As the business development outreach specialist for Nicolet College and coordinator of Nicolet’s entrepreneur program, I must have asked existing business owners who are struggling, as well as those thinking of starting a business, the same question hundreds of times in the last five years: “Do you have a business plan?”
Ninety percent reply, “No…do I need one?” Five percent will tell me, “Yes.” I ask these individuals, “When was the last time you read it?” Then there is the 5 percent who will tap on their temple and say, “Yep…it’s right here!” Then there was the individual who, when asked if he had a business plan, slid me a business card with a few notes jotted down on the back of it and he said, “Yes ma’am…it’s right here!” Needless to say, I was amused by his response. At least he had something written down!
The primary value of your business plan will be to create a written outline that evaluates all aspects of the economic viability of your business venture, including a description and analysis of your business prospects. Keep in mind that creating a business plan is an essential step for any prudent entrepreneur to take, regardless of the size of the business. This step is too often skipped.
Your business plan is going to be useful in a number of ways. First and foremost, it will define and focus your objectives using appropriate information and analysis. You can use it as a selling tool in dealing with important relationships including your lenders, investors and banks. With respect to lenders, my rule of thumb when working with entrepreneurs is always the same. It doesn’t matter if you are seeking funding from a traditional lender or friends or family members. Anyone investing in your business should be presented with your business plan. Your business plan will also uncover omissions and/or weaknesses in your planning process. Too often, entrepreneurs forge ahead with an “I’ll do it my way” mindset without the benefit from experts who could save them a great deal of wear and tear.
Here are four points of consideration that can serve as a starting point when preparing your business plan:
1) Define your business and vision
Defining your vision is important. It will become the driving force of your business. Here are questions that will help you clarify your vision:
• Who is the customer?
• What business are you in?
• What do you sell (product/service)?
• What is your plan for growth?
• What is your primary competitive advantage?
2) Write down your goals
Create a list of goals with a brief description of action items. If your business is a start-up, you will want to put more effort into your short-term goals. Often, a new business concept must go through a period of research and development before the outcome can be accurately predicted for longer time frames.
Create two sets of goals:
1. Short-term: range from six to 12 months.
2. Long-term: can be two to five years.
Explain, as specifically as possible, what you want to achieve. Start with your personal goals. Then list your business goals. Answer these questions:
• As the owner of this business, what do you want to achieve?
• How large or small do you want this business to be?
• Do you want to include family in your business?
• Staff: Do you desire to provide employment? Or perhaps you have a strong opinion on not wanting to manage people.
• Is there some cause that you want the business to address?
• Describe the quality, quantity and/or service and customer satisfaction levels.
• How would you describe your primary competitive advantage?
• How do you see the business making a difference in the lives of your customers?
3) Understand your customer
It is not realistic to expect you can meet the needs of everyone; no business can. Choose your target market carefully. Overlook this area, and I guarantee you will be disappointed with the performance of your business. Get this right and you will be more than pleased with the results.
• Needs: What unmet needs do your prospective customers have? How does your business meet those needs? It is usually something the customer does not have or a need that is not currently being met. Identify those unmet needs.
• Wants: Think of this as your customer’s desire or wish. It can also be a deficiency.
• Problems: Remember, people buy things to solve a specific problem. What problems does your product or service solve?
• Perceptions: What are the negative and positive perceptions that customers have about you, your profession and its products or services? Identify both the negative and positive consequences. You will be able to use what you learn when you start marketing and promoting your business.
4) Learn from your competition
You can learn a lot about your business and customers by looking at how your competitors do business. Here are some questions to help you learn from your competition and focus on your customer:
• What do you know about your target market?
• What competitors do you have?
• How are competitors approaching the market?
• What are the competitors’ weaknesses and strengths?
• How can you improve upon the competition’s approach?
• What are the lifestyles, demographics and psychographics of your ideal customer?
In Part 2 of the Essentials of Business Planning, we will discuss the necessary factors that should be included in your business plan and what to avoid when writing your business plan.
A former business owner herself and graduate of the Urban Hope Entrepreneur program out of Green Bay, Michelle Madl-Soehren is currently the business development coordinator for Nicolet Area Technical College, where she assists and coaches new and existing entrepreneurs and small business owners with business plan development, provides professional development workshops throughout the area and coordinates and teaches Nicolet College’s eSeed Entrepreneur Program. She holds a baccalaureate degree from Mount Mary College in behavioral science and a master’s in management and organizational behavior from Silver Lake College. Madl-Soehren is also the current president of the Northwoods Entrepreneurs Club and Northwoods Women in Business, and sits on the state advisory board for the Small Business Development Centers. She can be contacted at firstname.lastname@example.org or (715) 365-4492.