Every entrepreneur is told they need a business plan. It’s the roadmap that guides your strategy, secures funding, and focuses your efforts. But jumping straight into writing the formal document is a mistake. A great business plan is the final output of a deep, strategic thinking process.
Before you sit down to write, there are several crucial foundational steps you must take. Completing this preparatory work will not only make writing the plan easier but will also ensure that the plan itself is built on a solid, well-researched foundation.
Here are the six things you must do first.
1. Determine Your "Why": Define Your Purpose
A business plan traditionally focuses on the "what"—what you will do to make a profit. But a sustainable, inspiring business is built on something deeper: your "why." Why does your business exist beyond making money? Why should employees be excited to work for you?. Take the time to articulate your company's core purpose and values. This will become the "compass" that guides every decision you make.
2. Build Your Vision and Key Strategies
Success starts with a clear vision of what you want to achieve. Once you have that vision, break it down into three to five core strategies that will enable you to get there. It's far more effective to execute a few strategies exceptionally well than to try to do ten things poorly. Focus is power.
3. Clarify and Test Your Business Model
Your business plan will need financial projections, but you can't create them out of thin air. First, you need to build and test your business model by asking "what if" questions. For example: "If I sell this product at this price, and my customer acquisition cost is X, what will my return be?". Model out your potential pricing, sales, expenses, and growth. This financial model will form the heart of your business plan and prove that your idea is viable.
4. Lock Down Your Name and Legal Structure
These are critical foundational details. Before you put your company name all over your official plan, you must ensure you have the legal right to use it. Register your business name and decide on your legal structure (e.g., sole proprietorship, LLC, corporation). Your legal structure has significant implications for your operations, taxes, and liability, so it must be determined early on.
5. Identify and Understand Your Target Market
Who, exactly, are you serving? Many entrepreneurs are surprisingly vague on this point. You need to paint a detailed picture of your ideal customer. Then, ask the most important question: "Why am I uniquely placed to solve this specific customer's problem?". If you can't answer this clearly, you either have the wrong product offering or the wrong target market. This clarity is essential before you can devise any effective marketing or sales strategy.
6. Test Your Business Idea in the Real World
There is no substitute for real-world feedback. Before investing significant time in a formal business plan, you need to validate your idea. Go out and talk to potential customers, industry experts, and other entrepreneurs. Ask for their honest feedback. Will people actually buy what you are selling? How big is the market? Who are your competitors?. Conducting a simple SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can also help identify potential risks and advantages you may have overlooked.
By taking these six steps, you move from having a mere idea to having a well-considered, validated, and strategic foundation. Only then are you truly ready to write a business plan that is not just a document, but a genuine blueprint for success.
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