What is a Business Plan?
Before you start your business, you’ll need a plan. In the simplest terms, a business plan is a document that contains the steps you’ll take to start a business and succeed with your idea. Think of it like a roadmap and guidebook combined: your goals, your financial plan, your marketing strategy, your anticipated timeline, and more.
Why Do You Need a Business Plan?
There are several good reasons to write out a business plan as soon as you have an idea you think can be turned into an enterprise:
- If you need investors, a business plan will give them confidence that you know what you are doing
- You can prepare for what you need to research and do
- A timeline will keep you on track
- You will know who you need to hire for help in which areas
- A business plan will include information about your competition
- Writing down your long-term goals will help you achieve them
You can think of a business plan as the instructions for putting together a piece of furniture. While it is possible to assemble the furniture by yourself and without written or illustrated step-by-step instructions, this method will inevitably be more frustrating, take longer to finish, and you may end up not doing it correctly.
Because you consider yourself a young entrepreneur, you no doubt want to appear professional and organized, and a business plan is your first step. Moving forward with your startup, you will find yourself referring to your business plan more and more often, whether to keep yourself accountable to your milestones or as a gentle guide when faced with obstacles. Setbacks won’t be the death of your enterprise if you already have the solutions laid out in front of you.
What to Include in Your Business Plan
Your business plan does not need to be a thousand-page door-stopper. A “lean plan” is better suited for young entrepreneurs. Lean plans don’t take very long to write up, particularly if you already have some ideas of what you want to do and the goals you wish you achieve. Start by answering the following questions as efficiently as possible:
What is the problem you are going to solve?
“I want to help special needs students” is too general and tells your investors nothing. A phrase like that also won’t help you create a timeline and realistic goals. You can be specific here without going on and on for several pages. “I’m going to create a stress ball that is small enough to be held in the palm or put in a pocket, which special needs students can touch or squeeze as needed during the school day.”
That one sentence has already laid out:
- The problem (many special needs students like to fidget or need to self-soothe)
- The solution (a small item that’s easy to carry)
- Where you fit in (creating a stress item that is easy to carry)
We’ll call your product a widget for now.
Next up: figuring out what you need to make your plan happen. In our example, you’ll need:
- A sample widget
- The cost of creating a proof of concept
- A target audience
- A marketing strategy
- A distribution method
- A timeline
Now you need to figure out the cost of getting your business off the ground. How much will you spend on the materials you need to create your widget? How much of your time will it take to make a working widget? Remember: your time is valuable. If you don’t already know how to make this widget, you will need to spend time researching, trying, failing, and trying again until you get it right. Figuring out this cost will be vital to convincing investors to finance your business.
Who is your ideal customer? With our widget example, the obvious customers will be parents and teachers of special needs children. Other professionals may want your widget, too, but focus on who you believe will be your main customer base. Parents and teachers don’t want to spend a lot of money, and they want to make sure that what they do buy will be worth it. Include in your business plan what makes your widget the right product for special needs students. Why should parents and teachers buy yours rather than, say, the cheapest widget they can find on Amazon?
This is where research will come in handy. Take a look at your competition and find out where they are falling short. Find reviews of other special needs widgets and take note of what they get right versus any common complaints.
Once you know what you are making, why you are making it, how to make it, and who you are selling it to, it’s time to come up with a marketing strategy. What’s your timeline for the rollout of your widget? Will you give a few samples out for free to get word-of-mouth going? (That’s called a “soft launch.”) How and where will you advertise?
Finally, consider what your revenue stream should look like. Investors want to know what they will be getting in return for helping you get started. You probably want to make some money for all your hard work, too! While you don’t want to price your widget unrealistically high, you also want to make sure you will be able to cover all your overhead, plus some profit for your investors and yourself.
Once you have an idea of what you want to do and how you are going to solve a problem, write it down. Ask yourself some of the questions above and brainstorm all the tools you’ll need to get off the ground. There are plenty of free templates for a lean business plan that won’t take you long to write and will help you organize your thoughts. Your business plan will be your secret weapon for taking your enterprise from idea to success!
Young entrepreneurs in Florida may be eligible for a Kantner Foundation college scholarship. Click here to learn about what we have to offer and how to apply.