Do you know why small businesses fail to grow, don’t expand, or won’t shroom? Let us introduce you to these nine main steps in the business planning process that will help you answer the question we just asked.
According to online sources, every 1 out of 10 adults in the United States embarks on the entrepreneurial road to capitalize on what the individual feels is an idea sure to succeed. Newborn businesses fail due to lack of opportunities which is a type of shortcoming that should have been addressed before launching a business. Can you see how there is a lack of business planning? This process is clearly important because the process of raising critical questions and researching answers helps newborn business go a long away! Or else you might join 42 percent of startups who, according to a survey by CB Insights, failed because they anticipated a need that didn’t exist, while 29 percent failed to forecast how much capital would be needed to seize a new opportunity.
Business Planning Process: Simple Steps Explained!
The following business planning process helps entrepreneurs avoid major pitfalls and bolster their original ideas into more than adequate opportunities.
1. Compact Your Vision To Fit Into The Pocket Of The Market
Answering questions about what you hope to accomplish the method by which you wish to reach your goals will guide you in making subsequent decisions.
2. Product or Service Development Is A Must!
Product or Service Development should logically occur after conducting research, but most businesses start as an idea for a specific product or service. If you already have a business in mind, try developing the product or service further. By this we mean that forming a concrete idea of the product you wish to sell can help kick-start your research. Be prepared to make revisions and further development of the item/service based on what you find.
3. Industry Research Cannot Be Skipped
Researching products in the industry in which you plan to operate, historic performance and growth forecasts cannot be skipped no matter what. If you skip it, then the Business Planning Process will be lacking. A popular technique for evaluating an industry such as the Timmons model of opportunity recognition can give you not only strategy, but also the tools and frameworks needed to assess market size, market demand, and margin analysis.
4. Market Analysis Will Help With Selecting Your Target
Define your target market This information can be done using demographic and psychographic information to better understand what your customers want.
You also want to think about how the target market will want to receive your products.
Determining how you can best reach them will help you improve your offering, and it forms the foundation for your marketing plan.
5. Size Up Your Competitors With Competitor Analysis
After market size, market demand, and margin analysis you need to analyze your direct and indirect competitors. By this we mean you need to determine how your product or service compares to theirs by studying key attributes.
Notice your success factors, evaluating your business against the competition, and then try to find your competitive advantage or develop one using the information discovered in the competitor analysis.
6. Design Your Company
Choose your company’s name, location and business model. Determine how you will sell your product or service to your customer and how you will protect your competitive advantage. If you plan on securing a patent, apply for one early because the process can take more than a year.
7. Marketing Strategy: Ads, Ads, Ads!
Develop a plan for reaching your target customer – whether organic or bought.
The plan for marking to your customers should contain information on advertising channels, distribution avenues, pricing and product attributes. To provide the foundation for your business’ financial plan, you may include a sales forecast.
8. Plan Your Operations Depending On Location
Before you begin to build your team, determine how ownership will be distributed and how investors and employees will be compensated.
Decide how you will manufacture or deliver your product or service.
You must also properly plan where to locate your business and forecast how your operations will change as demand grows.
9. Mark Your Financial Needs
To mark your financial needs, estimate how much must be invested to start your business.
You will need to add money to operations until the business can sustain itself.
Keep in mind that actual sales are usually lower, and expenses will go higher than the forecast.
Calculate which, if any, outside sources of funding your business as well.