Life Area: Professional
Topic: Business Plan
Six Key Questions To Ask When Writing Your Business Plan
As many of you know, I started my first business when I was just 19 years old and have bought and sold 16 ventures since. I’ve written here before about the elements of a business plan, creating a pitch deck and have offered up FREE downloadable email templates to help you raise seed capital. Today, I want to talk to you about the many invaluable things you’ll learn writing your business plan and the merits, beyond raising capital, of going through the effort of taking your many thoughts out of your head and committing them in writing. By first writing a strategic plan, you can evaluate on paper without the risk of finding out the hard way by trial and error. At the very least, these are questions that any potential investor IS going to be asking of you and you better be prepared to answer:
1. Why you? Why your business or your product? What differentiates you from your competition?
I am, or any potential investor is, going to assume that your product fulfills a want, need or desire of the buying public. If it doesn’t, rethink your plans. Sometimes the market doesn’t know it needs your product – and that’s fine. Henry Ford famously said, “If I had asked them what they wanted, they’d have told me faster horses.”
The first step is to identify the need your product will fulfill. Then determine whether or not this need is currently being met and if so, how and by whom? The first question I always ask my business coaching clients is, “Why should a prospective customer buy your product or service rather than a competitor’s?” If they can’t answer this question clearly, concisely and definitively, I tell them that that is the first thing that we will accomplish in their business coaching.
The first step is to identify the need your product or service will fulfill.
2. Is there a large enough segment of that buying public that will value that difference?
Identify the segment of the market that values whatever it is that differentiates your product. Estimate the size of the market segment. Now, reduce the size of this segment by the percentage of people who won’t be willing to pay what you will have to charge to make your business profitable and answer if you can still reasonably project enough volume to make your business economically viable?
3. Now, question whether that difference, the very things that set it apart, are indefensible?
If your idea is a good one, you had better know how you will keep a large competitor with deep pockets from knocking it off and running you out of the market. There are many examples of well-healed copycats overtaking people with good ideas. You need a plan to protect yourself from this. Perhaps you can protect your intellectual property through a patent. Perhaps your idea, for one reason or another, is difficult to copy. What barriers to entry are there to keep the competition from moving in?