There are many topics in a business plan, but that doesn’t mean you need to address all of them at once. In a previous post, I explained that the first set of topics help you assess “what” you intend to do. Today, I’ll focus on the next set of topics, which help you determine how you’ll execute your idea and turn it into a business. Soon, I’ll cover the last step: determining what resources you’ll need. This is just the basis of the business plan thinking at Upstart Bootcamp@Inc. At any point you can also take our in-depth online business plan course, which explains all these subjects step-by-step.
Analogs. By studying analogs, you can learn about what actually works in the real world, and what doesn’t work, before you invest the time and money to try it yourself. Not every business plan needs an analog section, but it can be very helpful. An analog is a company that’s comparable to yours, in terms of which customers they serve, what they offer those customers, and/or how they make money. You may also find a way to describe your business that’s easy for people to understand, by calling your company “the this of that”. For example, the founders of StubHub thought about and explained their ideas as “the eBay for tickets.”
Offering. To get to market quickly and inexpensively, you’ll need to build a “minimum viable product,” a stripped down version of your product or service that provides just those things your target customers will find critical. In this part of your business plan, find a way to explain or show that minimum viable product in a way that’s easy for others to grasp. Usually the best approach is to “show,” not “tell,” meaning a very short demonstration, or a visual representation of what customers will experience. A fashion startup might show a one-minute video of models in their clothes on the runway, with music and cameras flashing to bring the clothes to life.
Marketing. It’s been said that “build it and they will come” is a prayer, not a strategy. And you need a strategy—one designed to zero-in on the most cost-effective, scalable ways to attract customers. While you can’t predict what will really work until you actually try it, you can do your homework to understand best-practices. Also, be sure to prioritize, since you’ll have limited time and resources. For example, you might explain that after researching your analog and talking to industry experts, you’ve found that the best way to sell your human resources software is to partner with payroll and tax service providers.
Business model. When assessing your idea during the first stage of writing a business plan, you identified your primary source of revenue, and made sure your business model fit with the way you provide products or services to customers. Now that you’re in the second stage of planning, you’ll want to make some informed estimates of unit economics. Show the economics of a single sale or transaction, and predict how and when you will sell enough units to break-even.
Team. To succeed, you need a team that can execute, even if your strategy changes. Make sure you’ve got capable people running each primary area of your operations, not just people who happen to be available. A good way to show this is to list the top three to five roles, who will fill them, and why those people are qualified. An email newsletter startup might indicate it needs one person to write the newsletters, another to build the subscriber list, and a third to sell advertising—and that it has experienced people in each role.
Risk. There are really two things to concentrate on here. First, you should study and explain the competitive landscape, and understand which companies pose the most threats to you. Also, identify the other things that are most likely to go wrong, and find ways to prevent them from happening. For example, a juice company might sign an exclusive deal with a local distributor within its beverage category to block new competitors.
Progress. At an early stage company, the big honking question is always, “Will this work?” The best way to prove you can succeed is to demonstrate tangible results. For example, if you are planning to build an e-commerce business, you might explain that you built a basic version of your store by renting an Amazon service, you now have a few hundred customers, and that you identified two key hires.
Implementation Plan. Your team needs a clear roadmap for the next three to six months, including top priorities, and ways you’ll measure performance. If you want to raise capital, your investors will appreciate an implementation plan too, since they want to know what you’ll do with their money. For example, you might show the in the first three months, your event management business will land at least two clients, execute six events, and generate over $100,000.
David Ronick and Jenn Houser are serial entrepreneurs and start-up advisers. They partnered with Inc. to create Upstart Bootcamp@Inc., a program that guides entrepreneurs to start up smarter. To learn more about business planning, take UpStart's on-demand course. Or get a free reality check to find out if your plan is ready for action.