Dream, drive, passion, intuition, talent… They are all essential to an entrepreneur’s success but not sufficient.
The “let’s see how it goes” approach in business is too much of a vague way to go about it. What you need is good strategic planning beforehand!
With a myriad of factors at play to consider, you need to get a clear view of what path you are going to tread, where you want to arrive, and how you can realistically get there.
But how do you plan for your business start-up and growth? Upon what information do you build your forecasts? And what aspects do you need to consider?
Clearly, the pieces in the puzzle are countless, but if I were to choose four aspects which are essential to any successful business plan, I would say:
1) Know your competition
May sound obvious but it is a must prerequisite. Have you identified your competitors? How is their business going? Did you check their accounts on Companies House? If their business has not taken off, what’s the reason for that?
These are some of the questions you would need to answer.
You should also check their websites and their social platforms.
You might want to buy some of their products to test them and see how you can improve yours.
Try and look at it from a customer’s perspective: how would you, as a potential customer, see your business offer compared to your competitors’?
Doing this will help you learn more about your competitors and find out how your business can compare to theirs, and how you can differentiate your offer.
𝟐) Initial cash requirement
Have you worked out in detail how much money you need to get your business up and running? And how do you calculate your initial cash requirements anyway?
You might be tricked into thinking it’s simply the amount of the initial startup investments. Careful here! Your cash requirements should cover not only the initial one-off costs, such as machinery, licenses, computers, etc… but also the first months’ running costs to the extent they are not covered by your expected income.
Once you have put everything into a business plan, you might be surprised at the outcome and you’ll be glad you have looked into it in detail!
𝟯) Realistic financial projections
Try to get in the shoes of whoever is evaluating your business proposal, whether it is an investor, a lending institution, a granting body, or else.
How many times do we hear things like “I strongly believe my product is going to be a success” or similar, just based on pure instinct?
Instinct is absolutely important, it is what moves our creativity and ideas, but it then needs to be put face to face with realistic figures. So, my advice here is: make sure you stay with your feet on the ground and you have done your research.
Make sure that when you present a business plan your figures are realistic. This will help you win the trust of whoever is considering putting their money into your business venture.
𝟒) Product validation
Have you already sold your products/services before? If not, are you able to obtain a 𝐌𝐢𝐧𝐢𝐦𝐮𝐦 𝐕𝐢𝐚𝐛𝐥𝐞 𝐏𝐫𝐨𝐝𝐮𝐜𝐭 to offer?
What feedback did you get? And who did you ask, by the way? Besides asking family and friends, ideally, you’d sound out future prospective customers who are external to your circle: what you want to get is straightforward opinions to understand where your goods (or services) can be improved.
You will also want to keep an eye on social platforms and any relevant review portals for the feedback customers are giving about your competitors’ products.
You may also want to run a small online (or offline) survey to gather responses from your potential customers, always being careful not to give away too much information about your products.
Another advantage of carrying out product validation is that it’ll give you a better standing in front of your investors because asking for funding without having ever tested your products or services will not be the same as fundraising having first-hand experience of what you sell.
