Many business coaching clients are considering starting up their own businesses. Most of the time, they have merely an idea.
Here is axiom #1: virtually all ideas for new businesses sound good.
Thus axiom #2: over 90% of new businesses fail.
What is the disconnect? You can be sure it occurred somewhere in the creation or execution (or the lack of one or both) of the business plans.
While under a coaching arrangement we do not function as hourly consultants — who would dig into your business idea with all the due diligence of the raisers of venture capital we sometimes are — we can offer some tips on dressing up that emperor of an idea in the clothing of a rigorous business analysis. If you can’t answer the standard questions of a business plan, your idea is not ready for prime time. Below, then, we set forth a generic template. Do not confuse it with a one-size-fits-all template. Each industry will have its variations, as will certain types of products or services. Product-based businesses will often involve more operational detail than is set out below, and start-ups with larger goals in mind will require even more details than those here. But this should get most clients started.
What a Business Plan is Not
First, here is what a business plan is not: it is not a pitch to customers, and therefore it should not be relentlessly optimistic or packed with cheerleading. For example, the market size should not be “everyone in the world,” no matter how much you believe in the product. Your personal business plan in particular (as opposed to what some companies hand to venture capitalists) should be as clear-eyed and realistic as possible. That means it should include negative information, challenges, threats, actual odds of various things happening, worst-case scenarios, and so forth. If your goal is merely to convince yourself of an idea you liked — if you want to rationalize it enough to justify jumping into — then you don’t need a coach at all, right? (You may later need a financial planner or bankruptcy lawyer, on the other hand).
A Sample Business Plan Template
Brief Description of the Business and any Products or Services
The “elevator pitch”
Target Market: Who are my target customers?
All types of potential customers who would be interested in your product or service.
– What makes them attractive?
– Market segmentation (divide types of customers into smaller segments)
– Size, historic growth, and projected growth of the market or industry (for larger visions)
– Market and technology factors, if any, or windows of opportunity
Marketing: How will I market to them?
Channels (media) of marketing
– Word of mouth or referral
– Newspaper advertising
– Internet advertising
Messaging – the Pitches
Positioning (niche versus others; see competitive advantage)
Cost of each channel and expected response rate
Revenue: How will I make money?
Why will people buy?
Competition: Who is my competition?
How are they selling identical or similar services? (If no one is selling it, why not?) For how much? What is their message and positioning?
How can I do better or carve out a niche for myself?
– Lower cost
– More or less time (depending on business)
– Greater quality
– More or better features or functionality
– What do I have that will be hard for competitors to replicate in attempts to muscle in on what I’m offering?
What does the regulatory and legal environment look like? Is your industry a regulated one? Are there any social trends or even proposed legislation that could threaten it?
Financial Projections and Runway
Ideally done in a spreadsheet, make assumptions for acquisition of customers, prices paid by them, and expenses, for months 1 through at least 12, ideally 36.
Assuming these revenues and expenses (and the resulting profits), what is your net burn rate — how much would you lose per month in the beginning? Based on your liquid assets, how long could you afford to lose at such a rate — your runway — in the worst-case scenario?
If you’ve gotten this far in your own business plan, and you want more, contact your coach about more information on business plans.
Look for a business coach, an executive coach, or a leadership coach. Or look into internet business coaching.
Alternatively, maybe what you need is the benefits of life coaching or career coaching.
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