Entrepreneurs realize at some point that they don’t like working for someone else. In an effort to control their own destiny, they decide to strike out on their own and launch a business venture. If they’re smart, they take the time to figure out what they love to do, then look to build their business around this passion. If they’re even smarter, they figure out what they want to accomplish with their business, then seek out the counsel of someone who has already accomplished what they’re looking to accomplish (so they can learn how this person successfully went from launch to exit with their venture). Then they document how they plan to go from launch to exit, leveraging their personal strengths, and supplementing the business with the appropriate resources to bolster their weaknesses (or put a different way, they write a business plan, so they can explain to themselves and the outside world how they intend to get from start to exit in their venture).
The primary objective of a business plan, is to help an entrepreneur figure out whether their brilliant idea can actually be converted into a successful business venture. This is also referred to as “validating your business model”, or demonstrating that there are real people out there who will pay real money to purchase the product or service generated from this brilliant idea for a business. The beauty of the business planning process (when done correctly), is that it forces the entrepreneur to do research to confirm whether or not their idea truly is brilliant (and not just brilliant in their own mind). This research starts with the entrepreneur defining the scope of the problem that their brilliant idea is meant to solve, by answering the following questions:
1. What segment of the market is experiencing this problem?
2. How would you describe the typical consumer in this target market segment?
3. How many consumers are there in this target market segment?
4. What’s the cost of this problem to this target market segment, or how much is currently being spent in an attempt to solve this problem?
5. What solutions currently exist in the marketplace to solve this problem, at what cost to the consumer, and how effective do consumers in the target market segment view each solution?
Some of the answers to these questions may be found through research already conducted by other companies. But the most accurate answers to these questions is going to come from actually talking to consumers in the target market segment. Talking to consumers directly also provides an entrepreneur with the opportunity to test their solution out on this target market segment (thus getting the feedback critical to determine what consumers think of their solution, how the solution can be improved, whether anyone is actually willing to pay for the solution, and how much they’re willing to pay).
Assuming an entrepreneur can actually validate their business model (through confirmation of actual customers committed to purchasing the product or service), the next step is to for the entrepreneur to determine what they’d like to accomplish with this venture (or what ultimate goal they want to achieve, to feel comfortable moving onto their next brilliant idea for a business venture). Through the business plan, an entrepreneur can now reverse engineer the steps necessary to get from where they are, to where they want to be (this is also referred to as the assumptions you’ve made about the revenues you intend to generate through the business venture, and the expenses you intend to incur in order to realize these revenue assumptions). These assumptions can be converted into daily, weekly, quarterly, monthly, and annual goals that can be measured and monitored (to proactively determine if and when the business is about to veer off course, or hopefully remain on its’ projected course).
With the research complete to validate the business model and the business plan written, there’s nothing left to do but launch the business venture! And don’t forget to keep in touch with the successful entrepreneurs who provided guidance at the start of the business planning process, giving them periodic updates on the businesses accomplishments versus projected goals, and asking for their feedback on the updates provided to them.
If you found this article helpful, please share it with other entrepreneurs in your network. If you have questions about anything in this article, or would like my insight on a question about any aspect of the entrepreneurial process, please connect with me on Facebook (https://www.facebook.com/thinkbigwithgeoffreykent), LinkedIn (https://www.linkedin.com/in/thinkbigwithgeoffreykent/), or Instagram (https://www.instagram.com/thinkbigwithgeoffreykent/). I also believe that 50% of entrepreneurs fail within 5 years, because they lack the resources to properly execute their vision. Leveraging what I’ve learned over a 40+ year successful entrepreneurial career, I’ve developed a methodology to help entrepreneurs build their unique customized strategy for responsibly scaling exponential business growth. To gain access to my 7-week online course, collaborate with like-minded entrepreneurs through the exclusive “Think Big” Facebook group, regularly communicate with me, and gain access to my extensive professional network, connect with me on my course page (www.thinkbigwithgeoffreykent.com/).