do or best avoid doing. How are you going to stand out from the rest and how can you capitalise on your competitors’ weaknesses?
- Before choosing a location, think about all the environmental factors that could either help or hinder your business in becoming a success. Is there a sufficiently large target group? Is your business easily accessible and can you afford the rent?
- Cast a critical eye on things with a SWOT analysis. This will reveal the strengths, weaknesses, opportunities and possible threats for your business plan.
Have you thought of everything and not overlooked any pitfalls? The best way to see that you’ve covered everything is by completing a Business Model Canvas.
2. Your product or service
Now you know what the market is like, you can state concisely but powerfully what added value your product or service offers and what sets you apart from your competitors. Above all, try to get the reader enthusiastic about your concept or idea. Compare it to an elevator pitch, where you have 30 seconds to say what you do and how you intend to address a specific problem.
3. Your mission and vision
Your strategy is incomplete without an inspiring story that can strike a chord with investors and prospective customers.
- Your mission statement describes what you stand for. What drives you and how will you make a difference from day one?
- Your vision indicates where you want to go. What are your ambitions for the future and how do you want to make a positive impact?
It’s okay to dream, but don't forget your credibility. Show that you’ve thought about how you intend to achieve your short- and long-term objectives.
4. Your marketing plan
You may well have a brilliant idea, but if no one knows you exist or what you stand for, you won’t get very far with it. Therefore, ask yourself:
- How do I position myself as a strong brand?
- Which channels should I use to best reach my target group?
- What interests my target group and what message do I need to tell them to get their attention?
- What is my product or service worth and what price is my target group willing to pay for it?
- What do I have that my competitors don’t have and how can I showcase that in a distinctive way?
Start from the insights gained from your market analysis, the (unique) qualities of your product or service and, of course, your mission and vision. Don't hesitate to get the advice of a local advertising agency or freelancer. It's an investment, but one that pays off!
5. Your financial plan
If you want to convince banks and investors, a detailed financial plan is indispensable and even a mandatory requirement for some company forms. It is also important that you assess the profitability of your idea.
If you don't have a financial background, we recommend you enlist the help of a business expert. You can prepare for this by asking yourself:
- What one-off, variable and fixed costs do I expect to face in the next two years?
- What is my estimated income for the same period and will that allow me to break even?
- What can I put in myself and do I need to look for additional capital?
Above all else, be realistic
A plan is developed step by step and its feasibility should be tested repeatedly. If something seems unrealistic, go back to the start and go through all the steps again. It takes a lot of time, but it’s worth it.
Need help?
If you’d like to know whether your business plan is feasible or you need a sounding board for the financial side of things, ask our experts for no-obligation advice.
