If you had to draw a picture of someone coming up with a great idea, it might be as simple as sketching a person with a light bulb appearing just over over the top of his or her head. Illustrating the process of taking a great idea and turning it into a successful business -- now that’s a more complicated picture.
It’s complicated because there’s no one way to execute on an idea. Some of the variables can include your experience (if any) in being an entrepreneur before, your educational background, economic or market conditions and whether or not someone else has already come up with the same idea and beat you to the punch.
The closest thing entrepreneurs or startups will ever get to a map that helps them navigate their way to a successful, growing organization is a business plan. Before you ever reach the point of writing one, however, there is some other homework to do that will ensure the business plan you create will be effective in bringing your idea to fruition.
1. Find Your Business Idea’s Near-Identical Twin
Most companies fall into some basic industry categories like financial services, retail, healthcare, transportation and so on. Some firms may have truly unique products and services to offer those markets, but the way they grew and successfully established themselves may hold clues to what you’ll need in your business plan.
Do a comparative analysis and, if possible, try to imagine what the business plan of the biggest firms in your target market might have looked like. Be as detailed as possible.
This may seem like a waste of time at first, since you’re probably not going to be replicating this business in several important ways, but it’s an exercise that gives you the benefit of real-world information about the company that can inform what you put in your own business plan later on.
2. Talk to a Customer Archetype
You may be a long way from actually selling anything to anyone, but that doesn’t mean you should ignore the potentially valuable feedback from your target buyers. If you developed your business idea while working in the same industry or a similar one, you might already know the kind of people or firms who would most likely be interested in your products. Seek them out at an industry event or conference and bounce the basics of your idea off them.
Listen carefully to the questions these archetypical customers have or the objections they throw your way. If you can answer those, you can probably make a much stronger case when you write the parts of your business plan that have to appeal to potential investors like banks or venture capital firms. If you can’t adequately respond to those questions and objections, on the other hand, it may be time to refine or rethink your idea entirely.
3. Make Your MVP
To those outside the startup space, MVP probably stands for “most valuable player,” but in this case we’re referring to a “minimum viable product” that essentially showcases how your business idea will manifest itself in terms of something someone will purchase.
Some entrepreneurs prefer to wait until after their business plan has been written and approved by investors before taking the time and effort to make an MVP, but it’s an exercise that can teach you an enormous amount about your idea’s potential. The emphasis here is on “minimum.” It may be too costly, for example, to actually go through a complete manufacturing process, especially if you’d need to invest in expensive equipment to do so. You may be able to construct a prototype with similar materials, or even use software to create a model or visual representation that serves as your MVP.
As you complete this step, think about the lifespan of the product and what it will mean for your company. What will you need to do to generate demand? What will the sales cycle look like? What kind of customer service issues will be critical to cover off? If you can nail down answers to these questions after making an MVP, significant portions of your business plan will practically write itself.
4. Pinpoint Your Purpose
Some of the most successful companies in the world make it clear that they don’t simply focus on selling products and services. They define themselves as existing to bring some kind of value to a particular community of people -- whether it’s saving them time, saving them money or even helping them lead more fulfilling lives.
A purpose-driven brand is a compelling brand. It’s one where you can tell a convincing story about why your idea deserves all the financial and other resources necessary to turn it into a real business. This sense of purpose puts your customer at the very heart of your idea, which becomes a theme that will resonate with investors, business partners and ultimately your target market.
Once you’ve completed these steps and start writing your business plan, it will probably be pretty clear where some of the details you’ve learned should go. Your purpose, for instance, might be included in the business plan executive summary. Your discussions with an archetypical customer will inform the section on your target market. The story of making your MVP will help you flesh out everything from your operating model to what kind of staff you’ll need to hire, your financial plan and more. The elements you borrowed from looking at similar businesses will hopefully let you respond to counter-arguments or rebuttals from those reading your business plan.
In the end, your business plan will give others the big picture about your idea -- and it may be a complex picture, but one too powerful to be ignored.
