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4 Questions Your Business Plan Must Answer to Prove Your Idea Works

Kody Wirth

5 min. read

Updated November 22, 2024

Could your idea actually become a real business? 

To find out, you only need a simple one-page plan filled with bulleted lists and notes about your business.

Nothing fancy, just a functional document that can help you validate or invalidate your idea by answering four key questions.

1. What problem does your business solve?

Real businesses solve actual problems. 

You may provide critical life-saving solutions, such as glucose monitors for diabetics, or something more lighthearted, like a luxury lounger for your labradoodle.

The point is that your business fits into people’s lives. That you provide real value.

Do you save them money? Do you make their jobs easier? Do you make their lives more convenient or enjoyable?

So, how does the one-page plan help you define the problem? Well, it comes down to the first three sections:

1. 1.Your value proposition
2. 2.The problem you solve
3. 3.Your solution

You can tackle these in any order.

But defining the problem and how you’ll solve it first will make explaining what you do much easier.

If you struggle to get more than a few words down for any of these sections—that’s a sign you need to go back to the drawing board.

Further Reading: How to create a problem/solution statement

2. Who is your target market?

Answering what problem you solve is really a two-part question. The other half is determining who you’re actually solving a problem for. 

These are your ideal customers.

Your target customer shapes your entire business strategy—from product positioning and pricing to sales channels and marketing. It’s about getting inside the head of your customers to create products and services that truly resonate.

And creating a one-page plan helps you do that. It forces you to address the problem, what solution you have in mind, and quickly describe who will benefit from it.

For this work, you’re sticking to bulleted lists and either adding a handful of potential customers or describing one segment with a list of demographic information. This gives you enough to then go out and actually talk to these customers and verify if there’s any real interest.

Example:

Imagine you’ve created a low-calorie, probiotic-rich soda with natural sweeteners. Who will buy it? 

• •Young parents concerned about sugar? 
• •Health-conscious professionals seeking an energy boost?
• •Trendy Gen Z college students? 

Each group has unique needs, which impact where they shop, how they discover products, and what messaging and product design appeal to them.

These are the people you need to connect and test your product with.

Further Reading: How to Validate Your Business Idea

3. Why is now the right time to start your business?

Timing is everything in business. 

Your reasons for starting, experience, and commitment level all matter. So does the current market landscape, emerging trends, and what your competitors are up to.

So, you need to explain:

• •Why you're the right person: What unique skills, knowledge, or connections do you bring to the table?
• •Your vision: What milestones are you aiming for, and what's your timeline?
• •Market opportunity: Is there a demand for your product or service? Are there favorable market trends? What businesses are already present?

Luckily, the one-page plan has you address these points across a few sections (your team, milestones, and competition). Like everything else, it’s not meant to be overly detailed or perfect. You’re just trying to get down enough information to answer the larger question.

Example:

Let’s say you’re a software engineer who has noticed a growing trend toward digital health solutions and a lack of user-friendly pain management tools. 

This could be your chance to fill a gap in the market.

To demonstrate that it’s a good opportunity, you may highlight your:

• •Technical expertise and understanding of user experience design. 
• •Knowledge of the growing demand for accessible medical solutions. 
• •Existing connections with healthcare providers and plans to partner with them to improve reach and trust.

These three points help answer why you’re the right person, what the opportunity is, and what milestones you need to hit.

4. How will your business make money?

This is the big one that stories of notoriously unprofitable startups may make you believe is unnecessary. 

It’s not just about covering expenses. It’s about earning enough revenue so you can grow sustainably. 

If that sounds stressful, don’t worry. The beauty of a one-page plan is you don’t actually have to dig into the numbers just yet.

You’re just listing potential revenue streams and expenses, trying to get an idea of how you would actually monetize the idea and what costs may be involved.

Example:

A dog walking business might generate revenue through:

• •Group walks: Offer discounted rates for walking multiple dogs at once.
• •Private walks: Cater to owners who want one-on-one attention for their furry friends.
• •Pet sitting: Expand services to include overnight stays and basic pet care.
• •Training sessions: Offer specialized training classes for dogs of all ages and breeds.
• •Add-on services: Provide extras like pet taxi services, grooming, or medication administration.

If you were to actually start this business, you may not initially offer all of these services. However, having multiple revenue options in mind allows you to test customer interest and plan for ways to grow. 

Tip: Use the AI-powered LivePlan Assistant to generate possible revenue streams and expenses for your business.

Writing a business plan helps you answer questions at every stage

It’s never too early to write a business plan.

Research shows that you are actually 152% more likely to turn an idea into a business if you create a plan. And planning early can stop you from wasting time and money on an idea that simply won’t work (at least in its current state).

That’s because your plan provides answers, or at least ways to find answers, about your business. And it’s not limited to just formalizing an idea.

Revisiting, revising, and expanding your plan can help you answer more difficult questions as you:

• •Start your business
• •Pursue funding
• •Look for opportunities to grow

And don’t worry—I’ll address what specific questions your plan helps answer at those business stages in future articles.

Make planning easier with LivePlan

If you want to create a business plan that grows with you and helps answer these questions (and more), try LivePlan.

LivePlan combines your business plan with powerful budgeting and forecasting features to make every effort count. With a single tool, you can go from exploring a potential idea to creating detailed forecasts and pitching your business.

Try it out today risk-free.

It’s the perfect tool to start, plan, manage, and grow your business.

Kody Wirth

Kody currently works as the Inbound and Content Marketing Specialist at Palo Alto Software and runs editorial for both LivePlan and Bplans, working with various freelance specialists and in-house writers. A graduate of the University of Oregon, he specializes in SEO research, content writing, and branding.