Building Your Business Plan
A “traditional” business plan contains a lot of redundant parts that for most entrepreneurs starting out will not work, its best to start out simpler and work from there. We recommend a process called “lean planning” when writing your business plan, each section can later be expanded to create a more detailed, traditional business plan if required.
We use the following components (and questions) to make up a lean business plan. We feel this format is better suited for the South African small business environment. (However you can use any business plan format you want in our framework to get help). This format also suits the business startup framework we use – Effectuation Theory.
1. Value Proposition / Description / Identity
A one-sentence description about your business. Describe the gist of your business. This forces you to hone in on what you do and what’s special about it.
2. Market Need
The “problem” your product is responding to by being in the market. No market need = no need to market your product. If you’re not sure, ask your customers/potential customers why they like your products. You’ll get your answer.
3. Your Solution
A description of your products/services (you can add photos if you want). Describe your product and why it’s so great. Think what you’d say if someone asked you “what do you sell?”
Who else in the market is doing similar things and why your products are better? Think about who your customers will buy from (or do buy from) if your products didn’t exist. Knowing your competition is as important as knowing your customers.
5. Target Market
Who buys your products / services (or will buy your products/services)? Be specific about who buys your products (ex: gender, geography, age, shopping habits, etc). Segment your markets if you plan on reaching them differently.
6. Financials: Budgeting & Forecasting
How much does it cost you to produce one of your products? How much do your products cost, how many of them will you sell this year, and how will I make a profit? How much does it cost you to make/market your products? How much do you plan to sell in a given time period? These questions will help you develop your financials.
7. Operations & Management
The resources and people you have, need and want to start and run your business.
8. Sales Channels & Marketing Activities
Sales channels: This is where you will sell your items. Example: Your online shop is a sales channel. Perhaps you also sell at a local boutique or craft fair, and your goal is to land several wholesale accounts. It’s good to have multiple channels.
Marketing activities: How do (or will) you market your products? Examples: Search ads or advertising on a design blog. You may need different activities for each market segment.
9. Funding Needs & Use of Funds
How much money you need to launch or grow your business, and what specifically will you use the funds for in your business? You may need some funds (even if not a lot to purchase materials). Be sure you understand how those funds will help you.