3 Tips for Starting Your Business

Part 2. Do you need a Busines Plan?

Another piece of advice is to write a business plan and fund your business.

The question here is Do you really need a business plan?There is no one size fits all answer to this question.

Some businesses might need a business plan, but others don’t. The amount of work and detail required in the business plan will also vary.

It will vary depending on the size and nature of the business, and the industry in which this business operates.

You do need a business plan if you want to get a bank loan. There are secured and unsecured personal loans. Using your property as security is known as a secured loan.

An unsecured Personal Loan is a type of loan where you agree to repay the money back in full. And that usually happens over an agreed length of time along with interest.

There is a high failure rate among small businesses and startups, so is this a good idea to get a bank loan?

No plan survives contact with customers, and that’s a good thing in a way because it means you can change your plan according to Steve Blank an American entrepreneur, educator, author and speaker.

Generally speaking, a business plan is not essential for most small businesses.

You can start small to test the viability of your idea without borrowing from the banks.

So how can you start small?

One way is to go into markets that already have demand for similar products.

There are many tools you can use to see keyword search data for products, services and solutions.

I like using the Keyword search plug-in and Ubersuggest (check out Niel Patel’s website).

If people already searching for a product that means there is a demand.

But what about competition?

Part 3: Getting a Clear Perspective

Competition can often drive the prices down, hence you need to think about your uniqueness or unique selling point or USP.

How do you identify your USP? By knowing who your competitors are. You need to check them out.

And, how can you do that? You can sign up for their email newsletter.

Get their Free stuff, and then check what they are saying to you, how often and so on.

You can get a lot of intel done this way.

You also check their products, if they are selling on sites like Amazon where purchases are verified then read what people say about their products. Then if you are selling similar products improve what’s missing. Figure out how to be the best.

This exercise will allow you to identify your unique selling point. Ask yourself what makes your business more special. And, how is it different to the other competitors out there?

Think about pricing and how you will reach your customers. Ask yourself where you fit in the market for my target consumers.

But don’t price yourself low.

Think how you can be unique, people pay extra to get better quality/greater products, products that can solve their problems.. in a different way.

As per channels, check out the social profiles of your competitors, and which channels are they using. If they are consistently using these channels this means their customers are on these channels too. If they are running FB ads that means they are making money, they wouldn’t be spending money if they were not making money.

All this can be done without a business plan and funding from a bank or family.

All can be done with the smallest amount of money if you choose to run a digital business, resell other brands’ products, become an affiliate, author, or sell your own digital products or even physical products using the POD (print-on-demand) model.

What you need to remember is that a business plan is different from a business model.

A business model describes how your company creates, delivers and captures value.

It’s best understood as a diagram that shows all the flows between the different parts of your business.

This includes how the product gets distributed to your customers (direct/indirect method or channels).

And how money flows back into your company (monetization).

And it shows your company’s cost structures, and how each part of your business interacts with the others.

Where your company can work with other companies or partners to implement your business and so on.

To increase your success you need to focus on building and testing a business model.

And this is what Dan Noris did when he launched a WPCurve.

He achieved this through bootstrapping his business (that is starting a business with little capital and his own money). He tested his business model by offering a minimum viable product people would pay for.

And he kept testing his model and adjusting it till he found a market/product fit. And, he developed it into a profitable business that was later sold to an investor.

If you are going to bootstrap, you have a greater chance to build a business model which really works. The business model can produce positive cash flow and profits right away. And don’t we all want that?

Summary

So to recap 3 points we’ve covered:

1) Doing market research is tricky. So go after existing demand and after markets/customers that are already looking for similar products like yours. Identify your perfect customer who is already paying for similar solutions.

2) Spy on your competition to figure out your unique selling point and pricing, but don’t lower your prices to compete. Validation works best when you show the customer a product and ask them to pay for it. If you have enough interest, your idea is validated.

3) Business plans are not necessary for small businesses unless you are asking for a bank loan or VC capital. Bootstrap your product idea using the MVP concept (minimum viable product) and take it from there.