In the first place, every companies or business is fundamental for business success. And of course just like you need goals and direction to succeed in life, you definitely need a game plan to succeed in business, and it’s not as simple as it might initially sound. It’s not just about setting goals of “what you want to achieve”.
To add to that, you of course have to back up all your claims with real data and statistics, strategize for the future and predict eventual crisis as accurately as possible. Normally, a business plan is presented to banks and investors to convince them to invest.
For example, now imagine that you want to launch a start-up. You plan to create an app that restaurants can use to organize their orders, receive payments, and make reservations. In order to develop, launch, and market the app, you need a bunch of money.
And the average start-up costs range from 10 thousand to 125 thousand dollars for equipment, which is probably the biggest cost. Then there are many other expenses, like office space, employees, consultants, developers, accountants, taxes, incorporation fees, and so much more.
And in making it quick, let’s pretend that your startup needs 125 thousand dollars in total to get started. If you don’t have all that money or you don’t want to use your own money, you need to get that money.
How? There are many ways to go about this:
- You could, get a bank loan
- Give equity in exchange for money (similar to what they do in Shark Tank)
- Join a start-up incubator or accelerator and so on.
Now, whichever you choose, you need to sell people your vision. First of all, no one is going to give you money for free. If you’re looking for investors, they are probably going to ask you for equity. If you’re going to talk with a bank, they are going to give you an interest rate, and so on.
Also, clearly, they definitely aren’t going to give you their money if you don’t have a good idea and a strategy. So, you need a business plan for your App in order to sell it to potential investors, banks, and so on.
In today’s article, I’m going to teach you how you can develop a strategic business plan, that will, first of all, help you achieve your business goals. But it will also show people that you know what you’re doing, because at the end of the day, a plan that is backed up by research and facts is very compelling.
Ways to Write a Strategic Business Plan
First Step: Define your vision with precision
Surely your own vision is what generates all the goals and strategies. To develop a game plan, you need to know exactly what you want. So, let’s look at the App for restaurants example. Your vision is pretty simple.
And you want to create an app that will be used by many restaurants (especially busy restaurants in big cities) to help them manage their expenses, orders, and reservations. You want to help them clarify everything, and you want them to have no issues when it comes to organization and clarity.
Rather of having people run from one part of the restaurant to the other, you could have an automatic system that they can rely on. You could also implement a POS system. POS stands for Point of Sale, and it’s a tool that can manage transactions (receive payments, create invoices and receipts, and so on).
Clearly, I’m already defining with clarity the vision of the start-up. But it has to go well beyond this, and it should describe all the aspects with ambition. So you shouldn’t hold anything back while doing this. If there are unrealistic elements in your vision, you can revisit and correct them later.
You also need a mission statement. This is basically your opening line, the phrase that you will say over and over and over again. Something like “We will (blank)” or “We want to (blank)”. Here’s an example. You probably know Tesla, Elon Musk’s car company. Their mission statement is: “Tesla’s mission is to accelerate the world’s transition to sustainable energy.” You can find it on their website.
So, now let’s look at a good mission statement. It should define your goals. Again, you shouldn’t hold back anything. Just think of what you want to achieve and how fast you want it. Be ambitious and realistic. If something is unachievable, you will redefine it, in a later step. For now, focus on what you would really like to happen.
Here’s an example for the restaurant app:
- Finish the development of the app by February next year
- Have 3 different subscription packages ranging from 1000 dollars a month to 5000 dollars a month
- Find our first 100 clients by April of next year and you just keep going.
You don’t need a lot of details yet, you only need a goal and a deadline. And possibly a number too.
Second Step: Research, and research some more
This is one of the most important steps. In fact, it is so important that some business people extend it to a couple of steps. For example, there’s a business person named Dan Peña, and in his book “Your first 100 million” he puts research twice in his success formula. But why is research so important? Because you need to know the facts before you can act.
You need to stay true to what is really possible and what isn’t, but still, be ambitious. As Elon Musk says, one of the most common mistakes that entrepreneurs make is wishful thinking. Wishful thinking is when you believe in something based on what you would like to be real.
Basically, many entrepreneurs and visionaries tend to think that something is real or doable when, in fact, it is not. So, very often, people pursue ideas that actually don’t have merit, and they don’t even realize it. I mean, imagine the following situation.
You just released your restaurant app, and you’re looking for those first 100 clients. And what if, after 3 months, you have only found 15 restaurants? Is it your fault, or is your idea too unrealistic? Are you not working enough, or is the idea that you’re pursuing unachievable? In order to be able to tell, you need research and facts. Those help you look at reality from an objective point of view.
Ways To Conduct Market Research
The most important research that you need to conduct is market research. Here’s how you can do that, briefly.
1. Describe your target market
That time you are selling something, you shouldn’t attempt selling it to everyone. That doesn’t work in today’s competitive market. You need to be as specific as possible about who your customer is and what he really wants.
For to the example of the restaurant app, who is your ideal customer? It might look something like this: A restaurant owner in his 40s looking to expand and generate more income despite COVID-19. He has a restaurant in a big city like New York, Los Angeles, Houston, or Chicago (the top 4 most populated cities in the united states). In marketing, this is called an avatar.
Definitely more commonly it is referred to as buyer persona. You should go into further details, like revenue of that restaurant, pandemic-related measures, position, customers, type of food that they serve, rating, and so on. The more detailed you are about this, the better you will be able to:
- Create a product that will help them tremendously
- Market your product effectively
- Find your target audience easily instead of winging it with non-specific audiences
- Learn how to close and retain that client.
- Beat competition that isn’t as specific as you
2. Then Look at your competitors
This part is crucial. Remember this: there’s always competition. It doesn’t matter how innovative you think your product is, there’s always some direct or indirect competition. Identifying your competitors isn’t as easy as it sounds.
Again, everything you do must be backed by facts and research, so you can’t just write down your competitors off the top of your mind. It might also not be that easy to know who they are initially. So, here are a couple of ways to get around this:
- Actually ask your prospects and customers:
For example, if you’re trying to close a restaurant on a subscription to your app but there’s no way you’re selling it to them, don’t give up.
There’s still something very valuable that they can give you: information. Ask them what they would choose instead and why they won’t purchase. You will probably get to know your direct or indirect competitors, and also get other valuable info.
- Use social media platforms:
Literally, look for services similar to yours and explore their market positioning. Everyone, especially in the start-up world, has a presence on social media like Facebook, Instagram, Linkedin, YouTube.
Some might even have websites and more. You can also use the Facebook Ad Library to see what advertising they are running and figure out a way to do better.
Third Step: Redefine Goals
According to your research, which of your goals is actually achievable and which ones have no merit? Be brutally honest with yourself and also get advice from external sources if needed.
All criticism is actually very positive if it comes from credible sources, so you could even hire someone to criticize your goals based on your findings. You can also hire someone to review the whole business plan once it is finished.
Here’s how you should go about this. First of all, look at your goals. Based on your goal, how can you divide it into smaller targets? For example, if your goal is to make 10 thousand dollars in the first 3 months, what is the monthly goal of that? What about the weekly, and daily goals? The daily goal would be about 110 dollars every day.
Based on your research, is that doable? If so, why? How much are you supposed to sell in order to achieve that goal? What about taxes and other expenses, what role do those play in your revenue? See how many factors come into mind? Go over all of them and you will come to your own conclusions.
If your conclusion is that you won’t achieve your goal, then don’t be discouraged. Just redefine your goal. Let’s pretend that there’s no way in the world that you can make 110 dollars a day, what’s the solution? Bring your goal down to something like 8000 dollars. Is that achievable? 8K in 3 months is about 89 dollars a day. Can you do it? If so, set your goal with all the details you have discussed.
Your business plan shouldn’t include every single mental process and data point you went through, however. Keep a very brief summary of it, or maybe have separate documents to collect that.
Typically, a business plan is 30 to 50 pages long, so you don’t have the space to go through every single thing. Keep a summary of the facts, but still, be specific. No one will believe in you if you are vague about what you’re doing.
Fourth Step: Think of all possibilities
Then you as a strategic master, you must thinks of every possibility. You shouldn’t just think about what you would do. Actually, start thinking about how the market will respond. So since you are a new business in the marketplace, will your competitors respond? If so, how do you think they will try to bring you down? Also, are there any chances of a crisis happening in your country? If so, what type?
However, just know that the more you consider external factors, the more likely you’ll be prepared for anything. Then keep in mind, we appreciate you all so much for reading. Of course with that being said, have a great day and be sure to check back for more content for useful tips.