By Kayla Banda
When starting a new business, it can often be hard to describe your master plan to others. A business plan will not only keep your team focused on short and long-term goals, but can help clearly communicate your grand vision to others. Lenders and investors want to know that you understand your market, how you will grow your business, and ultimately, how you will make money. Creating a comprehensive business plan is the first step to opening your doors. Keep these helpful tips in mind when you’re creating your next business plan.
Who is reading your plan? The content, length, and depth of your business plan will depend on who the plan is intended for. For example, if your plan is prepared for a lender to decide whether or not you should receive a business loan, it should be detailed, backed by relevant data, and filled with explanations about your underlying assumptions regarding how much money you believe you will make. If your business plan is an internal document that will only be read by you and your team, you might structure the plan as a working document that you can easily update as your startup process develops. Remember: Who is reading my plan and what do they want to see from it? Those who are most likely to read your plan are lenders, investors, landlords, and your own startup team.
What research do you need? Regardless of who is reading your plan, relevant content backed up by data is most important. Don’t add fluff to your plan; instead focus on relevant research, strategies that relate to that research, and actionable items. Research is important for proving the demand for your product or service, understanding which customer market is the best target, and showing that you’ve done your homework. All assumptions should be backed by data. If you think you are going to serve 100 customers in the first month, explain why. Where did that number come from? Most importantly, make sure that your research data is locally sourced. While looking at nationwide information about your industry can be helpful, any data you provide about your local market should be based on localized research. Just because an industry excels in one market doesn’t mean that it will in another.
Have you defined your target market? After you’ve researched what kind of customer best fits your product or service, make sure to clearly define that customer using demographics or psychographics. Examples of demographics include: Is your ideal customer male or female? What age group do they belong to? How much money do they make? What area of town do they live in? Examples of psychographics include: What hobbies is your ideal customer interested in? What political or religious beliefs might they follow? How do they spend their time online? Do they care more about the environment than others?
Not all of these factors may apply to your business, but start thinking about what describes your customer best. It is important to do this so that you can tailor your business strategies around your ideal target market. How you provide your service, communicate your value, and market your business will all depend on your target market and their preferences. Each strategy presented in your plan should reflect the preferences and interests of your defined target market(s). While you might be able to serve all people, focusing on 1-3 specific groups can narrow down your marketing strategies and drive awareness with those whom you know will buy your product.
Once you have researched your industry, your local market, and your target customer groups, you will need to make sure that your financial projections align with what you’ve learned. Make your assumptions about your financial projections clear. You don’t want the reader to say, “How did you get those numbers?” Make sure that by the time the reader gets to your financial section, they already have a clear idea of what you expect from your business.
While a business plan isn’t required to start a business, it most certainly helps. Being able to clearly articulate your idea, direction, financials, marketing, and product or service in one document will keep your team goal-oriented, and assures possible lenders that you have thought long and hard about your business.
If you need assistance in creating a business plan or any other aspect of starting/scaling your business, request counseling with the Nevada Small Business Development Center at https://nevadasbdc.org/
Kayla Banda is a Graduate Assistant at the Nevada Small Business Development Center. She is currently pursuing an MBA with a focus in Business Strategy and Ethics. Kayla has specific experience with marketing and general business strategy, branding, and “artrepreneurship” (working with artists and/or non-traditional creative businesses to help monetize their work and build brands).