Table of Contents
How Do You Define the Target Market?
If you’re in the business of selling ice cubes to Inuits, you need to know that they often boil their beverages, and so ice cubes help bring them back down to a reasonable temperature. Not common, but it is true.
In your case, you may have a unique problem like cooling down hot tea in the Arctic, or you may have a unique solution to a common problem, like choosing a grocery store based on a shopping list and current coupons. In either case, you can drill down to a single sentence about what makes your idea so compelling and how big your potential client or user base will be.
It’s okay to struggle when you look at it from that angle. If you operate a service business, for example, you may already have an existing client base. When you think about those customers, try to make a list of key demographic pieces: are they college-educated, do they seem to operate in a given sector, etc.
Now, Put Those Things Together
When you can define what kind of person uses your widget or process to solve problem X, you can truly understand your target market. It’s okay to attack it from either angle, but without knowing both, you’re going to run into problems trying to forecast your business growth. It’s not necessarily ice for the Inuit, but it can undoubtedly snowball.
Kowing the thoughts and motivations of your customer is called a unique selling proposition (USP). It’s one of the most glossed-over items by businesses that I see yet can significantly impact lead generation and sales conversion.
Do You Need A Business Plan?
With your target market in place, you’re ready to get going and find new customers or clients, right? Wrong. Take a second and ask if you would like any of the following things:
All of that comes when you put together a solid business plan. Done right, it can be everything from the foundation of your elevator pitch to an angel investor or a loan officer’s sigh of relief before they consider your application. More than all of that, however, the true benefit of a business plan is for you.
A business plan allows you to think strategically about whether your daily activities match up with what gaps and needs you are trying to clear up.
Having been through the process many, many times, I’ve seen how easy it is to spend hours trying to set up a new workflow management process or even try a new app without ever considering whether or not it would even help the bottom line.
What the business plan doesn’t need to be is perfect. Below, I’ve outlined some areas to cover when you start writing a business plan. Depending on your business, you’ll find out more about your target audience and solutions as you continue to focus on new customer acquisition and try to set up sustainable processes.
Formulating a Solid Business Plan
Blank page syndrome is real: there are few things more difficult than creating a document that you think will have to be perfect when you don’t have anywhere to start. A business plan is important, but you need to have it started and be willing to revise it. Don’t overthink things. Instead, use these section headlines as a guideline and flesh them out as you move forward with your business:
1. Executive Summary
This is the broad overview of your business, and it might make sense to start with this section last. Like a resume, this is skimmed by investors and potential partners before anyone else, so be ready to cover opportunities and challenges quickly and in a compelling fashion. This is an excellent place to put your unique selling proposition.
Just like this article, the description is the overarching ideas behind your business: what makes it better than other solutions in your space, what problems it solves, and why it has a chance to succeed!
3. Competitive Analysis
Odds are, you have people who are already trying to do similar things to what you are doing. Investors and other interested parties want to know that you understand what you’re up against and why you will succeed (and how!). Make sure to be specific, as this section helps you overcome objections.
4. Market Strategies
Market strategies expand on both your unique selling proposition and the competitive analysis. They should be concrete, with facts and numbers, and should explain how you’re able to grow and what it will take in order to do so. Again, don’t overthink it, but you can leave opportunities for features or untapped markets here to show that you can extend your vision.
5. Ownership, Management, Operating
If someone is interested in working with you in whatever fashion, they’ll want to know that you’ve drilled down into how to run the company on a day-to-day basis.
If you’re an inventor, this is where you’ll be honest that you need help with marketing or operations or scaling your company. It’s often an area where you can prove your strengths and admit where you can benefit from support.
6. Financial Plans
The financial plans are the most challenging part of any business plan, but not because it’s hard to calculate your expected cashflow and costs. Instead, many entrepreneurs find that they run out of cash because they were too conservative in their costs. Feel free to add percentages and overages that are much higher than you initially expect.
7. Appendices and Exhibits
If you have patents, resumes, significant contracts with companies, or any other compelling documentation, it goes here. These are your “trump cards” and are used to demonstrate why your company has the edge over others.
One of the great things about starting with an outline like this is that you can start by copying and pasting information from other places. Your resume can be placed in the exhibits section, while your description can be expanded on from an email you sent to a potential investor. The point is that you need to have it started and be ready to use it to justify your business choices to yourself or funders.
Understand the Commitment Behind Starting
Ninety percent of all new businesses fail. That’s sobering, but more so is the fact that only 20 percent fall in the first year and 65 percent in the first ten years. Failure is incredibly high.
What I want you to know is that there are going to be days where it feels like you have moved one step forward and two steps back when it comes to trying to grow your business. Most business owners hit a wall at many points when trying to grow a business.
Even when things are going well, it can feel like trying to break through plateaus is impossible. The good news? Hundreds of business owners like you face similar problems each year. You can find solutions that leverage your skills and expertise and the resources of trusted advisors and team members.
Discouragement is very real, however, and that is one of the things that can be impossible to teach except through experience. You will have doubts, and you will have moments where you are unsure whether or not your business and your idea are enough for you to succeed. Be committed to yourself and your goals.
Key Takeaway: Passion, enthusiasm, and a great business model will get you very far but making it sustainable will cost money and time.
Don't Over-complicate Your Concept
Many businesses struggle with feature creep or trying to satisfy every customer or user regardless of whether or not those features fit in with the core business model. Trying to be everything to everyone can be debilitating for a small business.
Whether you are a one-person shop or have a small team, everyone is already wearing several hats. There is an acronym that will help you stay on track and make you the MVP of your small business. MVP also stands for a minimum viable product, and it means the absolute bare-bones essentials of your product or service that your customers or clients need to see for you to grow your base and prove your concept.
You do not have the same type of flexibility that a larger organization does. However, you can still eventually add features. Focusing on your MVP allows you to remain in control of your business and focus on what your clients or customers want rather than guess and waste potential hours going down paths that might not prove fruitful for you.
Key Takeaway: You can’t know what will work best for your customers until you make sales and get feedback. Keep it simple to start.
Business Assistance and Training
Even if you spend some time in a startup accelerator or received an MBA from a prestigious business school, you likely don’t have all of the skills you would like to help your business grow beyond your wildest dreams.
That’s okay! You are one person and having people with different skill sets is critical to achieving rapid business growth and leveraging real opportunities.
So, how do you figure out where you might have gaps? Do a SWOT! The Strengths, Weakness, Opportunities, and Threats framework is commonly used to write out a complete business plan, but it’s just as helpful for you. After all, when you’re the leader of a small team or a sole proprietor, you are the business.
It’s also a valuable framework for people that hate talking about themselves or who struggle to focus on their strengths. For example, you DO have an idea that you think can be successful! So start with your background (human resources, management, sales, etc.?). Then take a look at where you could ask for help to get better. Areas you might be looking at include:
If that gets too complicated, you may also look into the idea of a mentor or a business coach who can help you figure out the proper steps for you.
Your business is unique, and finding the right partners or assistance for you can help turn those weaknesses into strengths and threats into opportunities.
Key Takeaway: Don’t be afraid to ask for help! The best always do!
Focus on the Market Instead of the Product
“Everyone has a plan until they get hit.” – Mike Tyson.
The famous boxer may not have had much business experience (although he is an expert at raising pigeons). Still, his advice about adjusting to the reality of what’s in front of you is critical to entrepreneurs and business owners. I touched on the minimum viable product (MVP) above, but I really cannot stress this enough:
You cannot know what you don’t know until your product or service is out there.
The best people to receive feedback from are not your family and friends trying out your service for the first time or a local incubator’s dev team.
Your customers and clients will always have the best answers because they are the ones who will have to hand over their money for your business to be successful. So, don’t overthink the product.
Instead, focus on serving the market and being responsive to their needs. You know the problem that needs to be solved. Work on strengthening the solution.
Key Takeaway: Your customer will always have the best ideas for product requirements.
Always Overestimate Costs
You can burn through cash, or you can burn through hours, but all new businesses or product lines, by nature, are inefficient. You’re testing an idea that you have, not running a streamlined team-based machine yet. More importantly, there is always some headache that will arise. Here are some I’ve heard in just the past few months:
These are all extremely common scenarios for people who are just starting or who are at an inflection point in their business. The way to get through this is to be extremely honest with yourself and your investors: include financial cushions and don’t promise the stars in terms of revenue projection.
Most companies burn through cash quickly, but the Dunning Kruger Effect can be worse for others. The term popularized online is when people think they can do work simply because it looks easy to “figure out.”
One example might be a programmer thinking that building a website on their own will save money and then spending hours learning WordPress, but the list is endless.
Knowing who to count on and when it shouldn’t be you is one way to avoid wasting priceless hours.
Key Takeaway: You can’t know what costs will come, but you can plan for unexpected ones
Establish a Support Team
People who have success are those who understand their SWOT analysis and look for people to become strengths where their weaknesses exist. Do you have the people that you can rely on to be sounding boards? To point you in the direction of potential time savings?
You need those, and the most successful businesses have whole teams of people who can help with marketing, business formation, legal issues, and more. You might not have that whole list in your contacts, but that doesn’t mean that you can’t get started as soon as today!
You can always start with local business groups that you can find on Linkedin, Meetup, or through your local Chamber of Commerce. Every door that you open will necessarily bring about more opportunities, even if it is simply to refine your business plan. However, you might not find all of the answers, and someone you can count on as a coach can be the difference between networking and growth.
Key Takeaway: It takes a few good people to make a growing business shine, and no business owner should be on an island.
Read Up on Managing People
Creating a team for a successful business is a lot harder than picking fellow students for a group project or teammates for a pickup basketball game at the gym. If the thought of trying to plan meetings, set policies, and other “manager-like” activities sets your hair on end, that’s okay.
You’re not alone! Business owners and creative people alike can struggle to let go of their “baby” or even figure out how to make their processes extensible.
But remember this: the most successful CEOs in the world read, on average, a book per week. That’s a heady goal, but you can at least try to find some time to brush up on a few that can make a real difference for you when it comes to being a manager and getting the most out of your team. Two of my favorites include:
But I get it. Some people don’t think that they’re big readers or need to create the positive habit of sitting down every day or two to study. In that case, you can do far worse than perusing a collection of Harvard Business Review’s 10 Must Reads of each year. They cover various key topics and can be a great thing to discuss with your team, a mentor, or a coach.
Key Takeaway: It costs you nothing to read, even if you have to go to a library!
Look for a Mentor or Advisor
The flip side of the high rate of business failures is that there are people who succeed. But not everyone who can do can teach, and the people who can do both are rare, indeed. That’s why I’ve tried to explain how looking for people with strengths that are gaps in your skillset is so critical. Once you get to a certain sticking point, you need help.
Whether or not you need a business coach is dependent on a number of factors, but the most salient ones are personality fit and skill fit. I’ve worked with dozens of entrepreneurs who are uncomfortable “lifting the hood” on their business and seeing someone else look for issues and solutions. So you have to trust this person and feel like they can offer constructive advice.
As noted above, you’ll also need someone who complements your skillset. If you need help with systems, a marketing guru might not be a solid fit, for just one example. The same is true of someone who can help with team selection but might not have a good sense of pitching to investors.
The Bottom Line
Passion is critical to your business’s success, but passion with a strong plan, great process, and a business coach maximize your potential.
If you are coming across issues or feel like something is holding you or your business back, why not take 17 minutes?
That’s how long my free consultation lasts, enough time for you to get a sense of how I can help your business and whether or not we could be a great fit. I look forward to beginning our relationship and watching your business grow.