The Benefits of Creating a Business Plan

20190605 Business Plan

Creating a business plan is the most fundamental first step in building a business, and the importance of it cannot be underscored enough.

You may ask why do I need a business plan? Why can’t I just launch my business and get to market?  The importance of a business plan cannot be understated. First you have to define your business and how you’re going to compete. You need to understand the market and where your business is going to occupy its space in that market versus your competitors. You’ll need to clearly define your product and why your customers should be interested in it. 

Once you’ve defined that product, have a good understanding of how you’re going to take it to market. After you’ve decided how you’re going to take a product to market, you need to understand and articulate how you’re going to operate that business and create an operating plan to support those operations. Now that means you’re going to have people and you’ll need a plan for managing your people and the resources that come along with them. You’ll also need to define the administrative responsibilities and how you’re going to fulfill them.

Once you’ve got all that down, you’ll need to project your financial results and create a clear financial plan that helps you understand how the business should perform over time. Now with all of that done, you’ll need to think through what are some of the major pitfalls that you could face as you launch your business and make sure you incorporate those into your plan. Now depending on the type of business you’re running, not all of these elements will be relevant. However, these are the major components of the business plan and why you need to put them in place.

Defining the Problem

The first step in writing your business plan is articulating a problem that you solve. Is this a problem that people are willing to pay you to fix?  You’ll need to define who has the problem, is it companies, is it individuals? Spell out what your typical customer looks like.  Then think through how big is this problem, how does it show up for your customers? Is it a question of things are expensive and they have a cost problem, do they have a time problem, is it a quality issue with the products that they’re turning out and you can help them improve that quality?

When you write this problem statement you should be able to take it to your target customers and they should read it and say, “I have that problem, please come fix it,” and that’s where the demand for your product or service is going to come from. Allow me to offer a couple of examples, one bad problem articulation and one good one. 

I’m familiar with an individual who created an app for the iPhone and the problem he said he was solving was, “I’m going to make sure “that you make it to your next appointment on time, “because the problem is you don’t always know “when you should leave for that meeting,” and he created this app that was very complex, it factored in traffic and distance, and it would remind you, “Hey, it’s time to leave for your next meeting.” Now I was the target customer for that. That was not a big problem for me and I wouldn’t pay to solve it because I’ll just leave earlier for my next meeting to make sure I make it on time. 

For my business, I run a leadership training firm and one of the courses we teach is a communications course. The problem that we look to solve with that course is PowerPoint presentations in organizations are long, they’re confusing, they don’t get the point across, and ultimately the recommendation doesn’t get approved. When I put that problem in front of my target clients many of them say, “Yes, we have that issue, our slides “are convoluted and nobody ever says yes,” and fortunately for me I have a solution to that problem. So as you’re articulating your business’s problem and how you solve it, make sure it’s a clear and compelling statement for your customer.

Want to learn more about creating a business plan, and how it can fundamentally help your business? Check out the video below or you can go directly to the course and start learning how to improve all different aspects of your business every week. The entire course is available at LinkedIn Learning. Enjoy!

Mike Figliuolo at thoughtLEADERS, LLC

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