Many entrepreneurs are careless when they launch a new business plan, and with the intense competition in the market today, most businesses do not survive long. Statistics reveal that 20% of new small-scale ventures do not survive past the first year.
However, this doesn’t mean your business venture is doomed to failure. If you know how to come up with a business plan and have the right tricks up your sleeve, you are good to go. Writing a business plan demands careful planning and consideration. If you start on the right foot, you will be able to overcome all roadblocks and make your way to success.
While it is true that many businesses don’t begin with any formal plan, it cannot be ignored that stepping back, researching, planning, and strategizing can bring tremendous benefits.
Following are some handy tips on how to come up with a business plan that helps you overcome the hurdles common to all new ventures:
How to come up with a business plan: 5 common mistakes to avoid
1. Not knowing your demographics
The most challenging, yet also most important, step to keep in mind when thinking about how to come up with a business plan is knowing your target audience and having thorough information on their demographics. You need to know who you are selling to, how many people you can reach, and what characteristics they have.
Companies tempted to target a large audience to satisfy everyone usually end up diluting their area of expertise and spreading the product’s value too thinly to the audience.
Different categorization tools with scoring systems can separate the audience into layers. Tools like social media analytics, website analytics, and surveys can help you research your target audience and avoid this costly mistake.
2. Writing a business plan just because you ‘should have one
While it is true that a business plan is a necessity when launching a new venture, it shouldn’t be written just because it is needed. A business plan is more than just a document to be presented to concerned parties as a formality; it is a document that facilitates planning.
Your business plan should be a detailed and long-term outline with a clear goal, timeline, and the main milestones you hope to achieve.
When researching ways of how to come up with a business plan, remember that it is more than just a ‘mandatory’ document. Your business plan must be carefully drafted to be beneficial on a personal level.
3. Not knowing your competition
Answering any question about how to come up with a business plan without thorough research into the competition is impossible. Today the market has diversified significantly, and competition is intense.
Unique ideas thrive; even if you believe you have an outstanding idea, you must always check and double-check. There is the excellent potential where a business idea does not exist, but a customer need is present.
Competitor analysis helps you outline ways to enhance your business idea, develop a creative strategy, and outrun your competition. Consider your direct and indirect competitors when thinking about your brand, product, marketing strategy, technology, customers, etc.
4. Not knowing your audience well enough
When you draft a business plan, your goal is to get it approved or accepted by the audience. If it is a business partner you are sending it to, you want them to like the idea and agree to invest. Similarly, if it is for investors, board members, or venture capitalists, you want your idea to sound appealing.
You must research and know your audience enough to address their concerns in your draft.
If it’s a bank manager you are writing for, they are likely looking for proof of security and minimal risk in investing in your business. You need to include expected profit and revenue to assure them that your business will likely succeed.
Another thing to remember when you work out how to come up with a business plan is when you have different parties as audiences, you might have to draft several other plans. Your plan has to be written in such a way that it anticipates and addresses their specific questions.
Writing a business plan with the wrong audience in mind can be counterproductive. If you want a plan only for yourself, write one that addresses your questions. In short, when considering how to come up with a business plan, tailor your approach to your audience’s needs.
5. Relying entirely on templates
When you look up how to come up with a business plan on Google or any search engine, you will surely get numerous business plan templates that you can adjust per your requirement. However, it is doubtful that these templates can help draft a plan that suits your specific situation and is comprehensive.
To achieve that, you need a personalized template (which isn’t possible), or you should come up with one yourself. Templates are designed to be generic, with a definite ‘one-size-fits-all’ approach which certainly isn’t the best for creating a business plan.
If you need a template’s help, use it only as a catalyst or guide that gives you ideas for questions you can address in your plan.
How to come up with a business plan: things to keep in mind
1. Be realistic: anticipating immediate success or being overly optimistic about the expected profit can make your business plan sound unconvincing and lacking credibility.
2. Support your claims with proof: if you claim that your product will create hype within six months, what evidence do you have for it? If you have faith in your management team, communicate its qualifications. Don’t make overly optimistic claims without proof.
3. Be attentive to detail: your business plan must be concise and detailed enough to reassure your reader and provide sufficient information about the business.
4. Seek help from a business advisor: as confident as you might be in your ability, don’t hesitate to get help from a business advisor if needed. A professional can offer unbiased insight and constructive criticism that can improve your plan tenfold.
A well-drafted business plan is a stepping stone for many successful businesses. Figuring out how to come up with a business plan and drafting one might seem challenging if you are doing it for the first time; however, fear not.
With the right tricks up your sleeve, you can ace this! Know your demographics, don’t write just because ‘you have to,’ know your competition, research your audience and their needs, and avoid dependence on templates. If done right, a well-thought-out business plan can give your business venture a good start.