by Fiona Adler
For a new business, your business plan needs to step you through several milestones. Unfortunately, some of us skip steps, while others get stuck along the way. Neither works.
Business plans should never be a one-size fits all document.
We’ve described some different purposes for business plans and for businesses that are already up-and-running, (this actionable, one-page business plan works well).
But if your business is just getting off the ground, you need a completely different type of business plan to help you turn your idea into reality.
When starting a new business, you can look at the process as if there are several milestones or gate that you want to pass through. Some of us have the tendency to skip these steps, while others of us can easily get stuck at any one of these stages. If we skip any of these stages, we’re likely to launch too quickly and most often end up with something flopping, while if we get stuck at any of these stages, we don’t launch at all. Neither works.
“If your business is just getting off the ground, you need a completely different type of business plan to help you turn your idea into reality.”
Instead, it’s far better to stay focused on what we’re trying to achieve – launch a successful business. The best way to do this is to borrow from The Lean Startup philosophies (a book I’d highly recommend).
But, rather than wade through yet another book, try walking your business idea through the following steps, and work through the process to move it forward – all the way to launch …
1. Do I want to start a business?
This might seem obvious (if you’re reading this!) but it is something you should really consider. There are lots of great reasons to run your own business, but don’t forget that is just one side of the coin. Business ownership is certainly not for everyone.
Write down your big “WHY” for starting a business. It could be that you want flexibility, a sense of personal accomplishment, to set an example for your children, or you could already have a specific problem you’re dying to solve.
2. What type of business do I want to run?
One way to think about the type of business you want to run is to consider whether you want it to be;
- Built to Flip – a business you’re building to sell for a profit in the not-too-distant future.
- Enterprise – a business you’re intending to grow into a significant force within your industry.
- Project – a short-term business aimed at answering a particular question or fulfilling a particular need.
- Lifestyle Business – a business primarily designed to support the lifestyle you want to lead.
You should also think about whether you want to build a physical business or an online business, a franchise, something niche, something service oriented, something scalable, or a business that helps you make a difference. Of course, these are not all mutually exclusive. Getting clear on what your objective with starting a business is the first step.
What type of business do you want to start? What are your main criteria? List them now.
3. What’s your business idea?
Before settling on one business idea, think of lots (and lots more!). James Altucher recommends brainstorming 10 new business ideas every day. When you think you’ve come up with a good idea, let it marinate for a few days and then see if it still seems like a good idea. If it does, it’s time to flesh it out and get some real clarity on the nature of your business idea.
A great way to force yourself to think through more of the details for your business idea is to use the Business Model Canvas method. Using this framework, you start mapping out the following sections (note that I have modified them slightly from the original concept);
- Target Market(s)
Who will the customers (and/or users) be? Describe them in as much detail as possible. Eventually you should create a detailed target market avatar, but you can start with just a few descriptors for now. - Key Value Proposition
What problem are you solving? How will your solution be unique to the other alternatives? What core value will you provide? - Sales / Marketing Channels
How will you attract and convince customers to purchase your offering? - Customer Relationships
How will you communicate and interact with customers through their journey? - Key Activities
What will be the main activities for building and operating the business? Which activities should be unique and amazing to deliver on the value proposition? - Key Resources
What are the assets the business must have to compete? Financial? Skills? Relationships? Other? - Key Partners
What people, businesses or other relationships will be critical to making this work? Suppliers, special skills to find, unique relationships to leverage, etc. - Revenue Stream(s)
How will the business earn revenue? What price will your customers be willing to pay? - Cost Structure
What will be the business’ major costs? How are they linked to growth?
Go through each of these headings and write some (brief) notes to describe the business you’re envisaging.
Do you still like the idea of this business? If so, move on!
4. How can you validate your business idea?
What information do you need to validate your business idea? Some ideas for validating your business idea include (but are not limited to);
- Having one-on-one conversations with people in your target market – perhaps showing them mock-ups of your idea.
- Doing a survey to assess demand and better define users’ needs.
- Running Google or Facebook advertisements to test demand and your ability to connect with an audience.
- Creating a splash page and email capture to test price points/willingness to signup and/or pay for your product.
- Looking at Google Trends data.
- Analysing your potential competitors (note that having competitors is not a negative and in fact proves there is an existing market).
- Offering your services for free to people in your network.
- Financial analysis – does the business model work? How do the projected revenues and costs look?
- Are there any regulations you need to be aware of?
Write down the key questions you want to answer in your validation stage. These should be the biggest unknowns, the hardest parts of the business, or questions that will help guide you on the design of your product/service. How will you seek to answer those questions?
5. Is your business idea sufficiently validated?
Take the steps that you outlined above to validate your business idea. Notice, that we use the word ‘sufficiently’ as you can never totally validate your idea and depending on the time and financials required to launch, you’ll be comfortable with a lower or higher level of risk. For instance, if you’re looking at starting a new power plant which has enormous costs, you’d want to do very detailed feasibility studies with thorough market research. On the other hand, if you can build your product in a weekend, maybe you don’t really need to validate it before you start.
Write down the answers to your key validation questions. Does the business still look attractive? Do you need more information in order to move on?
6. The critical path to your first 10 customers
Here’s where it really gets crunchy! Think about the minimum viable product (or service) (ie the MVP) you can create to serve your first handful of customers. Chances are, you’re a perfectionist and this won’t sit well with you, but your goal should be to minimise the time it takes to get your product or service in front of real customers.
- Do you need business cards? No.
- Do you need a legal entity? No, not yet (but don’t tell anyone I said that!)
- Do you need an accounting system? Definitely not.
- Do you need an amazing logo and brand design? No (just start with something rough that you can improve on later).
You get the idea.
But chances are there are quite a lot of things you do need in order to attract and serve your first 10 customers. What are they? If you’re developing a software application, they could be things like:
- Reduce the scope of your initial ideas to include just the bare bones functionality
- Wireframe the key pages of the application (for desktop only as the mobile app will come later)
- Decide on which software platform/language/architecture to use (speak to experts)
- Decide whether to develop yourself, engage individual(s), or engage a business for development
- Get quotes from developers and/or advertise for hourly roles
- Engage the developer(s) and start work (and speak daily)
- Create a rough logo and choose some colours
- Draft copy for a landing page
- Create a two-page website for generating interest
- Start reaching out to relevant groups
- Do five guest post on a relevant topic
- Create email sequence to keep leads warm
- Draft launch email
Of course, these will be completely different depending on your actual business but you get the idea.
Note that the first word for every action should be a verb – because it’s something you need to do. Make them all relatively small tasks so that you can keep the momentum going. Chances are you won’t think of them all at once, but have a shot at it and then stay flexible so that you can add to your list later.
The other key thing to think about is when do you want this all to happen? Start putting some dates against each task to hold yourself accountable.
List as many micro-actions as you can to move you towards having your first 10 customers. Put dates against them and start working through that list like a crazy person! Celebrate every new customer that comes onboard. Have you got 10? Then move on!
7. Engage with your early customers
It’s great that you’ve had some success with customers. Now’s the time to get some real feedback and incorporate that into your product/service before moving on. Of course, surveys are an option but there is so much more to be learned by having real conversations with each customer.
Set up times to talk and have a list of questions ready to cover areas like:
- How did they find you/initially come across you?
- What were their initial impressions?
- Why were they interested in a product/service like this? What were their hopes/expectations?
- How did your product/service meet (or fail to meet) these expectations?
- What suggestions do they have for improvement?
- Do they have thoughts about the communication/customer service of your business?
- What do they think of your branding and name?
Write a list of the key things that need to be changed or improved to get you to 100 customers. Put dates against these and work towards checking them off. Meanwhile, keep selling…
8. Getting to 100 customers +
Fantastic, you’re well on your way! But you’re probably all too aware that there’s still a tonne of stuff to do! Of course, this will depend on the type of business you’ve launched but some of the key things I’d suggest are:
- Set up a simple spreadsheet to track your key metrics. Put the weeks or months across the top and fill them in. Probably metrics like; number of active users/customers, number of signups, number cancellations, revenue, etc. Don’t have too many but focussing on one or a few key metrics can really help you keep things moving forward.
- Put a basic financial tracking system in place. This could be an accounting application or maybe a simple spreadsheet. Keep good records with all of your expenses, receipts, invoices etc.
- Get advice on the best type of legal entity and set this up
- Acquire any relevant domain names or other name related assets that you might need
- Set up a sales funnel based on whatever marketing has worked so far
- Choose a new type of marketing to trial (just one at a time though!)
- Set up customer service systems
Write a new list of tasks that need to be done in order to grow to the next stage. Put dates against them and spend some time each day on these, while keeping everything afloat within the business.
9. Keep iterating, improving and keeping customers happy
Once you’ve got to this stage, it’s a matter of continuing to listen to customers and meet their needs, whilst scaling to allow you to better meet the needs of a growing number of customers.
Well done!
Source: Flying Solo
