To put a good business plan together, there are steps that must be taken. These are preliminary activities that will help you organize your data, information, thoughts and ideas which will eventually form the plan as a document. These steps include
1. IDEATION (Idea generation): sit down and think through what you want. Most ideas come from recognizing a problem people or yourself are facing. Most businesses are conceived and born out of a burning desire or a heavy burden to solve a need. It is most likely you already have a vague idea about the business, otherwise you probably wouldn’t be thinking of writing a business plan.
The idea usually is a solution you want to proffer to a problem (to meet need or set of needs). Write down the needs to be met or problem(s) to be solved and ask yourself the questions:
- What is the problem?
- Can the problem be solved?
- Can I solve it?
- How can I solve it?
- How can I organize the skill(s) and expertise to solve it?
- Where can I source for the resources, materials, produce or products to solve the problem (meet the needs)?
- Etc.
The problems could range from scarcity of certain produce/products or services which you know you can access and provide, to the way things are done in a particular area of the society or economy or industry about which you are dissatisfied or know well how it should be done. Or maybe you do not know how to solve the problem but know you can learn the skills or know those who can solve them. Again, ask the following questions:
- Where is the market for the product or service?
- Who are my target customers/clients?
- How do my target market/customers behave?
- What are their classes, tastes and preferences in terms of quality, aesthetics and the prices they are willing to pay (bearing in mind that there are customers that high price drives away and there are those high price draws their attention and patronage)?
- Is the market ready for the solution I want to bring?
- How much will it cost me to provide the solution?
- Will the prospective or potential customers be willing to pay my price?
- What price are my potential/target customers willing to pay for my service/product?
- How should I present the product / produce or service to the market?
- Are there such services or products already in the target market?
- What are they doing right and what are they doing wrong?
- How or where can I benchmark and/or beat them?
- What will be my USP (unique value proposition)?
- Do I need further training for better delivery?
- Etc.
All these questions and more will help you form a unique and innovative business idea.
2. INCUBATION (incubate your idea): the incubation period is like that period when a bird sits on its eggs brooding over it. The egg are potential chicks alright, but the chicken must keep warming it as she keeps turning it under her bosom till the chicks are fully formed for hatching. Some ideas sure may require urgent action while others need time to mature. The incubation period is the period of training, learning of new and relevant skills, and finding things out from the fields. This period and its activities help you remove wrong assumptions, correct erroneous information and ideas. It is the time for the maturity of your idea. You don’t need to be hasty; your idea must develop muscles and bones for stamina.
3. FEASIBILITY STUDY (due diligence): following and/or including in the incubation period is the period of due diligence. It is the time to sit down and do the math and information gathering. Ask yourself more questions and do your PESTLE (Political, Economic, Socio, Technological, Legal and Environmental) analysis:
· Is the political environment and reality suitable for the business? What foreseeable political threats are there to avoid or look out for?
· Is my business idea feasible economically in both the short term and long term period? Will there be a sustainable market for it.
· Is it socially acceptable (will the product/service be acceptable to the people’s religion/ and culture)?
· Do I have the technology or can I access the technology/technological skills required to operate the business?
· Is it legally feasible? What laws of the land would the business run foul to? Have I or how can I meet all the legal requirements (e.g. tax requirements, compliance with regulatory bodies like NAFDAC, SON, education board etc)?
· How environmentally feasible; adaptable, friendly, acceptable etc, is the business (e.g. in terms of factory location, waste disposal, smoke emissions etc, from the factory)? Also can the environment have adverse effect on the hygiene, quality/standard, movement/transportation or storage of the products? Will the climatic condition be right for the product/service etc?
· Other questions to ask yourself can be: Do I need to serve under some experts in the field to learn certain secrets or should I start small and learn those secrets as I go along? What should I do about it? The questions you asked yourself during ideation can still be asked here and more.
4. PERSONAL SWOT ANALYSIS: carry out S.W.O.T. analysis test on yourself as a person, not on the business at this stage. Examine yourself. Do soul searching exercises. Determine your strengths, weaknesses, opportunities and threats. Do I have the needed passion that will carry me through where sheer determination fails in the face of adverse circumstances? Do I have the personal character strength that can help me run the business or flaws that can ruin my efforts? What are my skills, expertise, knowledge, experiences etc that the business will leverage on? What opportunities lie on my path in the business? What are the possible pitfalls? What should or can I do about them?
SWOT analysis test must be done in all honesty. Weaknesses and threats must not be wished away. They must be admitted with a view to solving them. Often the strengths and opportunities can cancel them out or off-set them. The strengths and opportunities you list out must not be what you wish or hope to have but what you know to be the realities already.
PROFILE THE MARKET: Know and understand the size, class, segment and emotions of your target market. Determine if you are selling to a general (mass) market or you want to have a niche.
5. KNOW YOUR COST: determine your cost and your price. Profiling your market helps you know how to present your produces/products or services which in turn determine your cost and consequently, your price. Your outcome here will greatly influence and reflect in your market/sales plan. Always have it in mind (as simple as it may seem) that P=C+PM (i.e. Price = Costs + Profit Margin. This will be covered in detail under price and cost calculations in part two)].
6. KNOW/IDENTIFY YOUR COMPETITIONS: knowing your competitors and what they are offering the market in terms of quality, price, value, volume and customer care goes a long way to determine your acceptance and survival in the market. Your competitor’s failures are your opportunities; and their success is your challenge for improvement.
Can your competitors be bench-marked? Who are they not serving well? How are they winning in the market place? Keep a close tab on them and research extensively on the ones that are your major threat, if necessary. Also be sure to make plan to stay several steps ahead of copycats. New innovations that sell usually get copied or counterfeited. This could do damages to your products or business image in the market.
7. SELLING/DISTRIBUTION METHOD: will you take your produces/products and services to your clients and prospects or will they come to your farm, factory or store? Will you bring them to your products or bring your products to them or do both and how? Would you sell online in addition to the traditional offline market? Are you going to sell to only off-takers (wholesales) or to retailers or to both and how? Your home work here will determine your distribution strategy.
8. LEGAL FRAMEWORK: you must fulfill or meet a number of legal requirements in order to authenticate or make your business a legal entity so as to do business the right way. Will you wish to register or incorporate your business? Would you start by registering the business name as Sole proprietorship form of business or incorporate it from day one? Which of your products/service need to be trademarked?
Do you have any invention that need to be patented? Any intellectual property of yours in the business that need to be copyrighted? When do you want to copyright your business idea as an intellectual property? Do you need to register with any of NAFDAC, SON, NEPC and so on? If you have studied the second manual, which precede this, in this series, this will be easy for you.
9. CORPORATE IDENTITY: your business or company name, logo, colour, help create image that contribute to creating a mind share in the market place. What image or reputation do you want to have and retain in the mind of your prospects and customers?
Though this will be done in lesser details in the business plan, you must state it in the plan string enough to hold you responsible. In other words, the issue of corporate image must be taken serious enough to be followed through.
10. FINALLY, HOW MUCH DO YOU NEED TO START OR EXPAND THE BUSINESS? And how much turn over or return on investment do you expect or project after the next twelve or twenty-four or thirty-six months? This will be determined when you cost every aspects involved. A good way to do this is to prepare a simple business model canvas.
