Starting a Business? Use Your Business Plan to Answer These 4 Critical Questions
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How do you successfully launch a business?
While you can take plenty of steps to get up and running, creating a business plan is the only thing that increases your likelihood of success.
Combined with detailed financial forecasts, it helps you answer four critical questions that will prepare you to run a business:
Not ready to start a business? Learn how writing a business plan helps you answer critical questions to verify if you have a good idea (or not).
1. What are your key products or services?
When you first had your business idea, you should have identified the problem you’re solving and who your target audience will be (if not, you still need to work on your idea!).
Now, it’s time to get specific about your solution.
How does it solve the problem you’ve identified? What sets it apart from competitors? How will you get it to customers?
Filling in the value proposition, solution, competitor, and sales sections will help you answer this question. And while we do recommend using a one-page plan to keep things simple, don’t worry about sticking to that length.
You may want to add more details around pricing, product features, and distribution, or even create a full SWOT analysis to truly map out how your product/service stands out. Don’t worry about the length; just do it if it will make your plan more useful.
Example:
If you’re operating a local meal prep delivery service targeting busy professionals, your product/service description could look like this:
- Value proposition: Convenient, healthy, chef-prepared meals delivered right to your door.
- Differentiation: Locally sourced, organic ingredients; customizable meal plans catering to dietary preferences and restrictions.
- Pricing: Premium pricing reflecting the quality of ingredients and convenience factor.
- Distribution: Online ordering with weekly deliveries to homes and offices.
This does more than paint a clear picture of your services. It explains how they fit into your customers’ lives and addresses their needs and preferences.
2. How much will it cost to start?
It takes cash to start a business. Some require more, and some less. Creating a realistic budget and expense forecast is essential to answer this question.
If numbers aren’t your thing, just start by listing potential expenses.
Let’s take a boutique fitness studio as an example:
- One-time expenses: Building improvements, fitness equipment, initial marketing campaign.
- Assets: PA system, exercise equipment
- Operating expenses: Rent, utilities, instructor salaries, insurance, ongoing marketing.
But remember, you’re running a business and will eventually generate revenue. This means you also need to consider your revenue streams, prices, and expected sales.
Again, this can start incredibly simple by just listing potential revenue streams. Then go line by line and set goals for what you expect to sell.
Accounting for revenue early on helps you estimate what it will cost to get up and running and stay operational. If you don’t expect to bring in revenue to offset costs until six months or even a year in, that needs to be accounted for.
You don’t want to fall short or be surprised by unforeseen expenses.
Further Reading: How to calculate startup costs
3. Who are the founders and key team members?
You likely know who will be involved with your business. In fact, it may just be you.
But the answer to this question is more than names and titles, and your business plan helps you:
- Establish clear roles: Everyone knows exactly what they’re responsible for, preventing confusion and ensuring all bases are covered.
- Flag skill gaps: Identify needed experience and skillsets early on, so you can proactively address them (through hiring, partnerships, etc.).
- Plan for future hires: Mark when you intend to hire and what milestones must be hit first.
- Know your expenses: Salaries (yes, even your own), benefits, and other employee expenses add up.
By mapping out your team, you’ll gain a clearer understanding of your business needs and be better equipped to find the right people to help you grow.
Example:
Let’s say you’re launching a sustainable fashion brand. You have a passion for design but lack experience in manufacturing and marketing.
Your plan might include:
- Hiring a production manager with experience in ethical sourcing and manufacturing processes.
- Partnering with a marketing agency to build your online presence.
- Identifying potential advisors or mentors who can guide you in areas you lack experience.
Forecasting your personnel costs will then help you understand if you can immediately hire all of these people or if you have to decide who to hire first.
Further Reading: How to create a personnel plan
4. How will you reach your customers?
You can’t just build a business and expect people to come. You need to know how you’ll make customers aware of your brand.
Again, just start with a list of potential marketing and sales activities.
As your launch nears, create more detailed plans for the channel(s) you’ll prioritize. And if possible, tie your marketing expenses directly to sales to ensure you don’t overspend.
Example:
You’re launching a tutoring service for high school students. An initial marketing strategy might include:
- Social media: Targeted ads on platforms where teens spend time (e.g., TikTok, Instagram).
- Community partnerships: Collaborate with local schools, libraries, and community centers to offer workshops.
- Referral program: Incentivize satisfied students to refer their friends and classmates.
To minimize costs, you might start with a low-budget social media campaign. Your business plan could include sample ads, target demographics, and a budget breakdown.
Remember, your marketing plan isn’t set in stone. It’s a starting point you can adapt as you gather feedback and learn what works best.
Further Reading: What to include in your sales and marketing plan
Writing a business plan helps you answer questions at every stage
Research shows that writing a business plan increases your likelihood of moving forward with your business and decreases the likelihood of it failing.
That’s because your plan provides answers about your business, or at least ways to find answers. And it’s not limited to just getting your business up and running.
Revisiting, revising, and expanding your plan can help you answer critical questions as you:
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. You can go from exploring a potential idea to creating detailed forecasts and pitching your business with a single tool.
It’s the perfect tool to start, plan, manage, and grow your business.
