How to write a successful business plan.
Featured image by Austin Distel on Unsplash.
Do you want to own your own business? Do you want to be in full control of your time and direct your energies into something that is all yours? Here’s how to write the business plan.
I believe starting your own business is a key step in achieving ultimate success, especially in the advanced knowledge economy that is evolving now.
So how do we start a business?
First, find your mission:
You need to find your calling, the thing you will want to do even when everything seems too hard. Because it will get hard.
There are many ways to look at starting a business but I believe we need to start with an idea of what we want to do.
As Stephen R. Covey says, “When you can give yourself to work that brings together a need, your talent, and your passion, power will be unlocked.”(Covey 2005, Pg. 77)
So if you haven’t worked out what business you want yet, please go to How to chose a Business than can Bring you Success. Hopefully you can find what you want to do and what you can contribute.
Why Write a Business Plan
A business plan is basically a map to what you intend to do.
It lays out your thoughts and ideas. It forces you to consider the important areas that every business needs to consider. And it helps to solidify the idea into a tangible thing that can be communicated to other people; potential partners, investors, bankers, friends, whoever wants to know exactly what it is you want to do.
Read on to find out more.
Here are the basics of how to write a business plan.
In learning this process for myself, I looked at dozens of different plans, listened to lots of advice and read the Harvard Business Review. All offer lots of great insights, and I’ve included some of them here.
However, for the basic structure, I got from Cliff Ennico, check out his channel here.
For me, his structure was the easiest and seemed to make the most sense for a very first time business plan.
How to Write a Business Plan
Step 1 Business name
A business name is an important element. Your name must communicate what you do and the spirit of your enterprise. It should be brief and easy to remember.
I’m sure you know all the great examples – Google, Nike, Coke – For now we’ll leave the super cool inspired name up to your imagination.
For an example throughout, we will imagine Average Joe’s Language School. (I recommend you think of something a lot snappier than that, but for an example it will do.)
Step 2: This step of the business plan is Marketing Aspects
Marketing is essentially all the activities you will do to reach out to potential customers and how you will put your product or service in front of them. Cliff recommends these go first because you need customers! If you can’t find customers then you can have the greatest product or the most valuable service and it won’t be worth a cent. You need customers. You need to know who they are and how to connect with them.
o Who are your customers and what are they like? Age, gender, occupations, and so on. Be as specific as possible; really have a clear image of the exact person you want to target, serve or provide for.
o Where will you find them? Geography – Will you interact with them in real life or online, or both.
Finish with an answer to these vital questions:
o Who are we going to serve?
o Why do we want to serve them?
For my example: I will be teaching English to Vietnamese language learners. They need to have some level of English so they can’t be complete beginners. I don’t want to spend all my time dealing with behaviour problems, so I will teach older children and adults, ideally university students. I want to serve them because I can see the power English has for Vietnamese people as a vehicle for their lives. It is also an area that I can do well as I have experience in teaching. (You can and should elaborate in as much detail as possible. This is purely an example for me, so I will leave it at that.)
2. Customer Motivation
Why will our customers buy from us?
There are essentially 2 motivations for people to buy. They are passion and fear. Either people are passionate about something so much they have to have it, or they fear something so much that they are willing to do anything to avoid it.
– What are their passions?
Think about what are all the deep motivating drives of humans. What do we really want? We all want satisfaction. Greed, lust, desire, hunger, significance, all of these are part of what drives human activity. So what is the passion you want to inspire?
– What are their fears?
On the other hand, what do people fear so much that they are willing to buy your product or service to avoid? Human fears are rather varied, but we know the main ones. People fear not fitting-in, they fear missing out, insecurity, sickness, disease, death, not knowing, and so on. So what is the fear that you can diminish?
For my Example:
For my imagined customers, I know that their passion is to learn English so that they can either attend foreign universities or they can use it as a vehicle to conduct business internationally. This basically means they want to become more educated so they can access better opportunities for the sake of getting more monetary wealth and improving their lifestyle. This is common to most of us and should not be difficult to target.
In regards to fear, they fear being left behind as others learn a valuable skill in a very competitive marketplace. They fear that their children and their families will miss-out on vital opportunities for their future wellbeing.
For many, they fear poverty and powerlessness as well. These are powerful fears that can be targeted. Knowing these motivating factors, we have the key for how to persuade our potential customers to want to use our products and services.
3. What products and services can we develop that will have a direct and immediate appeal.
We started with a basic idea of what we want to do. Then we looked at who our customers are and what motivates them. Now that we know who they are and what they want, we can establish exactly what product to give them.
The essential question is, why do they need our product and/or service?
The answer to this question will tell us what to provide. However, the key to success is that our product/service must have an immediate need. They need to know straight away that they need it.
Apparently, the average person takes 10 – 15 seconds to buy or not. So, the product that I offer needs to be immediately necessary.
For my Example:
Therefore, if we just offer English lessons, we are not targeting a real immediate demand. We may get customers, but given the highly competitive nature of the industry, a simple call to take up General English will not create that desperate demand we want.
However, I know my ideal customers want to go to foreign universities or they want to use it for international business. Therefore, if I offer university English courses (IELTS), or business English courses, or Understanding International Business English, then my customers have a reason to say straight away, ‘Yes, I want that, I need that!’
4. How do we reach our customers?
So far, we know our customers and we know what they want, but the next most important step is knowing how to find them.
– Do we know where they are in real life?
– Do we know how to get to them online?
– How do we connect with them and communicate with them?
In short, how do we advertise to them?
From my Example:
For Average Joe’s Language School, I know where my customers are. They’re in high schools, universities, and most likely on Facebook, maybe in online English groups.
Knowing this, I can plan my marketing. Marketing is a topic for another day, but the basics are fairly obvious. A range of traditional marketing products could serve for an intro to the schools and universities, where I know I can encounter them physically. And more modern media type social campaigns and advertising could work to connect me with customers online.
At this stage, I know that there are customers, there’s a real need for a specific product and I know where to find my customers. There seems to be a good reason to go ahead with the business.
Step 3: Market Aspects of the Business Plan
Once we have established our marketing aspects, we now need to evaluate the market we are entering and gage whether we can compete.
The big question to ask is what is our market? Who is involved in our market? Who are the players and how do we operate within this market.
For our Example:
For Average Joe’s, the market is Foreign Language Learning. To be as specific as I can, it’s language learning in Vietnam – for Vietnamese learning English. Having experience in the industry, I know basically the market expectations and the prices and wages and who the players are. However, if I was to launch the business for real, I would want to know a whole lot more.
5. Who are our competitors?
Business is extremely competitive:
It is extremely important that we acknowledge that going in. Business is competitive, and if you are going to survive in an industry you will need to compete.
Cliff breaks it down to four main categories of competition, which is a good way to start thinking about all the different players you will need to compete with.
There are actual competitors – these are other businesses serve the same product/service, or an alternative that could take demand away from your product.
Potential competitors – these are the competitors that could offer the same product, or could offer an alternative to your product.
Direct competitors are the business that offer the same product or are in the same market.
Indirect competitors are those that are in the market but offer a different product, or they are from another market but they offer an alternative demand for your customers’ limited free money.
See the chart for more:
With any business idea you will find that there is a mountain of competition. And not just from the direct competitors. People only have so much time and so many dollars. There are a plethora of options out there and you need to target that customer and get them to choose you over so many other options.
6. What is our competitive advantage?
So this is the ultimate question that decides whether we have a viable business proposal.
Why will people buy from us instead of others?
And it will generally rely on one or more of the following areas.
- Location – are we easier to access than the competition?
- Product – Is our product better than all the competition?
- Personnel – Are we, and our team, able to beat the competition?
- Price – Can we beat competitors on price? Do we offer better value?
- Speciality – Do we offer something that no one else can replicate?
Therefore, to see if you can compete, you need to go through and evaluate where your advantage lies and what your weaknesses are?
If you can compete, they you probably have the making of a potentially very profitable business. But you never know.
From our example:
If I weigh all things up I can see that language education in Vietnam is super competitive. My advantages are location, I’m here and I can operate online. However, so are others. In terms of personnel, I’m highly educated and have great experience, and I could train teachers to be highly effective. This is an advantage, but for me to teach personally, the price would need to be high to replace my current wage. And so on.
I’m not going to spend the time going through each point. It’s here that I can see it will be very difficult and I don’t really have the passion to get creative enough to get to a competitive advantage. “So for those reasons I’m out”, as Mark Cuban might say on Shark Tank.
However, if it was your passion then you would need to find a competitive advantage.
Let’s say our unique combination of ‘local’, Vietnamese English teachers in conjunction with foreign, native teachers allows us to offer our classes at a much lower cost than the established companies. Let’s also say that our ingenious use of technology to teach online makes us easier to access. And while were at it, let’s assume my teaching program, which I can instruct others to use is the best.
Then, there we have a competitive advantage.
Step 4: Business Plan for Human Resources
Now we know our customers and we’ve developed our product to the point where we have a competitive advantage, it’s time to see if we have the people that can make the business work.
7. Do we have the people to be successful?
In the beginning, if it’s a small business, you will most likely be doing everything. So it’s not so important for you to know all the different roles. You’ll be doing whatever you need to do as it comes up. However, it is helpful to know how to structure the human resources of a business; especially if you are planning for amazing, super quick growth.
– What are the jobs we need to do?
- Management Team – the management team have the vision and lead the rest to implement the business plan and to do the tasks of the business.
- Administration Team – these are the people who get and manage the customers.
- Staff – Lower level management, workers, and support staff.
- Legal – register the business, maintain quality, ensure copyrights are not infringed, administer forms and legalities of the running of the business etc.
- Accounting – Accounting sets up the books, monitors capital, revenue, expenses- salaries, insurance and so on.
- Human Resources – These are the people that deal with the hiring/firing procedures, contracts, visas, and many other human related issues of a business.
These are all the essential roles of the business. In the beginning you may need to do them all. However, if you set up a profitable business, the sooner you can free yourself from these roles the better.
However, you need to work out what are the essential business tasks and what are the tasks that you can delegate?
The essential tasks are those things you cannot designate. They must be done perfect, and you should be the one who makes it happen.
From our example:
The essential roles would be those things that ensure we have an advantage. For example, I would need to establish the procedures and the classes so that I can ensure there is quality across what is taught. I would also need to be responsible to hire and train all the staff, so I know they are all living up to the expectations of the Average Joe brand. Lastly, I might not need to run the legal and the books, but I certainly need to supervise to ensure the business is performing adequately. I will also need to be monitoring the progress of the business and be responsible for growth and innovation. In part by setting the culture, but also by monitoring the meta data and making quick decisions.
Cliff also adds, that we should never do the non-essential activities?
By trying to do everything, we fail to do the essential things to the level they need to be done.
So what are the non-essential tasks?
Well that depends on the business, but for most of us we probably want to bring on people to do things such as accountant and lawyer. It’s probably best those jobs are in the hands of people who actually know how to do them well.
8. Payroll – How do we pay everyone?
The next major consideration is Payroll. You need to pay people to work for you and if you want good people you need to pay well.
This is why in the beginning small business owners need to do everything for themselves.
However, if you want to start something more substantial, you will need to plan for where the money is coming from. And there’s really only a few places the money can come from.
- You raise money from investors and you give away a share of the company. You should always be wary of this, as the more you give away the less you can control. Therefore, you should only give a share away to people who are long term prospects and who are really dedicated to the vision you have.
- Or you provide the cash from savings or loans. This money will fuel the operation of the business until your staff can produce a profit for you. Again, I would be very wary and would consider being very conservative with non-essential staff, until you get a profit coming in.
From our example:
The business would need to start as an owner operator enterprise. I would do everything and keep it as low key as possible. And once things take off, I would look to add the most essential jobs needed to make profit.
Step 5: Business Plan Financial Aspects
9. Revenue – Where does the money come from?
Following on from payroll, we need to also plan for the logistics of the business. Rents, overheads, resources, stationary and so on are all required by the business to operate.
The business will also need to be registered and pay licences and taxes and so on.
All these expenses need to be paid. Some before you start making a profit, and all regardless of if you make a profit.
Once again, this money comes from:
- Capital – investment from owners.
- Revenue – money from customers
You need to consider these things and calculate the breakeven.
3. Where is breakeven? (When we can pay all the bills and not have to invest any money.)
You need to run through the projected numbers and work out when you believe you will start to make money and become profitable. Then you need to decide if it’s going to be profitable and it’s worth the risk of pouring your money into the business.
Step 6: Business Plan Risks and Opportunities
The final step is to look to the future.
10. What are the risks that your business will face?
- Could you get sued?
- Do you need to set up protection? By registering as a limited liability company or a corporation, you can protect your personal assets and limit any loses to the assets of the business.
- Do we need insurance? Every business should have insurance just incase.
We don’t have time to go through all the issues related right now, we will cover this topic in more detail in future posts. But if you are at this point, these are serious issues that you need to consider and should be in your business plan.
11. What are the future possibilities for this business?
On the other side, instead of risks we also should plan for future possibilities.
- What areas can we grow into?
- What are our regular processes to ensure we remain relevant and can keep building scale?
For business it’s absolutely important to always be thinking of the next step and trying to stay relevant and engaging. If you are not growing then you are most likely dying.
Thanks as always for allowing me to share.
I believe that finding your own personal mission and making that your livelihood, a business, is a great step on the way to achieving true success.
The dream is having a business that inspires you to be at your best every day and that provides a wonderful rewarding experience for you by servicing the real needs and wants of your fellow human beings.
That’s the vision I have at least. I’m just starting on this mission. I’ve had one failed business attempt, and now I’m just starting to formulate a new plan.
A business plan is vital. I know that if I ask all the right questions now I’ll be in a better position going forward. By planning I will be more prepared and more capable to succeed.
It’s perhaps not for everyone. However, as always I wish you well with whatever endeavors you undertake.
If you enjoyed this content, please find more interesting ideas about another important business concept at, How to be a Success by Mastering Sales.
Or please come join our mission by checking out Success24x7.com, or by subscribing below.
Regardless, all the best and always keep striving for your success.