This blog was authored by Cheree Warrick.
Can your business plan help you decide whether or not to start a business? Should you write a business plan to determine if the business you’re starting will be successful? Of course, I (a business plan writer) would answer YES.
Entrepreneurs should write what I call “feasibility business plans.” More important, they should create financial forecasts that tell them exactly how many products or services they need to sell in order to break even and reach their revenue goals.
The feasibility business plans don’t have to be 50 pages to be effective. A 3-5 page plan will suffice if your business does not require funding. Here are 7 questions to ask yourself as you’re writing your feasibility business plan:
What problem are you solving? Are people willing to pay for that problem to be solved?
My favorite example to use is the problem of thirst. When someone is thirsty (problem), we believe they will automatically reach for bottled water (solution). However, this is not true. Some will consume Coke while others will consume a Red Bull. Some will refuse to pay to solve their problem and will only consume tap water. There must be enough people willing and able to consume YOUR bottled water for the solution to be relevant.
How much must you charge to be profitable? Are people willing to pay that amount for your product or service?
If you are charging individuals for bottled water, there must be enough profit for your company. You must truthfully ask yourself if people will pay the amount you need to charge and can you sell enough units to be profitable.
Are there enough people in the marketplace that may want your product or service?
Sometimes we discover that there are not enough people in the marketplace that are willing to pay for our product or service. If we cannot sell our services to enough people, the business is a “no go.”
Who are your biggest competitors and why would someone choose your service over your competitors?
It’s important to look at the competitive landscape and ask yourself why the competitors have not solved the problem you are solving. Are they staying away because there’s not enough demand? Are you in an industry with only big players and you are taking advantage of a smaller niche? It’s important to know WHY someone will choose your product or service over all options available in the marketplace.
How will you sell your first 10-1,000 customers? What’s your guerilla marketing plan?
When my mom began her bookkeeping company, I gave her a challenge. “Sell your first 10 clients,” I said. “If you can do that, then you have a business.”
I encourage entrepreneurs to create “go” or “no go” goals.
- 10 customers – small service based companies that charge $500 or more for their services
- 50 customers – service and product businesses that charge $25-$500
- 100 customers – products and services between $1 and $25
- 500 to 1,000 downloads and active users – apps, podcasts, and freemium business offering6.
It’s vital that you develop and execute a marketing plan that proves you can attract customers. The customers should not include your mom, spouse, best friend, or cousin. You must find people that are truly interested in the product or service to buy from you.
How many products/services must be sold in order to reach your revenue (and net profit) goals?
Some of my clients have full time jobs and want to transition to their businesses full time. How many products or services are required to achieve that goal? This question should be answered within your feasibility business plan.
Who do you need on your team to be successful?
No entrepreneur does it on his or her own. We all need people to assist us. Who is on your team?
Not all team members are employees. Sometimes you need a great business coach, advisor, online marketing strategist, etc.
There’s a common phrase we hear in business – Ready, Fire, Aim. I agree with this if you don’t need money to start your company. Create a simple business plan (Ready), set up a simple website or social media presence (Fire), and go get clients (Aim)!
ABOUT THE AUTHOR
Cheree Warrick, Author and Financial Expert will be IAW’s keynote speaker at our Free Building Your Business Webinar. Register today ! Cheree Warrick writes business plans and creates financial forecasts for companies seeking funding from banks and angel investors. She has helped clients from various industries (including dog daycare, restaurants, driving schools, and catering companies raise the capital they need for growth. She has also coached or written business plans for close to 100 entrepreneurs. For more about business plans, visit theprofitpartner.com and to learn more about building your business register for IAW’s free Building Your Business Webinar on June 7th 2017 1pm EST.