A great idea isn’t enough to start a business.
You also need a great plan. A plan allows you to present ideas to others such as potential customers or investors. They can offer feedback that improves your idea before you spend lots of time and money. Don’t think of your plan as something you write once and it’s finished. You should update your plans as you learn and develop your idea. While a good plan will have many sections, I’m going to cover two critical areas:
POSITIONING AND FINANCIALS
Positioning is building a story about how you will sell to customers. Understanding how your competition gets customers, whether they able to keep customers, and how they price and discount is essential. Do not simply rely on being better or having a lower price. Your idea needs to get people to change what they do today and buy from you instead. Once you have an idea of how you will do things differently than your competition, ask people for their feedback (what they think of the idea). As we mentioned, ideally you are not asking your friends, but potential customers. Your idea will improve every time you present your plan, and the investment to make a plan is very small.
The second major piece is your financial model for your business. This model should answer questions like:
How much will your product or service cost you?
What overhead (fixed expenses of operating a business) will you have in rent and fees?
How much do you have to charge to break even (when your profits are equal to your costs)?
How much do you think you can sell?
Do not just make up these numbers. Use your resources to make the best estimates you can, and get quotes where you can. You will not be able to come up with perfect, exact numbers. Some small business advisers recommend that you double your expected costs to be safe. But similar to positioning, whenever you present your financial plan for feedback, you will have a chance to improve it.
There are many books on creating business plans, and many non profit and for profit organization that offer classes in many locations. Some classes are free, while others you may require payment for services. I recommend the Small Business Development Center of Florida in Tampa, Fl. Organizations like these can help get you started on all parts of your business plan.
Next blog I’ll talk about some of the resources in the Tampa Bay Area. Until then, attend one of the start-up business workshops in your area and learn more about putting your plan together.
Sean Dougherty MBA, BSIS, CMMI Associate
Sean is an instructor volunteer for Project Prosper. He has started multiple businesses and worked in the corporate world. Sean’s latest venture is Service Amplified, which works with companies to improve the efficiency and performance of their operations. A problem solver at heart, he’s always looking for the better way to do things. When it comes to starting a business, he thinks the most important trait is to not pay attention to how difficult something is supposed to be.