→ We’ll get into the specifics of how to explore the market and determine if you’re idea is a good fit in just a moment. Right now, we recommend that you consider starting a Lean Plan to help make the rest of this process much easier.
→ The Lean Plan is a simple, one-page document that helps you refine your idea. It ensures that you’re considering your mission and value proposition early on, while also providing structure for the more technical portions of your business. In fact, it will provide you with the perfect template to tackle the rest of these steps.
1. Conduct market research
→ Once you decide on a business that fits your goals and lifestyle, it’s time to evaluate your idea. Who will buy your product or service? Who will your competitors be? This process will help you address your opportunity, value proposition, the market size, and competition sections of your Lean Plan.
There are a number of ways you can do this, including:
→ Performing general Google searches,
→ Speaking to people already working in your target industry
→ Reading books by people from your industry
→ Researching key people
→ Reading relevant news sites and industry magazines
→ Taking a class or two (if this is possible).
Research the competition
→ If you like, you can even take things a step further and consider the consumer needs currently not being met by businesses in the industry. This is a good time to take a look at potential competitors. And remember, the presence of competitors is oftentimes a good sign! It means that the market for your product or service already exists, so you know that you have potential customers who are willing to spend money on your product or service.
→ While you’ve got the time, learn as much as you can about your competitors, about what they provide to their customers, how they attract attention, and whether or not their customers are happy. If you can figure out what’s missing before you even get started, your job will be made that much easier when you do finally set up shop.
Validate your idea
→ Lastly, it’s important to field test your idea, services, or products. As you conduct research, take the time to actually speak to your potential customers. Present them with the concept you intend to launch to gauge interest, as well as confirm which competitors they may already use and the price they’d be willing to pay. If you can, it may be worth developing a minimum viable product (MVP) to help showcase what you’ll be providing.
You don’t even need to do this process in-person. Instead, you can:Send out surveys
→ Join forums and Facebook Groups
→ Run ads
→ Sell pre-orders
→ The important thing is to establish what success looks like. Know what threshold you need to hit and be willing to pivot your idea or target audience if it’s not panning out as you expect.
2. Write your business plan
→ If you will be seeking outside financing, a business plan is a necessity. But, even if you are going to finance the venture yourself, a business plan will help you figure out how much money you will need to get started, what it will take to make your business profitable, what needs to get done when, and where you are headed.
A roadmap for your business
→ In the simplest terms, a business plan is a roadmap—something you will use to help you chart your progress and that will outline the things you need to do in order to reach your goals. Rather than thinking of a business plan as a hefty document that you’ll only use once (perhaps to obtain a loan from a bank), think of it as a tool to manage how your business grows and achieves its goals.
→ While you might use your business plan as part of your pitch to investors and banks, and to attract potential partners and board members, you will primarily use it to define your strategy, tactics, and specific activities for execution, including key milestones, deadlines, and budgets, and cash flow.
You have a head start with your Lean Plan
→ Here’s the thing, your business plan does not have to be a formal document at all if you don’t need to present your plan to outsiders. Instead, your plan can follow a Lean Planning process that involves creating a pitch, forecasting your key business numbers, outlining key milestones you hope to achieve, and regular progress checks where you review and revise your plan.
→ If you aren’t presenting to investors, don’t think of this as a formal pitch presentation, but instead a high-level overview of who you are, the problem you are solving, your solution to the problem, your target market, and the key tactics you will use to achieve your goals.
→ Hopefully, you’ve already started developing your Lean Plan at this point as you explored your business idea. If not, now is the time to get started. Because, even if you don’t think you need a formal business plan, you should go through the planning process anyway. The process will help to uncover any holes or areas you have not thought through well enough.
→ What goes into a formal business plan?
→ If you do need to write a formal business plan document, you should follow the outline below.
The standard business plan includes nine parts:
→ The Executive Summary
→ Target Market
→ Products and Services
→ Marketing and Sales Plan
→ Milestones and Metrics
→ Company Overview
→ Management Team
→ Financial Plan
→ If you would like detailed information on how to write a business plan to present to banks or funders, there are plenty of online resources, including our own comprehensive guide.
→ You will also find hundreds of sample plans for specific industries on this very website. Use them at your leisure but be prepared to adapt them to suit your precise needs. No two businesses are the same!