Have you ever started a side hustle without any planning, a business plan or even a few ideas on the back of a napkin?
It’s common for entrepreneurs to notice a need, start providing a solution, and earn money as FAST as possible.
At some point, you will wonder if you can make this work for you and create a lasting business.
Creating a long-lasting business is a lot different than something that creates a few hundred bucks on the weekend.
So it would help if you spent some time looking at the possible issues and opportunities as you turn your side hustle into your primary source of cash.
This future planning is the purpose of a business plan. To look at the opportunities to maximize them while identifying the obstacles and minimizing them.
Explore the Possible
You may think you have a great idea to make widgets for the masses, take your hobby and scale it or build a large online business, but only through research can you ensure that your idea is possible.
When you study all aspects of your market, you can avoid the mistake of starting a business with no chance of long-term survival.
Just because you think your idea is a good one, and it might be, but that doesn’t mean it has the basic principles to thrive.
You’re not your market, even if you think you are. Your hobby or side hustle may have a limited market. There may only be a small number of people who need your service but are there enough people to support you as you need to be supported?
Here are some questions you should research
- How big is the market?
- Does the market have the resources to purchase your product?
- Is my product different from the other offerings?
- Can I provide a higher value than what is being offered?
- How will I sell my product or service?
Understand Your Competition
One remarkable fact about discovering your competition is that competition proves your idea is a good one.
If there are no competitors, this is not necessarily a good thing. It’s hard being the first to market with a new idea. In fact, depending on the market, it can be costly to be first.
If you study businesses, you’ll note that it’s not always the first to market that makes it.
It’s often the copycats that come later that truly make it work. They research the market, talk to clients and find a way to improve or provide a more compelling story for the product or service.
You can use your competition to avoid mistakes as well as find your audience.
Some questions that you can answer is
- How are they selling the product?
- Can you offer something different?
- What can I do to make my product stand out?
- How are the competitors marketing their products?
- Can I change the offer to make it more appealing?
Know Your Customer Better
When you develop your business plan, it forces you to find out not only who your exact ideal customer is, but where they are, what they need, and how you can best communicate with them about their problems.
When you find out the problem and issues, you can target your marketing to solve their exact problem.
You will also find out the demographics of who is buying your product or service.
This research goes into understanding who your ideal clients are.
For example, you would market differently to the urban female who is married with two children and a full-time job than the corporate male that is a couple of years from retirement and looking to develop an income to supplement his retirement.
When you know your customer, you can use targeted marketing and advertising to reach the exact audience.
You can also ensure you know who they are and how they make decisions.
- Are they found on a particular social site?
- Are there groups, clubs, websites that they hang around?
- What magazines do they buy?
- What podcasts do they listen to?
- What type of media does my client consume? Do they like video audio or written form?
Document Your Revenue Model
You only have a business if you have something to sell and a method of taking payment.
The thing about business is that it’s supposed to earn money. If you don’t find a way to make money from your product or service, you will soon not have a business.
Therefore, part of creating your business plan is to ensure that the business idea can earn enough money to support your intended lifestyle and dreams
Most small businesses are relatively simple to set up, but you need to understand how to keep track of money and expenses legally so that you don’t pay one more penny in taxes and fees than you need to.
You’ll need to know how to collect the money, what happens after collecting it, and follow all the rules and regulations based on the type of business entity you choose.
I suggest you do the following
- How do I collect payment? Cheque, Charge Card, Paypal, Stripe, EFT
- How do I organize the expenses?
- Decide what portion you will set aside a portion for taxes
- Decide what portion you will set aside a portion for re-investment
- Build a cash reserve fund so if you have a few bad months, you can survive.
Reduce Risk and Judge Potential Success
When you put everything down on paper, from how you’ll set up your bookkeeping to how you’ll process each customer’s order, it’s a lot simpler to figure out if success is possible.
It also gives you a chance to think about the things that can blindside you and how you’re going to handle them.
You’ll reduce risk by setting up everything in advance of starting.
Then, when you can see how the process works, from attracting a client to converting them to a sale and serving them, you can fix any problems before they start, ensuring your success.
You also get a chance to look at your personal goals and align them with your business goals. Hopefully they will be in harmony, but if they aren’t, it’s a lot easier to walk away from the business before you have clients and responsibilities.
Check out my FREE Business survival guide for different ideas on how to get through some tough times.
To Develop an Operation Roadmap
When you create your full business plan, you will also create a how-to-do everything you need to run your business step by step.
For example, suppose you start a reselling business on Amazon.com. You have many things that you need to figure out like:
- your process for purchasing
- a purchase price point
- a markup formula
- cleaning, packing, photographing, and posting procedures.
In other words, everything needs a step-by-step plan written out.
Crisis, What Crisis?
You might not want to think about it, but sometimes a business will go sideways.
Having a business plan can be a life saver if you spent some time doing some basic things.
If you write your business plan right, you’ll know things like your break-even point, the minimal resources you need to make it work.
This information will simplify and take the emotion out as you figure out what to do if business slows due to outside reasons like supply chain disruptions or political turmoil.
The crisis doesn’t have to be external. A family crisis or you have a health challenge can throw your business into a tail spin. If you have the basic operation numbers, you can make decisions based on facts, not gut feel.
Can you start to see that a business plan could be invaluable as you grow your business because, in a way, everything is taken into consideration while developing the business plan?
To Develop and Document Your Marketing Plan
Having the best mousetrap in the world won't matter if no one knows about it.
On the other hand, the last thing you want is to have your business be the best-kept secret ever.
You have to get out there and blow your horn.
The marketing plan is an essential part of your business plan that will help ensure your success.
To Forecast Business Needs
As you develop your business plan, you should end up with a list of resources, staff, money, equipment, software, and so forth that you need to be successful.
You’ll know exactly what you want and need and how much it’s going to cost you.
Even if you note things that you cannot afford right now, you can set up a plan to get around it until you can afford it.
The big thing is to reduce the number of surprises that you get hit with.
To Highlight New Opportunities
As you create your business plan and go through each of the steps and areas of the business plan, brainstorming gives you ideas for more products and services aligned with what you’re planning to offer.
These new opportunities can help you grow your business bigger and better than you may have thought to start with.
This is where many new entrepreneur's businesses fail because you are focused on all these opportunities without getting your original product or service up and stable.
It’s vital that you identify them for long-term growth but stick to what you can do when you start.
To Set Up Your Daily Tasks
The business plan is so robust that you can use it to set up each day full of tasks that build results.
These milestones become mini goals and targets so you can focus on the results.
You should come up with due dates, timelines, and more with your business plan so that you can insert the tasks into your calendar.
Write the next goal and the deadline on a whiteboard that you see everyday so you are reminded of the commitment you have made.
If you have a team, put it in a place where everyone can see it.
One example I saw was a whiteboard in a common area with a number and a date. When I asked about it, I was told it was the percentage of the sales target for the month and because it was in an area where clients would be the team decided not to refer to it as sales for the month.
Conclusion
Many small business owners think they don’t need a business plan because they will not be borrowing money from a bank.
But I hope you can see that it’s more than the ability to get a loan.
The business plan helps you set up your business in an organized way to work step by step on building your business, giving you the best possible chance of success.
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