Business Plan Guidelines (to be used in preparation for Bright Ideas Competition):
First of all, have a look at this successful entry. Notice how simple and clear it is:
Please provide a simple summary of your idea, no longer than 20 words. This may be used for publicity purposes – so it has to be concise and appealing. Use words that make it easy for others to explain what you offer. For example:
“Fashion Co. creates designer helmets for women who love to ride their bike, but don’t love helmet hair.”
Avoid clichés such as “quality”, “professional”, “excellence”, “value”. People should be able to assume that you are not setting out to be rubbish, offering rubbish. Notice how generic, non-specific statements like this could be used to describe anything:
“Fashion Co. sells custom bicycle helmets.”
Use this test on your own statement and see if you are specific enough or need to look through a thesaurus to find the perfect match.
Where did your idea come from? Did you brainstorm as a team, talk to people, look at trends overseas? (What did you observe and how did you find your need?) Tell a story, make it personal and we’ll remember. Quote trends or statistics and it will feel soulless. Percentages don’t inspire, people do. Numbers just add to the story, they shouldn’t substitute it.
1) Elevator Pitch
In 100 words, summarise your idea so that it has a real impact on the potential investor / champion. Catch my interest in 3 sentences with something like:
Did you know that x problem exists and impacts people in x way? We’ve discovered that by doing y, it can solve this problem in a unique way by doing z.
Be sure to establish the problem first, then explain how your solution is great and wanted by your market.
2) The market opportunity
This section is all about proving there is a demand in the market for your product/service. Go into the world and talk to people. Find out what their experience is by observing what they do, walk in their shoes, and keep your eyes open for opportunity. Ask WHY they choose what they do. This is often more important than asking what they think they want. As the saying goes, if Henry Ford asked people what they wanted, they would have asked for a faster horse.
To understand your observations and discussions in view of the big picture, go online, look up statistics, reports and see what your potential is. This puts your observations and experiences in context.
Now, an important note about your market potential. It’s not uncommon to hear people say, “There are a million people in England. All of them may be willing to buy our product. This is our market potential.”
- However, if you only have three employees, how are they going to be able to handle a million orders?
- If you only have a stock of 100 products, how long will it take to make more? Will people be willing to wait for this?
- If you only have one person that can print out the invoices, how many can be printed in one day by one person?
Instead, you should start from the bottom-up. List your assets and your resources as they are now. Then decide what can be done with the time and money you have available. Then you know what your potential market is. For example…
David is able to print 20 orders in an hour. David works 10 hours a week as he’s going to university. How many orders can David process in a week?
Your response here should also show an understanding of who you are proposing to provide the service or product to – what sort of people / organisations are they, and what are their needs? You should consider their needs on three levels:
Emotional. What feelings need to be fulfilled? Are they worried? Are they looking to be reassured, excited? What are the reasons?
Cognitive. What information do they need to make this decision practical. Does it fit their budget? Does it save them time? What are the facts?
Physical. Is this product easy to use? Will it break? Can I carry it? Will this service improve my health?
How many possible customers are there? Will the people or organisations who pay for the service or product be the same ones who use it? (For instance, university services are usually paid for the government or the university, but they are used by students.)
Finally, in the market, are there several different kinds of customers and needs? These are called segments, and if you can, you should identify the particular segment that you are targeting. A good way to bring this segment to life is by creating a persona. A “persona” is a fictional person that represents your ideal customer. Give this persona a name, habits, a job, desires, a salary and buying habits based on what you’ve seen and read. You may decide to use several personas to define your market, but don’t get carried away. To succeed in a short amount of time with your businesses, you need to be specific about who your customer base is, and have a strategy to fully surround them with your amazing offers.
The key questions you should answer are:
- What is the market need?
- What size is your target market?
- Who are your target customers?
- Are your customers the ‘end users’? If not, who is?
- How have you ‘segmented’ your market?
3) Competitors & Potential Collaborators
What will stand in the way of your market share? Competitors and untapped Collaborators. Who are they? Why aren’t they solving this market need already? You have to persuade a potential investor or other interested party that your product or service is worth providing, even if others aren’t already doing so. There may be substitutes already in the marketplace – other products which do most of the job in some other way. Why would customers select your solution? Again, you need to research your competitors thoroughly and understand their business as clearly as you understand your own.
Because your business is small, it’s a good idea to find someone who already has an established network or distribution channel. For instance, if you are selling gift hampers, what networks are involved in special events? Hospitals? Real Estate Agencies? Would you be adding value to their service by providing your goods? Same goes for providing a service, what goods exist that could be improved through your service?
Also, don’t consider giants like Apple or Nike to be your competitors. You are not competition to them in the least. Instead look at who the local competitors are (whether they are geographically close to you or near you on a search engine ranking counts) and how you compare or potentially connect.
The key questions to answer here are:
- Who are your main realistic competitors?
- Who are your potential collaborators?
- Why are they not solving the market need that you have identified already?
- What are the ‘substitute’ products/ services to yours?
- What industry are you working in?
4) The product/service
In this section you need to explain what your product/service does and how it meets the market need and personas identified above.
What is its Unique Selling Point (USP)? Is it faster, cheaper, safer than existing provision? Have you offered something to the customer that compares it favourably to the competition and will make them purchase your product/service?
The key questions to answer here are:
- What is your product or service in three words?
- What does it do?
- How does it meet the market needs (emotional, cognitive and physical) identified in Section 2?
- What is the ‘Unique Selling Point’?
- Why will the customer (identified in Section 2) buy your product/ service?
5) Market entry strategy
In order to make your business idea work, you need a strategy. This involves identifying the system you will be operating in, and explaining how you will use your system resources.
A great way to demonstrate this is through a timeline indicating the steps along the way to your goal. Each stage of this section needs to be broken down. If your first customer is a supplier rather than end user you have to understand them as much as you know your product/service and your competitors. Think about their budget and buying cycle as well as whether working with them will enhance your credibility. How are you going to sell to your first customer? Maybe it’s through attending exhibitions, by networking or even cold calling. Be specific. What will you do if your competitors react to your product/service by dropping their price, developing new products or even waging a PR war against you?
Marketing is also a consideration. Think about the channels you will use and explain why you are using them. Don’t just say “Facebook campaign”, explain why a Facebook campaign is right for your market, and describe how long it will run, how it will target your customers and what you expect for your investment in that channel. Just buying up media channels is not a strategy. Start small (such as flyers or word of mouth) and then build up to the campaign. This also needs to be tied to your business timeline. (For instance, don’t start a big campaign to sell something if you are a month away from making it!)
Consider creating barriers to entry to protect your new market share, such as intellectual property (IP) protection through trademarks, patents, copyright or design right. Think about developing partnerships/alliances and a strong brand to give you an advantage over your competitors. Or consider how open licensing, such as “Creative Commons” would be an advantage. For instance, anyone can make an iPhone application, which has opened the market for others and made the iPhone more attractive.
Identifying specific milestones will help you assess whether you have made progress. You could categorise your milestones into commercial (for instance number of customers, market share), financial (for instance sales turnover) and / or product-development stages (for instance feasibility study, patenting, first prototypes available).
The key questions to answer here are:
- Who is your first customer?
- How will you target and sell to them?
- How will your competitors react?
- How will you create ‘barriers to entry’ or ‘reduce barrier to entry’ to build market share?
- What partnerships/ alliances will you create to help you?
- What ‘milestones’ do you need to achieve in order to commercialise your idea?