There you are, sitting in your favourite cafe, sipping on your coffee or juice. You’ve been thinking on an idea for a business for a while now, and you think you could be onto something good. The questions and doubt start to kick in (totally normal). Does it have legs? Can I do this? Will it work? and other questions pop into your mind…
A business plan on a napkin
It’s time to grab a napkin, a notebook, your laptop or the notes section of your smart phone. You’ll need to answer these basic questions if you want to really interrogate your business idea.
What am I going to sell?
It may seem like stating the obvious, but if you’re going to have a successful business you need to sell something. If you think you’ll provide a service then you’ll be selling your time and expertise. Your business idea might be about selling product – digital products like software or physical products like clothing or food. You may be planning to sell advertising or exposure if you plan to become a blogger or influencer. No matter what business you are creating, there needs to be a way of earning income, either in the short or the long term. If there’s no way of earning money then you need to find one, or consider your business a long game. Many businesses have existed for years before any income was earned – usually the sale of the business itself. This may sound exhilarating to some, but there’s huge risk involved in these ventures, and you need the cash to support you along the way.
Who am I going to sell it to?
This is the most fundamental part of a business. If no-one wants to buy your product/service/exposure, then your business will not work.
Your business model might be to sell large volume to a large audience, which means you’ll need a big marketing budget to get your product out there, and you’ll have lots of competition.
Maybe you’re planning to create a niche tribe or community to sell your product or service to. If this is your gig, you’ll need to create an authentic connection to your target market. Your brand will need to be unique and believable, and you’ll need to own that market. You’ll be able to be sell at a premium price, allowing your business to exist with a smaller target market.
There’s a chance that what you’re planning to create is completely new and different to what currently exists. If this is you, your communication strategy will need to be tight. Explaining what a new product is, as well as finding the right target market for it adds an extra layer of complexity. You’ll need to craft the story of your product/service expertly so your target market can easily understand what you’re selling and will want to buy it.
In some markets there’s plenty of business for everyone, and in others there’s a very small market with a higher price tag. Understanding what your market looks like will be key to your business success. Which leads to my next point…
Why will people want to buy it?
No matter how amazing your expertise/exposure/thing is, if no-one wants to buy it then you don’t have a business. Your product/service/influence needs to be either different, better, more specific, cheaper or easier to buy or use than your competitor’s. Finding your unique selling points (marketing speak for what makes your thing buyable) will make all the difference.
While you’re scribbling on your napkin in your favourite cafe you might not have all this nutted out. But thinking about why someone will hand over their cash to you is really important.
How do the finances stack up?
Even if making money isn’t one of your key goals, you still need to live and eat while you’re creating your business. Being able to answer the question “How much money do I need to live?” is really important (and most people forget to think about this). Making sure you have your personal finances under control is crucial, and you need to have a plan for this before you start. Will you move in with mum and dad, keep your part time job, live on savings or ask your lover to cover the costs of life for a while? You need to know how much it costs you to live and make sure you have that covered first.
Next – what will you need to spend to start your business? Branding, website, legal/accounting fees, building fit out, equipment and machinery for example. What costs do you think you’ll have in your first year in business? Write it down.
If you plan to sell your time, be realistic about how many hours you’ll bill in your first year (1000 hours in a year would be a great first year) and how much will you be able to charge for your time. This estimates your income for the year.
If you plan to sell products, how much will each product cost you, how much can you sell it for and how many could you sell in a week/month/year. Keep it simple, and write it down. If you don’t have the maths/accounting skills to do this, ask a friend or at least make some guesses.
The difference between the income you earn and your costs is your profit (or a loss if the costs are more than the income). If you don’t have any other income then the profit from your business is what you’ll need to live on. And if the business looks like it’ll make a loss in the first few years, you’ll need the cash to to feed it and the cash you need to live on.
Why do you want to create this business?
Why? Why do you want to create this business? There’s a heap of reasons why you might start a business – you are an expert in something and you want to zone in on that. Maybe you want to push yourself personally and you think this idea is the one that could do it for you. If impact is your game, you’ll see this idea as the one that can contribute the most to your community. It’s really common for people to decide to go into business because they want to earn more money, have more flexibility or to be in charge of their own destiny.
All of these reasons are perfectly valid. And in my experience, if you’re going into business just to earn money, get famous, be cooler or to boost your ego, it probably won’t work. Getting your business off the ground takes a lot of work (the unsexy stuff they don’t write about) and perseverance. Even if your business takes off straight away (lucky you!) you’ll have a slog of hard work ahead of you and you probably won’t enjoy every part of it (perfectly ok).
For those times when you’re working late, going without or experiencing doubt and anxiety, you’ll need to be able to call on your why.
If the reason you’re starting this business resonates in your gut and your brain I reckon you’re onto something. If your business allows you to play to your core strengths then that’s another boost to your why.
You may still be sitting in a cafe daydreaming about starting your business. And if you end up going ahead then having a really strong grasp on why you’re doing it will make you stronger and clearer about your business and more likely to see it through to success.
So you’ve answered all of those questions and you’re still feeling pumped. Well, all there is to do now is take action. Any action. If you want to create a business, all you need to do is just get started.
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