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The “how to start a business plan” is a guide that will help you in the process of starting your own business. It will walk you through 8 steps.
It takes a lot of effort to start a company. The quantity of paperwork, regulatory obligations, and strategic planning that must be completed may be daunting. You’ll struggle to convert your concept into a profitable company if you don’t put in the work.
We’re not trying to frighten you away from starting your own business. We simply want to keep things genuine while informing you that starting your own company is 100% feasible. You can accomplish it, but it will require time, effort, and maybe a few setbacks.
What is the best way to start a business?
You may be wondering where to begin at this point. Should you focus on your company’s name and logo or on its structure? Is it better to start asking for financing now or to concentrate on product development?
It may be tough to choose the best course of action. But that’s OK. It’s all about trial and error when it comes to starting your own business. Working through the process to discover what works for you and what prospective consumers respond to.
Rather of being overwhelmed by all of the choices and responsibilities at hand, there are measures you can do to jumpstart your company’s growth. Let’s get this party started.
1. Decide whether you want to be an entrepreneur.
It’s a good idea to take stock of yourself and your circumstances before delving into the specifics of your prospective company.
- What motivates you to start a business? Is it for the sake of money, independence, and flexibility, or for some other reason?
- What talents do you have?
- What industries are you familiar with?
- Do you wish to sell a product or a service?
- What do you like doing?
- How much money are you willing to put at risk?
- Is it going to be a full-time or part-time business?
Your responses to these kinds of questions will aid in focusing your attention.
This phase isn’t meant to scare you away from establishing your own company. Instead, it’s here to start you thinking and making plans. Passion alone isn’t enough to establish a successful company.
“Know yourself and work in a position that suits your skills. You will be happy as a result of this knowledge.”
— Sabrina Parsons, Palo Alto Software’s CEO
Make a self-evaluation.
You must plan, establish objectives, and most importantly, know yourself. What are your advantages? What are some of your flaws? What impact will these have on day-to-day operations? To discover this out, you might do a SWOT analysis on yourself.
As your company grows, it will certainly take over your life, so make sure you’re doing something exciting and difficult, but not totally outside of your specialty. You’re going to stay here for a long time. Use what you’ve learned from the SWOT analysis to consider how you want to live your life, not simply how you want your company to run.
The following are some excellent questions to ask yourself:
- What would you do if you didn’t have to worry about money?
- Is it really so essential to have money? Is it really necessary to make a lot of it? If it is, you will most likely be eliminating a lot of possibilities.
- What is most important to you?
- Is your family, particularly your close family, behind you? They may have to make compromises at first, therefore it’s critical to have their support.
- Who do you look up to in the business world? Perhaps there is someone in the industry you want to work in. What is it about them that you admire? What are their endearing qualities? What lessons can you take away from them?
Answering these (and other similar) questions about yourself and your skills won’t guarantee your success, but it will start you thinking about your objectives and what drives and inspires you. Use this time to ensure that the company you wish to establish is a good fit for your own goals.
Take our quiz to see whether you’re also an entrepreneur in the making.
2. Refine your concept.
It’s time to discover and develop your company concept after you’ve determined why you want to start one. After completing your self-assessment, you’re more than likely to have a plan in mind. However, if you’re looking for ideas, you may go through our example plan library to learn about various sectors or read up on hot start-up concepts.
It’s no longer enough to just believe you have a fantastic concept and go with it. You must establish that a need exists. You should also consider whether or not this concept is viable.
Begin with a lean strategy.
In a minute, we’ll get into the details of how to research the market and see whether your concept is a suitable match. We suggest that you create a Lean Plan right now to make the remainder of the process go much more smoothly.
The Lean Plan is a one-page document that will assist you in refining your concept. It guarantees that your goal and value proposition are considered early on, while also giving structure for the more technical aspects of your company. In fact, it will serve as the ideal blueprint for completing the remaining stages.
To get started, just download our free Lean Planning Template.
3. Conduct a market analysis
It’s time to assess your concept after you’ve decided on a company that matches your objectives and lifestyle. Who will be interested in purchasing your goods or service? Who will be your main rivals? This procedure will assist you in addressing the parts of your Lean Plan dealing with opportunity, value proposition, market size, and competition.
You may accomplish this in a variety of ways, including:
- When using Google for generic queries,
- Talking to individuals who are already employed in your desired industry
- Reading books written by individuals in your field
- Identifying important individuals
- Reading industry publications and related news sites
- Taking one or two classes (if this is possible).
There are individuals you may turn to for assistance if you don’t have time to do the research or if you want a second perspective, such as government agencies and your local SBDC.
“The more you know about your business, the more you will have an edge and protection.”
― Tim Berry, Palo Alto Software’s Founder
Determine who your target audience is.
It is insufficient to just describe the present market situation. You’ll need to know how much you’ll be able to claim and if it’s even feasible. We recommend doing a market study to evaluate how appealing your potential market is.
It will direct your investigation as you consider:
- How urgently do consumers need the product or service you’re selling or providing right now?
- What is the size of the market? Are there a lot of individuals willing to pay for goods or services that are comparable to yours? Have you figured out who your target market is? You may concentrate your marketing message and investment by being particular.
- How simple is it to get a client (and how much will it cost you)? If you’re selling corporate software, you’ll probably need a lot more money than a coffee shop.
- How much money and effort will it take to provide the value you want to provide?
- How long will it take for your product to reach the market? Is it really a month? Is it really a year? Is it really three years?
- How much money will you need up front before you can start?
- Will your company remain relevant as time goes on? A company that fixes iPhone X displays will only be relevant as long as the iPhone X exists. If your company is only important for a limited time, you’ll want to think about your long-term goals.
Examine the competition.
You may even go one step further and examine the customer requirements that are presently unmet by companies in the sector. This is an excellent opportunity to investigate prospective rivals. Also, keep in mind that the existence of rivals is often a positive indication! It implies that there is already a market for your product or service, and you know that you have prospective consumers who are prepared to spend money on it.
While you have the opportunity, discover all you can about your rivals, including what services they provide, how they draw attention, and whether or not their clients are satisfied. If you can find out what’s lacking before you start, it’ll make your work a lot simpler when you do eventually open your doors.
Validate your concept.
Finally, field testing your concept, services, or goods is critical. Take the time to talk with your prospective consumers while doing your study. To assess interest, provide them with the idea you want to launch, as well as clarify which rivals they may currently be using and the price they’re prepared to pay. If you have the resources, create a minimal viable product (MVP) to demonstrate what you’ll be offering.
This procedure doesn’t even have to be done in person. Alternatively, you can:
- Send out questionnaires
- Join discussion boards and Facebook groups.
- Run ads
- Pre-orders should be sold.
The most essential thing is to define what success entails. Know what you need to achieve and be ready to change your mind about your concept or target audience if things don’t go as planned.
4. Prepare a business strategy
A business plan is required if you want to seek outside funding. Even if you intend to fund the endeavor yourself, a business plan will assist you in determining how much money you’ll need to get started, what it’ll take to make your company successful, when things need to be done, and where you’re heading.
A route plan for your company
In its most basic form, a business plan is a road map—something you’ll use to track your progress and define the steps you’ll need to take to achieve your objectives. Instead of seeing a business plan as a cumbersome document that you’ll only use once (maybe to get a bank loan), consider it as a tool for managing how your company develops and accomplishes its objectives.
While you may use your business plan to sell investors and banks, as well as to recruit prospective partners and board members, it will mainly be used to outline your strategy, tactics, and specific actions for execution, such as important milestones, deadlines, and budgets, as well as cash flow.
With your Lean Plan, you’ve already gotten a head start.
Here’s the thing: if you don’t need to show your strategy to outsiders, your business plan doesn’t have to be a formal document at all. Instead, use the Lean Planning process to create a pitch, predict your main business statistics, outline important milestones you want to reach, and conduct frequent progress checks to evaluate and modify your plan.
If you are not presenting to investors, think of this as a high-level summary of who you are, the issue you are addressing, your solution to the problem, your target market, and the main strategies you will employ to accomplish your objectives, rather than a formal pitch presentation.
Hopefully, while you researched your company concept, you’ve already begun creating your Lean Plan. If you haven’t already, now is the time to get started. Because you should go through the planning process even if you don’t believe you need a formal business plan. The approach will assist you find any gaps or places where you haven’t given enough consideration.
What does a formal business strategy entail?
If you do need to create a formal business plan, stick to the steps outlined below.
The typical business plan is divided into nine sections:
There are lots of internet resources, including our own thorough guide, if you want specific information on how to create a business plan to submit to banks or funders.
On this page, you’ll also discover hundreds of example plans for many sectors. Use them at your leisure, but be ready to modify them to meet your specific requirements. There are no two companies alike!
Different types of business strategies
If you’re only writing a business plan to start a conversation with prospective partners and associates, a “startup plan,” also known as a feasibility plan, may be the way to go. As your company develops, you may expand the parts as needed.
The operations or yearly plan stands in contrast to the standard and startup plans. This kind of strategy is mainly utilized for internal reasons and represents the requirements of the company’s members. Banks and outside investors are not interested in this kind of strategy. It will be used to plan your company’s development and expansion, as well as to establish company-wide objectives.
If the latter is true, and you’re utilizing the plan to guide your internal strategy, you’re developing a strategic plan, which consists of a high-level strategy, tactical foundations of the strategy, particular roles, activities, deadlines, and budgets, as well as a financial plan.
5. Make your company legitimate.
Registering your company is, in reality, the first step toward making it a reality. Take your time to learn about the advantages and disadvantages of various company organizations, just like you did with the personal assessment phase.
Work with an attorney to smooth out the specifics if at all feasible. This is not an area where you want to make a mistake. You’ll also need to get the necessary licenses and permissions for your company. There may be municipal, county, or state restrictions as well, depending on the kind of company. It’s also a good idea to look into insurance and locate a competent accountant at this time.
The following are examples of business formations:
Spend some time learning about the advantages and disadvantages of each company structure. If you need more information, we have a comprehensive guide on Legal Entities, Licenses, and Permits.
While incorporating is costly, it is definitely worth the investment. A corporation is a distinct legal body that is responsible for the company’s operations. You are less likely to be held personally responsible if anything goes wrong.
Other tasks include choosing on a company name and investigating its availability.
6. Invest in your company
You may need to seek funding from a “angel” investor or a venture capital company, depending on the size and objectives of your business. Most small companies, on the other hand, begin with a loan, credit card finance, or assistance from friends and family, among other things.
There are a variety of investment and loan alternatives available, including:
See our full guide on how to get your company financed for more information on financing, which includes extensive information on each of the above-mentioned alternatives.
Note: Just because you have a well-thought-out business plan doesn’t mean you’ll obtain funding. In fact, according to Guy Kawasaki, when it comes to collecting funds, the business strategy is one of the least important elements.
You’d be better off concentrating on your “pitch” first if you want to have a realistic chance of obtaining the money you need to get started. Not only will it be simpler to modify since it includes less information, but you’ll also get feedback on it—most investors don’t read the whole business plan, though they may still require you to have one.
It’s also lot simpler to convert a pitch into a business plan than it is to reduce the scope of your strategy.
7. Determine the location of your company.
Your business plan is complete, the funds are in the bank, and you’re ready to start. If you’re starting a company online and won’t require a physical location, you’re definitely thinking about creating a website and selecting a shopping cart solution. Instead than renting or purchasing office space, you may be able to work from home or a co-working facility. However, if your company need a dedicated physical site, there are many factors to consider.
Locating a suitable site. Negotiating leasing agreements. Purchasing inventory Installing the phones is the next step. Getting stationery made. Recruiting personnel. Decide on your pricing. Organizing a big opening celebration.
Consider each of these steps thoroughly. The kind of client you attract, the types of promotions you may run, and how long it takes you to expand are all determined by your company location. While having a fantastic location does not ensure success, having a poor location may contribute to failure.
In a physical place, what to look for
Evaluate the following factors when you consider where you want to open your business (including the city and state):
- Can you afford to be where you want to be in terms of price? Continue searching if not, or if you’re cutting it too fine.
- Visibility: Will people be able to readily locate you? Will they be aware of your special deals and promotions? Are you in the heart of town or on the outskirts? What impact will this have on you?
- Access to parking or public transit: Can people locate you quickly using the available parking and transportation options? They may give up if they have to search too hard.
- Is there a large number of rivals in close proximity to you? If this is the case, it may indicate that the venue is exclusive to the clientele you want to attract. It may also imply that you don’t conduct any business. Think about how you want to handle a scenario like this.
- Look into local, municipal, and state laws and regulations, since certain locations may have more severe requirements than others. Make sure there aren’t any limitations in place that will limit your operations or serve as a barrier to your store’s success.
Things to think about while planning a shop space
Your marketing will pave the way for your store’s future success. It will establish expectations, create buzz (if done well), bring in business from the start, and let people know where you are and what they can expect from you.
The layout, style, and positioning of your goods in your shop will determine not just the overall mood of the store, but also which products customers will notice and purchase. Consider how you want your shop to be lighted, how you’ll display goods (if required), how different colors will make customers feel, and how people will walk through it.
There is a mountain of literature on why we purchase the things we do, all of it interesting and much of it educational. Begin by considering how you purchase; this will prompt you to consider your own business more seriously.
Your product selection and pricing decisions will establish a reputation. Rather of stocking everything in a comparable price range from one or two catalogs, focus on just those products that will help you achieve the look you desire.
If you run a service company, structure your offerings in a similar way, taking into account your various clients and the value they will get from the many choices you provide. Consider omitting a low-cost bundle if it would devalue your brand. If a more expensive choice would severely restrict your customers, consider cutting down on some of the services provided.
Businesses that operate online
Many retail sites are still slated for closure in 2021, increasing the likelihood of companies launching online. While an online or distant company may remove some risk, it also introduces new difficulties that you must address.
First and foremost, you must place a high priority on web development and your online user experience. You must ensure that your site experience is smooth if you do not have a physical presence or live customer support. This entails selecting an eCommerce platform with consideration, evaluating your UX design, and making frequent changes depending on user input.
Second, you must include remote work into your company. It may start off as just you, but as your company grows and expands, you’ll need to learn how to manage a virtual staff. Examine remote working technologies, start implementing virtual procedures and documentation right away, and make sure you know how to interact online. By taking care of these issues up front, you may avoid them becoming stumbling obstacles down the line.
8. Get ready to expand
Expect to make errors whether you’re establishing your first or third company. This is normal, and it is also helpful if you learn from them.
Setting up review procedures to assist you in making choices is the greatest way to take benefit of any errors. This is when your Lean Strategy, or complete business plan, from earlier comes into play.
Set up monthly review meetings to look over the statistics, your strategy, and create projections for the following month, quarter, and year if your plan is up to date. This is an easy method to keep track of performance and make informed choices based on data. As a result, rather of reacting to negative circumstances, you prepare for them and face uncertainty with confidence.
To begin monitoring your financials, you may download our free cash flow statement and balance sheet samples to assist you with your analysis. You may want to try LivePlan for a simpler option that makes analyzing predictions and financial statements quicker and easier.
You can build your Lean Plan, complete business plan, pitch, and predictions all on the same platform using LivePlan. If you’re not ready to invest in a planning platform just yet, the templates in this tutorial will enough to get your company up and going.
In order to start a business, you will need certain things. In this list of things needed to start a business, you will find the most important items that you should have on hand before starting your own business.
Frequently Asked Questions
What are the 8 steps to writing a business plan?
A: 1. Identify the Target Market and Purpose of Your Business 2. Research Industry Standards and Competitors Within This Niche 3. Create a Mission Statement for your Company that Clearly Describes Your Marketing Strategy 4. Establish Strategic Objectives to Achieve Success with this Plan, such as Number of Customers Served, Revenue Produced From Target Market, etc… 5-7) Set Up Cost Structure for Startup Costs (Initial Inventory Purchases), Salaries/Wages For Staffing Team Members, Sales Efforts in Next Periods or Quarter
How can I start my own business in 2021?
A: In order to start a business in 2021, you will need to have at least $1000 and be 18 years of age or older. You can also choose from many different types of businesses like construction work, security services, retail sales, and more.
Is 2021 a good time to start a business?
A: Of course, 2021 is a good time to start a business.
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