BUSINESS PLANNING 101: TIPS TO HELP YOUR BUSINESS THRIVE
By: Aria Spears
Business Planning
Creating a business is solving a problem. And it doesn’t have to be an earth-shattering problem. The problem might be better lighting for a TikTok video. Or wanting to keep your beverage cool. For every product, someone uncovered a problem and an idea was born. Look around your home and the products you have. What problems do they solve?
Once you have an idea for your business, it’s time to create a business plan. Running a sustainable and profitable business is no easy feat. It is so important to create a plan and to think through the details of your business.
Entrepreneurs can have great ideas, a great work ethic, and a lot of confidence. But it’s what they don’t have that often leads to failure:
Not enough money
Poor management
Inadequate marketing
A flawed or nonexistent plan for the business
A business plan is a written document that establishes the vision, mission and goals for your business venture. It explains in detail how you intend to achieve the vision, mission and goals of your business. It guides an entrepreneur through the early stages of business development. And it serves as a measuring stick for the success of a business.
But let’s break down each of the components.
Components of a Traditional Business Plan
A traditional business plan is usually quite long and detailed. It incorporates all of the elements of the business in much detail and is explained in written form.
Executive Summary: Describe where your company is, where you want to take it, and why your business will be successful
Company Description: The market you hope to fill and how your products/services meet the needs of the market.
Market Analysis: Strengths, weaknesses, opportunities, threats in the market, target market, and competitive analysis.
Organization & Management: List of all owners and managers, credentials of owners and managers (skills, experience, education), and projection of operating expenses.
Service/Produce Line: What services or products you plan to sell or offer.
Marketing & Sales: How you will enter the market, increase market share, distribute product or provide service, and promote product/service. This is also your sales activities, product positioning, target customer, primary benefit, and key attributes.
Financial Projections: Cash flow statements, income statements, balance sheet, funding needs, and revenue/profit projections.
Components of the Lean Startup Plan
A lean start-up is built to deliver a product for which consumers already express some level of desire. Research goes in ahead of time to test and refine the product offering so a large market already exists when the product launches. A lean start-up plan is usually simpler than a traditional business plan, and is a more visual representation of the business than the traditional business plan.
Value Proposition: the unique value your company brings to the market.
Key Partnerships: Other businesses you’ll work with like suppliers, manufacturers, subcontractors, etc.
Key Activities: List the ways your business will gain a competitive advantage
Key Resources: Resources you’ll leverage to create value for your customer, such as staff, capital, or intellectual property
Customer Segments: Have a clear sense of who your business will serve
Customer Relationships: Describe how customers will interact with your business.
Channels: List the most important ways you’ll talk to your customers
Cost Structure: Will your company focus on reducing cost or maximizing value?
Revenue Streams: Explain how your company will actually make money
Picking your business plan model
There are many ways you can write a business plan. Some businesses don’t write a full formal business plan. However, you still need to create some sort of plan. It is important to think through the details and logistics of running your business. Will it be an online business or brick and mortar? What will you sell? Who is your target market?
Realistically, things change. Your business will evolve and change a lot in the first year, and will probably evolve every year. So the type of plan is not as important as thinking through all aspects of your business. The business plan is a great starting point to help you get started. When you get started on this plan, read through the different kinds of business plans and pick the one that would work best for your business.
Regularly update your business plan
Your business plan should not be an untouched, historical document. It needs to be a living and dynamic document you update and revisit at least once a year. Look at the past few years from 2020-2022, for example. No business expected to live through an unprecedented pandemic, as well as current labor shortages and inflation. During an uncertain time or a drastic change to your environment, it is important to revisit your plan and make adjustments. Businesses that sit on their hands or freeze during unexpected events often are the ones that fail.
Review your projections and assess why or why you did/did not meet your goals. It’s not only important to update your plan but evaluate it. If you set goals and do not reach them, assess what happened and what changes need to be made. Your business plan holds you accountable for the goals you set.
Put it into action
Are you ready to start planning? If you are a Spirit Box school or a school wanting to start a school based enterprise, download the business model canvas we created for you to help plan your business.