A business plan is the foundation of your business. People who want to raise money from venture capitalists always need one. But what about other entrepreneurs with smaller businesses? There are so many businesses that do not go down that road. Do they also need a business plan? In my opinion, yes, they do. I am convinced that a business plan is the most important tool for your business.
Forming a business plan is not supposed to be something that you do just for investors, it is also for you. Everyone has amazing ideas in their heads for a business. But most of the time the ideas are kind of vague, and therefore they’re not able to communicate them with their team or their clients. When you make a business plan, you get the idea out of your head and formulate it into words. Doing that provides clarity. Clarity for yourself, clarity for the team, and clarity for the clients or other people that you’re working with.
With that being said, let’s go into the typical components which are in a business plan. A business plan typically has a number of parts that need to be covered, for example:
– What’s the market that you’re active in?
– What’s is actually the product that you’re trying to sell?
– What’s your revenue model?
– What’s the USP (unique selling proposition)?
– What is the marketing and sales plan/system that you’re following?
– Do you have a financial plan?
– Are you raising money externally? If yes, what is the use of proceeds?
All these points have a certain structure that you need to follow, so that not just people, but you also could understand your business clearly. And this is usually done in three different lengths:
1) A longer version where you describe everything.
2) A shorter version where you describe everything in single paragraphs.
3) The one-pager, where you put everything together on one single page.
If you want to know more about the details of a plan, and what should be in every individual part, just let us know in the comment section below!
The Secret Components:
Other than the typical points that are mentioned above, there are a few secret components to a business plan, that almost nobody is mentioning to you:
1) The USP of your product or service: it is the foundation and groundwork for your sales, marketing, and your product development. So, if you get this wrong, you get everything wrong. And unfortunately, it is one of the sections that many, many people do get wrong. The reason why they get it wrong, is that they fail to understand that the USP is not a technical description to why, in their opinion, their product or service is the best one out there. The harsh truth is that the ONLY thing your client is actually interested in, is that he/she has a problem, and how your product or service might solve that problem. Asking yourself this question is the key to making your USP literally stand out and be of true value. Always try to shift your focus from thinking about what is in it for you and ask yourself, what is in it for the client?
2) The 3 T’s:
The 3 T’s are the most important part of a business plan, and,in my opinion, they are also the key point that VC’s base their decision on, whether they’re going to invest or not.
The 3 T’s go like this: Team, Team, and once again Team. Having the right team is extremely important and plays a crucial part in the success of your business.
But here’s where things get a little bit awkward. If the team is actually that important to investors, how come people only look at the team’s current situation? They focus on the team’s bio and what they’ve done in the past but ignore the fact that there’s no future plan for the team’s development. What’s your plan on how to develop your team? How are your people going to grow together? How are you going to mix their different capabilities and make them work in harmony? In order to have the right team, you have to also have the right plan for the team.
3) Your big WHY:
There will be a lot of hard times in your business. Sometimes you’re going to feel like giving up, your team members may sometimes think, “what am I really doing here, why don’t I quit?” In order to get through such tough times, you need to know your why. Why are you actually doing this? Why are you running this company or business? Why are your people there? You need to know your personal why and then you need to communicate it and transport is to your team so that they’ll also know their why. By doing that you make your personal why become the company’s why.
Your job as an entrepreneur, is to communicate this again and again and again, to make sure they understand it. For example, people that work at Tesla, they do not go there to build a car. They go there to make the transition to carbon-free humanity. That’s their big why.
4) The Owner’s Development:
I’ve spoken to hundreds of entrepreneurs, and all of them cover how they want and will develop their company. But what I’m personally missing, is their plan for developing themselves as the business’ owner, as an entrepreneur. Hardly anybody talks about this.
In the world of entrepreneurship, your company can only be as big as you are as a person. How do you handle failure? How do you organize yourself? How do you organize others? How do you move and make the transition from, doing it myself to delegating and then managing people? How are you, as a person, able to handle all of these shifts? How you approach every single one of those challenges, determines where you’re going to go with your business. So, in your business plan, it is important to have a section that takes care of your development as a founder.
As you can see, there’s much more to a business plan, than it’s commonly discussed. If you want to know more about it, and discuss your ideas, thoughts, questions, and fears with other like-minded entrepreneurs, you can join my Facebook group, “Entrepreneurs Ignited”.
The link is in the description below:
The link to “Entrepreneurs Ignited”: