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Mike Figliuolo

Management

The Benefits of Creating a Business Plan

You do have one, don’t you?

Published: Tuesday, June 18, 2019 - 11:03

Creating a business plan is the most fundamental step in building a business, and the importance of it cannot be underscored enough. You may ask, “Why do I need a business plan? Why can’t I just launch my business and get to market?”

First, you must define your business and how you’re going to compete. You must understand the market and the space your business will occupy in that market vs. your competitors. You’ll need to clearly define your product and why your customers should be interested in it.

Once you’ve defined that product, you’ll need to have a good understanding of how you’re going to take it to market. After that you need to understand and articulate how you’re going to operate that business, and create a plan to support those operations. Most likely that will mean you’re going to have people, so you’ll need a plan for managing them and the resources that come along with them. You’ll also need to define the administrative responsibilities and how you’re going to fulfill them.

Once you’ve got all that down, you’ll need to project your financial results and create a clear financial plan that helps you understand how the business should perform over time.

Now with all of that done, you’ll need to think through what some of the major pitfalls are that you could face as you launch your business, then make sure you incorporate into your plan how you intend to deal with these.

Depending on the type of business you’re running, not all these elements will be relevant. However, these are the major components of a business plan and why you need to put them in place.

Defining the problem

The first step in writing your business plan is articulating the problem that your business solves. Is this a problem that people are willing to pay you to fix? You’ll need to define who has the problem: Is it companies, is it individuals? Figure out what or who your typical customers are, and define their needs. Then think through how big this problem is, and how it shows up for your customers. Is it a question of things are expensive, and they have a cost problem, or do they have a time problem? Is it a quality issue with the products they’re turning out, and can you help them improve that quality?

After you write down this problem statement, you should be able to take it to your target customers, and they should be able to read it and say, “I have that exact problem; please come fix it.” That’s where the demand for your product or service is going to come from.

Allow me to offer a couple of examples—one bad problem articulation and one good one.

I know someone who created an app for the iPhone, and the problem he said he was solving was to make sure “that you make it to your next appointment on time because you don’t always know when you should leave for that meeting.” So he created an app that was very complex; it factored in traffic and distance, and it would remind you, “Hey, it’s time to leave for your next meeting.” Now I was the target customer for that, but it wasn’t a big problem for me. I wouldn’t pay to solve it because I’d just leave earlier for my next meeting to make sure I made it on time.

For my business, I run a leadership training firm and one of the courses we teach concerns communications. The problem we seek to solve with that course is that PowerPoint presentations in organizations are long, they’re confusing, they don’t get the point across, and ultimately, the recommendation doesn’t get approved. When I put that problem in front of my target clients many of them say, “Yes, we have that issue.” They say their slides “are convoluted, and nobody ever says yes.” Fortunately for me, I have a solution to that problem.

So as you’re articulating your business’s problem and how you solve it, make sure it’s a clear and compelling statement for your customer.

First published June 5, 2019, on the thoughtLEADERS blog.

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About The Author

Mike Figliuolo’s picture

Mike Figliuolo

Mike Figliuolo is the author of The Elegant Pitch and One Piece of Paper. He's the co-author of Lead Inside the Box. He's also the managing director of thoughtLEADERS, LLC—a leadership development training firm. He regularly writes about leadership on the thoughtLEADERS Blog.