As someone whose culinary ability barely goes beyond spaghetti, I’m always amazed by cooking shows where the chefs are put under intense time pressure to make something incredible with a few random ingredients and zero initial plan. And while these generally turn out well, the same can’t be said for launching or scaling your small business.
After you get that great idea for your business, one of your next steps should be to create a business plan. There are an endless number of templates and resources at your disposal. I’m not here to prescribe the right length and level of detail. Instead, I’ll cover the most intuitive points that will help your idea come to life.
What your company does
Let’s get that idea from your head onto paper…or a screen. This often helps flesh out the idea further. It will also help you formulate your competitive advantage. What are the things that you’ll do or offer that are better than the competition? Does your company have a mission or goals?
Even if you pivot and change once you get your idea out to market, it’s helpful to be clear about what this is all in support of. Maybe it’s helping businesses market their ideas, like our customer Driven Media. Maybe it’s about helping consciously-minded consumers find beauty products that match their values as Greener Beauty does. Or maybe it’s about ensuring that small businesses have the capital and flexibility they need to thrive, like we do at Capital on Tap.
Who are your customers
Are you selling B2B (business to business), B2C (business to consumer), or some combination? Within each group, there are endless opportunities to segment and target your customers. Are you going after premium, mid-range, or budget space? You’ll want to consider your ICP (ideal customer profile) and ensure your product or service, brand, communications, etc. align with it.
How you'll attract those customers
The days of cheap yet targeted Facebook ads are behind us. Now, how will you get in front of your ideal customers and help them get excited to buy from your business? Will you start small and non-scalable, by selling your homemade honey at the farmers market, or opt for a Shopify store up front? How you plan to sell will directly impact your decisions about how to attract customers.
Who is your competition
How will you position yourself against the competition? Is the market you’re in rapidly growing and the competition isn’t such a factor? Or will every new customer of yours be one you need to steal from another company? Of course, it can be easier to start operating in a new space than one that’s already highly competitive.
You’ll want to map out the ‘sources and uses’ of funds. It’s rare that early-stage businesses are profitable on day 1. So will your sources include your savings, a bank loan, or equity funding?
And on the uses side, what is your projected cash burn rate? How much money will you need in order to have enough runway to win customers and begin to see profit?
The classic stereotype is small businesses die because they run out of cash. Planning for how you’ll avoid that now will go a long way towards your future success. Once you get started, apply for a Capital on Tap Business Credit Card, which will help smooth out your working capital needs.
So who is this business plan for anyway? Well if you need traditional funding, you can be sure they’ll want to see it. But even if you’re bootstrapping your company, doing this work just for you to get really clear on your company will help keep you on a successful track!