Starting up as an entrepreneur (2/4)

BUSINESS PLAN

The business plan is the document that gives you an overview of your plans, future goals and potential 12 risks that can occur along the way. It describes potential financial wins and losses, how your sales and marketing works, and many more details concerning your business. It has everything you have thought about until now and more. Writing a business plan is a great way to think about as many aspects as possible concerning your business and get ready for action, and bringing to life your enterprise. And the length may vary.

  • It may be 30-50 pages long, with absolutely every potential detail concerning your enterprise
  • It could be a plan necessary for banks or sponsors to help them decide to support you or not
  • I can be a page that summarises a 60 second speech, also known as the “elevator pitch” to easily explain what you are doing and what are your needs.
  • Can be an external document to lay out a detailed step-by-step action plan to use within yourenterprise, containing your vision, mission and goals.

The difference between those different versions is the length and format which is presented, as its core. Numbers, goals, marketing still need to be there, and everything needs to be linked. So start up as an entrepreneur you must have a business plan, because you will be communicating with different people that you can help or who can help you. So let’s break it down into parts now, and familiarise with a tool that can get your thoughts together, the pre-business plan, known as Business Canvas. Business canvas

This is a “strategic management and entrepreneurial tool that helps you describe, design, challenge, invent and pivot your business model.” This helps you understanding what you are doing in a clear and easy 13 way. Once you have written a business canvas, even your grandfather or toddler niece can understand your business. There are 9 components in a business canvas that you can write down, and you can do it alone, although if you already have a team better to do it together, so to make sure all are on the same page. (or you can repeat it once you have a team).

 

Components are:

  1. Your customers (customer segments) the ones for whom you generate value and your enterprise helps.
  2.  Value proposition, every customer segment has one of many value propositions coming from your products or services, that is where you describe what is the value that your customers gain from you, and now you can systematically write it down.
  3. How does the value get to our customers, what are the channels you will use to communicate the value to your customers?
  4. Customers’ relations, concerns the relation your customers have towards the value they give to your product or service, to the channels, and therefore, to you.
  5. Revenue Streams, show how much, and what type of value, you obtain through all of the above.
  6. Key Resources, show how you create the value you generate for your customers ; what resources do you need? Physical? Digital? Of course this can vary.
  7. Key Activities, show what you need to actually do to deliver Value to your customers
  8. Key Partners, who do you need (as partners) to accomplish all of the above? Do you really believe you can do it all alone?
  9. Cost Structure, time to quantify and put numbers here, how much does all of this cost?

You can go about it using the sequence of categories above as a smart and logical approach. Once you have your business canvas you will have a nice overview of your business. Remember, there are countless varieties and shapes of business plans, for example the longer version we are about to see.

The purpose of the business plan is to describe the different aspects of your enterprise, you actually already thought and wrote about many of them, time to put them in order and write it all down. Keep in mind you’ll need:

  • Summary – a short and overall description of your business’ key points
  • Business description – the vision, mission and goals
  • Analysis of the business environment – the context and situation of your business sector
  • Product/Service description – what is it? How does it work? What are the options around?
  • Market analysis and competition – who are your main competitors? How did they build their produc and service? What are their strengths and weaknesses? How can you be better than them?
  • Marketing plan – How to reach the customers and help them cross over the “buying line”.
  • Staff, Leadership and Management – how will you lead your enterprise, how many people will be involved? What is their profile?
  • Financial Plan – planned expenses and costs as well as forecasted income
  • Achievements and Milestones – what do you think will be your milestone, by when do you plan to accomplish them and how? How does one contribute to the next?

Summary

The summary-one-page is the first impression you want to give, the place to say right away the most important aspects about your business and catch the attention. To make immediately  clear what you do and why you do it, what’s in it for the investor, sponsor or customer. What are the most important numbers , including quantifying how big is your potential market, projected revenues, needed capital to start, and of course your value proposition to the customer and what will motivate them to purchase your service or product. Your goals, resources and needs should also be as clear as possible. And, by all means, target 15 your summary to the audience you are communicating too and be prepared to make adaptation.

Business description

The next part is the Overall Business Description. What is the situation in your sector today? What problem are you tackling? Do you have statistics? Can you show how other businesses tackling similar problems are performing? How do national and global strategies impact your business? For example the Paris Agreement. Basically, here goes the description of the situation in the sector of your enterprise, and can be beneficial to include a forecast, foreseeing (and demonstrating) how will the sector change in the near future and what are the perspectives.

Here you can describe in detail a description of your customers, the produce or service, and how your customer uses it.

Concerning Vision, Mission and Goals ;

  • The Vision is your direction and dream, where do you want to go, your purpose, how many lives you will positively impact and how, in other words the change you want to bring. This is about the emotional context, like returning to initial motivation – why do I want to be an entrepreneur.
  • If the Vision is the dream and the emotions, the Mission is the rational plan, how will you accomplish your Vision step by step? In a logical and rational plan. How many people can you positively impact through your product or service? What is the change you want to bring? Vision and Mission are not really about measurable objectives and indicators, rather the emotional context, something that moves those who read it.
  • Goal-setting – is about developing long and short-term goals, and here is where the measurable objectives appear, how concretely the Vision and Mission are measured are monitored as well as quantified. Including all kinds of foreseen measurements such as timing, targets, outreach, even revenues, and here the SMARTER acronym can come to your help:

Business Environment Analysis

It is important to know the environment that surrounds you, its is actually essential for a good business plan. For example, in these pandemic times, when so much of the work went online and digital it is important to develop good competences concerning software and social media when starting an enterprise, as well as to know how to work and operate with the new regulations.

A very helpful tool here would be the PESTEL model that we already introduced above, and this time dividing it into two columns, the macroenvironmental analysis and the microenvironmental analysis.

Concerning Macroenvironmental analysis:

  • What are the Political features that can affect your enterprise? What impact do the governmental and public sector decisions have? For example quotas of women in the board of enterprises. What is the direction of governmental decisions that can have an impact on business or your sector?
  • What are the Economic features that can impact your enterprise? For example labour skills and specialisation, unemployment, upskilling and reskilling necessities, market trends, cost of salaries, taxation, financial situation of the sector and of competitors, etc.
  • What Social features can have an impact? Aging population for example, hi-tech new generation entering the job market, levels of education, social context of the potential customers, etc.
  • What’s the Technological situation? Are there popular apps and software among companies in your sector? What social media does your target group use? What are their online habits? What problems do they solve via technology?
  • What is going on Environmentally? What are the newest standards to follow? How are companies expected to behave responsibly? What are the trends? What materials can you use, reuse? How and where to apply circular economy? Etc.
  • How does the Legal sphere impact you? What are the administrative duties? What about taxation? Which laws and regulation affect your business and sphere? Etc.

The questions above are just random samples, of course there can be, and there are, many more that apply to your entrepreneurial idea.

Now it is time to have look and the micro-environmental analysis, before you look around yourself, and now it is time for a bit of introspection. For example, what internal factors have an impact you, your colleagues, board and workers, your services or products? Let’s explore how PESTEL is applied here.

  • Political : what are your policies about dividends, gender mainstreaming, holidays, working hours, prizes etc.
  • Economic : forecast of revenues and income, added value of hiring or outsourcing, accounting and book-keeping processes.
  • Social : Any policies towards inclusion or those with lower opportunities? What culture do you want to develop within the company to make it a good environment? How to look after colleagues and workers to gain loyalty?
  • Technology : what do you use for communication? How do you promote your services? What about book-keeping?
  • Environment : Do you need an office? Do you have environment friendly policies? How are the spaces designed and what for? Etc.
  • Legal : What administrative and legal structure will you adopt? What about ownership and dividends? How to fulfill administrative duties? Etc.

Once more the questions here are just samples, there can and should be more, especially more specific ones concerning your enterprise. Time and experience will help you answer more accurately all the questions you come up with, and give feedback to the answers you provided now, so don’t overthink it, its a process not an end in itself, a process of figuring out, reconfiguring and figure out again. Expect it to be a few paragraphs up to a couple of pages.

Description of the Product or Service

Here you will write the description of your product or service, and it is important that you make this extra clear, to make sure that whoever reads it understands it extremely well. It has to be crystal clear! And of course Keep it Short and Simple, and this you can test with different people how well they understand the description and what your product or service is about.

Maybe something similar already exists on the market, in that case stress similarities and differences, and it can help people understand what you are doing, and points out to your unique product or service, and to put the accent on the extra value that your offering, or innovation, and understand the competition around you. In this part it is also good to describe the process, how your service or product are created, developed, prepared before delivery and your needs when it comes to getting it ready for the customers.

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