Any business has several stakeholders that each needs to see a return on their participation in the business project. Clients will not be clients unless you give them something that make their lives easier, cheaper, more exciting etc, investors will not give you money to create a product or service to make the lives of clients better unless you manage to show them a decent return on the investment, you will not get business partners unless you can convince them it is worth the effort for them to join, employees will not want to work for you if they risk not being paid or given the opportunity to develop as persons and suppliers will never deliver goods and services to you if they suspect you will not be able to pay them.
The entrepreneur is the one who is supposed to bridge these key parts of the business and the diverging interests of the stakeholders into a machine that works, and works so well that all stakeholders become happy and want more at the same time as they are willing to give more. The five essential parts of the business plan addressed below have to be answered in detail or you will not impress any of the stakeholders.
What is the challenge facing the customer? What situations in their lives can be improved? How can their lives become better? How can you help the customer to buy things cheaper? How can you help the customer to increase their status in society? How can you make them happier? How can you deliver items, services and feelings to them faster?
These questions are at the core of a successful business idea and you need to answer them truthfully and in detail in your business plan and not get stuck with any idea that you might have that doesn’t add value when confronted with these questions. Describing the value added is the first thing that should be done in any business plan and it should be done in detail.
Only when you have addressed the customer challenge you can continue by estimating how many customers might be interested in your solution, where they are and how many customers are added to that market per time unit. The challenge, number of customers, their location and growth of their numbers are what any investor will look for first when they review a business plan.
What is your solution to the challenge perceived by the potential customer? Which product or service can you develop and launch on the market to solve the customers’ challenge and make his or her daily life more comfortable, cheaper, and more exciting? This solution needs to be described in detail so that the stakeholders can see a clear and realistic connection between the customer challenge you described and your proposed solution to that challenge.
How much time and money will it cost you to develop your solution to the challenge faced by customers? Do you need investors to shorten the time to develop the solution, to market the solution or to build production capacity? Is your solution possible to scale when put into production or will each product or service unit cost the same to produce? If stakeholders don’t see how your solution can be implemented at a realistic cost and see an advantage with growing your company they will not be impressed as they will suspect that your business will get stuck at an infant level.
Craved by the entrepreneur, demanded by the investor, needed for continued product and service development to retain the customers the return on investment is essential for all stakeholders to believe in and use your product or service. All parties will of course avoid investing, buying, deliver and working if they don’t see more coming out of the deal than they put into it and if they don’t they will pursue other opportunities that has lower risks for them.
The earlier you can prove your concept and deliver a clear proof of good for your stakeholders the greater are your chances to tie the stakeholders to your product or service, which is what is needed to become successful with any business.
The stakeholders invest in you as much as in your business idea. Are you really up for it? Do you have the characteristics of a successful entrepreneur who will be able to connect the dots in the business plan and make them work jointly as a company? Describe why you are the one and what in your experience and knowledge makes you the one – the stakeholders will demand it to do business with you.
Why use the term stakeholders and not focus on investors and customers only? This is because just as there are several aspects of a good business idea and a business plan the stakeholders are also several and their needs will all have to be met for you to succeed. The stakeholders include business partners, customers, employees, investors, suppliers, strategic partners and even your family and they have an impact on the success of your company. Try to imagine who they are when you write your business plan and include their needs and demands in the plan - that will make the business plan stronger and more complete.
Finally it is important to remember that writing a business plan is not what makes a business work but the process of writing the plan is usually the more useful activity for you to develop and structure your ideas and how to implement them. As five star General and U.S. President Eisenhower said: “Plans are worthless, planning is everything”.
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