Starting a startup: Developing a plan

In Starting a startup: Processing Ideas, I explained how a simple exercise can help determine the merit of your ideas; the common sense litmus test is designed to catch major flaws and justify spending more time exploring the possibility of starting your startup.

Now, it's time to get serious. The next stage revolves around developing your idea into a business plan. At first, it can seem like a daunting task, but it's absolutely vital for your startup's success. By completing the business plan early on, you can be sure that you see the big picture, and it will be easier for you to draw the attention of prospective partners, employees and investors to your startup.

Don't worry about formatting yet; compiling all of the information you need first will make formatting as easy as copy and pasting into the appropriate sections. I ordered the steps in the way that made the most sense during research rather than how your final project will be formatted, so keep that in mind.

Step 1: Mission Statement

Your mission statement should explain your business, its goals and its "essence" in one sentence. Take the time to envision the ideal customer experience. An example mission statement for NNE would be:

"No-Noise Entrepreneur seeks to educate entrepreneurs and those who wish to become entrepreneurs in a way that encourages their success and is free of any hidden agenda."

The example follows the suggestion exactly; I name the business, state its goal, explain the target audience and illustrate the company's values. It's a fairly straightforward process.


Step 2: Business Description

Write a description of your business -- explain to the reader how your company will operate. You will want to include your product development/manufacturing, sales strategy, marketing strategy and business management tactics. Don't go into too much detail at this point; a few paragraphs should be sufficient. Your goal is to give a basic overview of the entire business.


Step 3: Organization and Management

This section is meant to explain your hierarchal structure and how your business will be managed. Just because you don't have any employees yet or plan on being the only worker does not mean that you can skip this section -- it's still just as important.

Create a hierarchal chart and include it at the end of this section. Draw every employee that you plan on having and explain their job duties in the text above. If you're going to have several employees, a departmental level explanation and presence on the flow chart is sufficient.

You'll also need to include any founders, their professional experience and explain why they are qualified for their positions; this is important because it will help you and others understand what each of the main partners bring to the table for your startup.

If you have any intellectual property, such as copyrights, patents or trademarks, list them here. You'll also want to explain whether you're pursuing or plan on pursuing any of these in the future.

Lastly, you'll want to give a basic overview of how your day-to-day operations will be managed; discuss how your business will handle customers, sales, accounting, licensing and anything else that you will be doing to keep your business in tip-top shape.

Step 4: Product Development/Manufacturing

Utilize this section to explain your product -- this should be the technical side of things rather than the pricing structure, etc., which will come later. You should describe your product, its development process, future research and design plans and the benefits it offers to customers. The last thing you'll want to explain is how it matches up to the competition and why your product will better serve customers.

Coming soon...

We've got four steps left for our business plan; marketing analysis, marketing and sales strategies, financial forecast and the ever important funding request. These are the most important sections of your business plan. I want to take my time and write up a guide that gives you a clear picture of exactly how to do it right. After that, we'll be going over a sample business plan and learning how to format yours.

Don't forget to leave a comment if these guides have helped you in any way!

Starting a startup: Processing ideas

As entrepreneurs, we're driven by our urges to dream up new and innovative ideas. For people like us, problems and obstacles are just other ways of saying opportunities; whether you realize it or not, problems and obstacles are our business.

If you're hoping to develop a startup, you should be vigilant in keeping a log of every problem you encounter each day; the root function of every single business, product and service is to be the solution to its specific problem.

Basing your entire project around a problem rather than a product is almost always beneficial; it challenges you to make your product or service better during the developing stages rather than simply rushing through it to get an end product. It also provides insurance against design problems; if something happens that prevents you from being able to go forward with a particular design, you'll already have other proposals ready to rotate into place. On the other hand, if you're trying to build a product and you're unable to build the product...well, you get the point.

So, let's say you've done your brainstorming and found a unique solution to your problem, good job! Now, we've got one more thing you do before you can officially say you're working on a new project. We need to run a litmus test to ensure your newfound solution doesn't have any major issues that would hinder your progress down the road.

In our test, your metaphorical litmus paper is going to be your common sense. I'm going to ask you several questions pertaining to your new project, and you need to write down your answers so that you can evaluate your project at the end. You definitely want to take this exercise seriously, but don't stress yourself out or start overanalyzing every little detail -- not yet anyways. All we want to do is put together a basic overview of your project and then ask ourselves "does moving forward with this project make sense?" before you start dumping hundreds of hours into it.

In essence, what you're doing here is a very informal SWOT analysis. If your idea passed the test, you'll be doing a much more detailed one to show investors and partnerships in the future, so do yourself a favor and keep up with this exercise!

The common sense litmus test:

How many people experience this problem? 

Ask yourself how many people you know personally that have encountered this problem. Take an educated guess on how common you think the problem is when considering a much wider audience, such as the entire nation. Write down what demographic you feel is most likely to encounter the problem. If you can answer each of these questions, you've got a rough estimate of your target audience; refer back to those numbers when answering the next several questions.

How often do those people experience this problem?

It's important to know whether your customers will be coming back or not; if not, how quickly will demand for your product falter? If the problem is recurring, how often will customers need to buy your product? These questions are extremely important because they will set the tone for your entire marketing and branding campaign.

How many products already offer a solution to this problem?

Your competition is not limited to products that solve the problem at hand the same way as your product, so make sure that you include every product currently on the market that is designed to solve the same problem as your campaign is working on. 

Is my product better than what's currently available?

Write down ways that your product could stand out from the competition; extra features, quality, durability, user interface and price point should be considered as well. Make a list of pros and cons for both your product and your competitor's to help figure out your strengths and weaknesses.

How many people will I need to hire?

Write down the number of employees you'll need to comfortable run your new business. Make a list of each employee's job title based on your needs. 

Is the product viable?

Here's where everything ties together; compile all of your estimates on one page for a comprehensive overview of your idea. If you wrote down the answer to each question as you went, you should know whether you'll be able to move forward to the research and validation process with your current idea.

For those of you who made it past the common sense litmus test with your idea, congratulations! In the next section, I'll cover how to validate your idea and conduct market research. 

In the next post: "Starting a startup: Developing a plan" (Step 1-4 of your business plan.)

Welcome to No-Noise Entrepreneurship!

Thanks for visiting! As a public relations professional, I was surprised to find that many entrepreneurial communities are filled with mostly noise; for me, the term noise encompasses articles/blogs that provide canned information, promote get-rich-quick schemes, are designed to sell a product or are otherwise disingenuous.

The reason noise is so prevalent among these communities is because it's highly profitable; many of the people interested in becoming an entrepreneur have no formal experience starting and managing businesses, so a guide promising "5 Easy Steps To Take Your Idea And Turn It Into A Powerful Business That Practically Prints You Money!!11!" is appealing. Not to mention that at the low price of $297 (a $10,583 value!), it seems like a small price to pay for your very own federal reserve. 

Scams like my example are a huge problem for would-be entrepreneurs because they're literally everywhere, and often, these products are accompanied by hundreds, if not thousands, of glowing reviews; the people who write them offer other 'affiliate marketers' a commission to sell their product. As a result, people who are unfamiliar with the industry are easily sucked in by the tide of people promoting it; without knowing about what's going on behind the scenes, it's easy to think "if this many marketers are saying it works, it must work!" 

Dealing with noise is an unfortunate inevitability when trying to learn about entrepreneurship and creating online businesses, but there are people out there that truly want to help! A good rule of thumb to follow is this: If they make any promises, almost exclusively describe their product with hyperbole or imply urgency, you should probably do some research elsewhere. There are always exceptions, but you should consider any of those tactics a red flag because entrepreneurial promises aren't real, business is a fact-based industry and someone who wants you to succeed will tell you to take your time before jumping into running a business. 

I started this blog to help people who have questions about entrepreneurship, marketing and managing a business get real answers instead of the incessant noise pushed around by those who are trying to turn a profit off of newcomers. Feel free to comment on my blog and suggest any articles that you would like to see in the future! 

Coming soon: Starting a startup; Processing your ideas