As a solo business owner, would preparing a business plan be on a top list of your priority? Based on the common challenges for many solo entrepreneurs (aka solopreneurs), preparing a business plan is not something that many solopreneurs do. Why is that? I come up with two main reasons – firstly, the word business plan sounds daunting, i.e. there seems to involve a lot of time-consuming work. Secondly, many solopreneurs think they have everything in their heads. Besides, many think their business models are straight forward – buy or create products and sell those products to someone else. How hard could it be?
Well, I do agree that the word business plan sounds daunting because I also don’t like to do it. However, it is important to have a plan for any business. Even you don’t require funding from a bank, having a plan and even better, a plan with a good, solid strategy, could make your business successful and increase a chance of success in a long term (by the way, did you know that more than 90% of new business failed?). Many sources suggest certain formats for a business plan. The structures are very similar. For example, an Australian Government website suggests having the following format:
- Title page – This describes what the plan is for and includes general information on your business.
- Business Summary – A one-page overview written after your business plan is finalised.
- About your business – It covers details about your business including structure, registrations, location and premises, staff, and products/services.
- About your market – This is the marketing plan. It should outline your marketing analysis of the industry you are entering, your customers and your competitors.
- About your future – This section covers your plans for the future and can include a vision statement, business goals, and key business milestones.
- About your finances – The financial plan includes how you’ll finance your business, costing and financial projections.
- Supporting documentation – List all of your attachments under this heading in your plan for referral.
Some sources such as National Australia Bank (NAB) suggests focusing more details on a sales and marketing component and including a pricing strategy. I think the bank wants to ensure that solopreneurs are clear about how they generate revenue.
My formula is slightly different. I am a big fan of having a clear strategy in mind. And, it’s always a good practice to put the strategy in the plan. Why? Writing strategy down is a great way to organise your thinking process. It also means that you have done your homework before you write the strategy down. Below is my recommended structure of a business plan for any solopreneurs.
Have you heard about an elevator pitch? If you have under 1 minute to explain about your business compellingly, how would you do that? My suggestion is that you include the following components in your pitch:
- Our business notice there is a gap in [xxxxxxx], and we can offer a perfect product or service to fulfill that gap
- We will do it by [xxxxxxx]
- The following will be happening in the next months
Demand Gap Analysis
This is the most important part of my business plan. You have to find out if there is unfulfilled demand in a product or an industry that you are interested in doing business. If you are selling the product that many people are already selling, it would be hard to differentiate yourself from the crowd. I don’t say that it’s not possible, I say it would be hard. In this case, you will have to ask yourself – why would customers want to buy from you? Is it because your product is cheaper or better? How can you tell customers that your product is better?
Once you identify the demand gap, now it’s the right time to explain about your product or service. Below are the good questions that should give you an idea on how to write in this section.
- What is the product or the service?
- How is it going to fulfill the demand gap?
- Are there a number of businesses selling or offering the same product/service?
- If there are, how is your product/service different from those businesses?
Sales and Marketing plan
This section is to use the analysis from the business solution section above and add how you would tell customers about your product or service. Imagine that no one is aware of your offer. You will have to explain how you will let people know. And, it’s not just letting them know about your product/service. You will have to give them good reasons to buy from you. You also need to think about communication channels. The common online channels to consider are:
- Social media
- Search Engine
- Website – to me, it is necessary to have a proper, professional looked website. The first impression is very important.
Financial plan and forecast
Your financial plan and forecast don’t have to be complicated. Chances are you will rely on personal financial sources anyway. What you have to bear in mind though is that you have to split your limited budget in different bucket carefully. The main buckets are:
- Product-related budget
- Sales & Marketing budget
- Contingency budget
Remember this – you should always have enough money as a backup.
You should try to think and explain what could possibly happen in the next two to three years. Of course, you wouldn’t know for sure. However, this exercise encourages you to think beyond the next six months. My assumption is you want your business to last as long as you want it to be, correct? It doesn’t have to be complex. You could only ask the following “what if” questions:
- What if my customer’s preferences change next year?
- What if my suppliers increase prices by 10-20% next year?
- What if there are 5-10 people selling the same product next year?
- Or, what if my business work so well that I have to add more staff?
I hope the above plan doesn’t sound too daunting. I strongly recommend that if you plan to launch a new business, you should spend a few hours to prepare the above plan. I can guarantee that it will save a lot of your time and money.