Bill Warner, in a blog post on the Raleigh Emerging Designers innovation incubator website this week, shares the following about successful business plans:
If you were to ask twenty experienced business people what it takes to have a successful business plan, chances are you will get many of these answers and more. Here is my view of what a successful business plan is made of.
“Most importantly, have the passion for your business.”
- Confirm that your entire heart and soul is behind the business.
- Insure you have family and friends supporting you.
The Challenge: Having the passion for your business means it is something you may want to do for the rest of your life. It is not a sideline until the job market improves. It is not something you can manage part-time while you are looking for a “real” job. You may not be passionate about the idea initially, but if you don’t become passionate as you do your research, beware. Sometimes, your passion will be the only thing that will keep you going.
“Define your market.”
- Focus on large and growing opportunities.
- Intimately understand your buyer’s wants and needs.
The Challenge: A market is a group of buyers that have common buying wants and needs. Business owners need to understand if the market is big enough to go after and whether or not it is reachable. Many small businesses fail to define their market, lack emphasis on customers and groups of customers (market segments), and how to reach buyers in those market segments. Your market definition should include market size, growth rate, market trends, market influencers, number of buyers, buyer wants and needs, competitive analysis and regulatory influences. Test your definition by meeting with other companies in your market segment and with potential buyers.
“Ensure you have a winning business model.”
- Understand everything that affects your market segment.
- Determine if your business will produce results.
The Challenge: A business consists of a market and a product or service; not just an operation or a product. You must define both. Export-import is not a business; rather, “importing decorative candles for sale by mail-order to wealthy collectors of oriental art” defines a business. You need to understand how your business will coexist in your selected market segment. How will your business operate within an environment of suppliers, manufacturers, distribution channels, competitors and buyers? Put the whole picture together so you know how your company fits in.
“Know how to beat your competitor(s).”
- Understand their strengths.
- Exploit their weaknesses.
The Challenge: New businesses need a creative concept. Sometimes they just follow the pack; thus have no competitive advantage. New businesses cannot ignore the competition. You must look for underserved niches in the marketplace. The creative concept does not have to define a totally new class of business, but rather a “twist” on an existing business may be adequate. Know all about your competitors and clearly understand how you will beat them. With a product that is uniquely differentiated and satisfies the buyers need, you will win more than you lose.
“Create a winning product or service.”
- Provide what the buyer wants and in the way they want it.
- Have a plan to expand to new opportunities.
The Challenge: There are three strategies for success in dealing in a competitive environment: lowest cost (not lowest price), best product and market focus. The first two are difficult or impossible to achieve for most small businesses. The third, focus, requires management discipline and overcoming the urge to do too many other things. If you really understand your buyer and know what it takes to win against competition, your product or service will be easy to sell. Anything less will lead to failure.