A lot of sites will talk at length how to plan a new business, but I’m going to leave those academic bits to last. First up, you need to know why.
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Why do you need to know how to plan a new business?
What is ‘Why?’. Why is the very reason why you think you can solve a problem. Why is your solution better than what is already out there. Why would you risk a steady job, or a happy home life, for a gamble.
Is it a gamble?
Why isn’t it a gamble?
The ‘why’ is the very reason you landed on this page to find out how to plan a new business. So let’s start with ‘why?’
No great business that endured, or better worded, no great business that attracted legions of immediate fans and financial backing, fail to address why you are doing this.
(If you haven’t already read it, check out our how to fund a new business venture here.)
Knowing your core mission, your purpose and your value to your audience is central to any great business idea. Let’s consider the opposite idea first. Suppose you just had an idea, didn’t think too much about what it could do for others, and was simply something you dreamed of doing as a job.
What could go wrong with no ‘Why’?
So this is some of the realities of running a business. I could put together a bundle of small business tips and focus on the boring. The mundane, but this is the cold hard steel of failure’s samurai sword.
This is the kind of entrepreneur’s advice I didn’t get, when I started out.
- You borrow money or remortgage your home to invest in it
- You quit a good job or a steady one, to gamble on no guaranteed income
- The long hours mean you lose some of the best years of your youth
- The long hours mean you look at your phone and not your children growing up
- The long hours put a strain on your loved ones and friends
- The long hours put a strain on your mental and physical wellbeing
- The years invested mean you forego those career aspirations you may have had
That’s what you’re converting into chips when you pull up a pew to the poker table of commerce. It’s a lot that no one talks to you about, when you browse Google for how to plan a new business.
If you are about to risk all of these priceless resources, and they are that, then you better have your ‘Why’ in place.
I have to make a conscious effort to look at my son in the eyes once a day to remember how beautiful his toddler charm is. It won’t be around for long and I can’t stress enough how often in business I had those moments when I wished I worked a 9 to 5. If I didn’t believe that what we did was better, I would have gone to work for someone else a long time ago.
How do I identify my why?
I haven’t scared you off yet then.
Your why comes down to why you are doing this. Let’s give you a few things to answer yourself and help you decide if you should even be worrying about how to plan a new business.
- Why does the market need this service?
- Why are we first to market?
- Why does our solution work better financially, operationally, conveniently, socially or aspirationally.
- Why are we best placed as a team to deliver?
There are bound to be more, but if you start off with the following:
“I haven’t thought about it, I think it makes sense to me, other’s are doing it and I don’t have any experience in this field.”
You are going to be a hell of an exception if it works. Go back to those things you’re risking and the odds don’t look like it’s worth it.
If on the other hand you have a unique idea that no one else is doing as it’s a growing market, you are your target audience and have consistently heard people grumble about this problem you can solve, then you may be worth looking into how to plan a new business.
Every story is different, but if I can get one piece of advice over to anyone looking to start a new business – Start with why and understand how you offer positive change.
Your family telling you it’s a good idea is not reinforcement. In fact, if they say it’s a bad idea, it’s probably not much more help.
The beauty of the internet though means we can find out very quickly, if anyone else is doing something like this and if so, how yours is better. While you’re browsing you can see if your brand name idea is available too. That’s a colossal mistake many forget to research on. They buy a domain and can’t get the socials to match!
From this exercise you can now move onto the next stage, of how to plan a new business.
Back of the Envelope Business Plan
The back of the envelope business plan is a fairly UK phrase that describes the very basics of a business idea. It’s not something you can hand into a crowdfunding platform, nor is it the same as an elevator pitch (I’ll get to that next.) but its knowing what you are going to do, why you are going to do it, how, where, with who and to who.
SWOT analysis and competitor research can come later. But if you can succinctly conclude the process from a summary level, you are beginning to have the skeleton in which to build from.
Is this an elevator pitch?
No, what an elevator pitch is, is your business idea summarised in a few sentences. The phrase comes from the early Studio days of Hollywood where a writer may stalk a movie executive and then snare him in an elevator/lift, giving him rarely more than 60 seconds to pitch an idea.
The task here is to be able to concisely and effectively explain your business in no more than 2 sentences to anyone who asks you. In that short span of words, you can describe a problem, how it can be fixed and why your company can do that better than anyone else.
Nailing this is less about knowing how to pitch it for funding, but beginning to have a strong grasp on how you will promote it online, in your ad copy, press releases, when speaking to prospects etc. But of course, if you are lucky enough to meet investors, and you drop a powerful 2 sentence elevator pitch that makes sense – then you are more likely to score a result.
“…the first two sentences of any elevator pitch are the most important, and should hook or grab the attention of the listener.”
So elevator pitches are still important?
Yes undoubtedly. I remember listening to a guest on the MFCEO business podcast with Andy Frisella not long ago. He asked the guest about their business. The guest then went on a long winded ramble and I thought to myself, ‘What is he talking about?’
Seconds later, my opinions were affirmed by Andy the show host.
“Dude, if I can give you one piece of advice. You have to nail that pitch in a sentence or two.”
Andy Frisella, MFCEO Project
Here’s a major podcast, with credible guests and even they aren’t doing this. The entrepreneur will do one of two things. Step back, lick his wounds and become a deadly beast. Or he will bimble on into complete obscurity.
Time to plan your new business
I believe in adding value where I can, so I am not going to dwell too much on how to write the perfect business plan. I am the absolute last person to advise on that.
I have written business plans only for things I didn’t start.
Maybe it was a good move, I realised how completely bored of the idea I had become. When you work on a project you end up being sucked in for years, so it needs to keep your attention. Instead, I will link out to some really useful places to fill in those blanks.
Do I need to know how to plan a new business properly?
If you mean, do you need to write a full business plan?
No. But and there is a big but here, it does not hurt to plan and organise some parts of the business idea. These structures and guidelines will be necessary to show to banks, potential investors, even landlords. So you will need at some stage to produce a business plan of sorts.
It always seems a little silly that we would spend so long planning something that could steal our agility. Likewise, the market you will be in, will move so fast, the document will be out of date.
What Should I Plan?
So, keeping it brief and direct is a good solution if the other options are ‘Legacy Novel’ or Nothing at all. Instead I suggest you focus on the following key areas. I have added some useful links to where you can develop those bits of work.
- Your Executive Summary. This should include your ‘Why’, the problem, your solution, who, what, why, where, when and hows. You will want to address in as few as 6-8 sides of A4, the mission and why your plan is the answer.
Inc.com put together this guide on how to write an Executive Summary – Inc’s Guide
- Your Core Values. These are those things that set your brand apart. Importantly, how you plan to demonstrate those core values. Those companies that talk about customer services being valuable but do nothing about it. That’s what I would call a corporate training exercise. Real brands speak from the heart and care about things. It’s why they get consumer attention.
Here’s a great case study I found on how one business developed Core Values – Recruiting Social
- A SWOT Analysis. This breaks down into, Strengths, weaknesses, opportunities and threats. You can run this for your business team, your market, and even a couple of competitors.
I’m a fan of Wordstream, they have some great business tools – Here’s their guide on doing a SWOT Analysis
- Financials. No one expects you to be Gordon Gecko with your numbers from the off. But it doesn’t hurt to set out an initial costing to start this, plus a look ahead at your run rate and how much cash you will need until you become profitable. As well as this, it will help you when you want to scale and repeat the process or push for franchises.
Doing some basic Financials is an important step in running a business. Look at the 80/20 principle for inhouse accounting. It doesn’t have to be perfect internal accounts, but something is better than being blind to losses. Leave the detail to a book-keeper.
To get started, here’s Inc Magazine again with a guide to doing planning level financials.
Summary of How to Plan a Start-up
These 4 core areas will help you get a stronger grip on what is at stake, how you will play the game, who you are and what you will need to be equipped with mentally and financially to compete.
If you follow this how to plan a new business guide, you’ll still have a head start on what I did for most of my companies.
I found years after the fact, I needed to go back and write these for prospective investors. If you have the time now, then it doesn’t hurt to do it, especially while you aren’t being distracted by customer emails and other facts of business life.
Like your delivery driver has run over a kid. True Story
And, that’s how to plan a new business
My work here is done
David at Deathground