Crafting a solid business plan can be a real asset for building a successful business. That is because a business plan can hint at whether the business is aiming in the right direction. You also submit business plans to receive government grants or other investments, and they can play a strategic role for people outside the team running the business as well.
Beyond that, it helps colleagues and other employees clearly understand what the company product and service concepts are. When that happens, they better grasp the importance of their own role, and by giving them a vision of the company, it also serves to motivate them.
A well-crafted business plan plays all these positive roles, so today I want to walk through a few basics you should not forget when writing one.
1. Easy and clear explanation
Avoid jargon and explain things as concisely and clearly as possible. No matter how expertly you speak about what is in your business plan, people outside your industry may find it hard to follow. So it is important to make the content as concise and easy to understand as possible.
Being precise also matters. For example, when explaining your monetization phase, rather than simply saying we will gradually grow revenue, it is better to state it clearly like: by the end of this year we will sell a certain number of product A and earn 20 million won in net profit.
2. Highlight the team capabilities
In business, showing what important roles your members are playing matters. That is because the team capabilities often determine how the business unfolds. If you can describe what each member has done and how that experience gives your business an edge in execution, it leaves a much better impression than a plan that does not.
3. A clear company vision
A company vision that goes beyond mere profit makes the company direction easy to gauge. It is hard to show the future you are drawing solely through current performance and results. It is good to explain the company vision, why the current phase matters, and how this phase will support later phases, thereby showing the company plan and growth potential.
To clarify the vision, you need to clearly understand the product or service you want to offer, and clearly describe who the target customer segment is.
4. Differentiate from competitors
Your company service needs to have something that sets it apart from the competition. Otherwise, there is no particular reason your business is special. If you have competitors, be sure to mention the strengths that clearly differentiate you from them.
5. Target a single niche
Rather than trying to attack every segment, focusing on one niche market is important. Since time and money are scarce in the early stages of a company, targeting a niche comes across as realistic and positive.
It is also important to research and describe what competitors do and do not offer in order to strongly position yourself in the niche. For early-stage businesses, giving a realistic sense of credibility matters, so it is better to divide the niche into the smallest groups possible and show a plan for slowly capturing those small groups.
6. Understanding your financial statements
Running a business is a fight with money and time. Showing others a business plan with aggressive marketing strategies but no realistic financial plan can be awkward from a third party perspective. It is important to grasp the financial situation objectively and show how you will run the business, realistically projecting when and how you will earn revenue while accounting for other costs (office rent, cost of goods, website operating costs, etc.).
7. A clear benefit
You need to clearly state why what your business does matters, and what benefit it brings to the target customer or market.
For example, rather than simply saying it would be nice to have this service or product, it is more compelling to say something like: Feature A in the service we provide helps target segment B save a certain amount of time, and in a survey of 250 people in that target segment, 90 percent answered that time savings was the most important factor in their purchase. Framing it that way makes a much stronger case for your business.
8. State the limitations
No one thinks their business model is perfect from day one. If you state in the plan what the company currently lacks and how you intend to overcome it, the supporting party may even help with that piece. More than anything, the posture of recognizing and trying to overcome the limitations of your own business model shows sharper analytical skill and stronger will to improve than a plan that does not, leaving a stronger impression.
Today we looked at a few basics you should not forget in a business plan. If you happen to be preparing one, is there anything on the list above you might have forgotten?
