“Ideas are easy. Execution is everything.” This is Silicon Valley venture capitalist John Doerr’s advice to aspiring entrepreneurs and business school students. But between an idea and its execution is planning. That’s why it’s essential to have an effective business plan. How do you do that? With clear answers to business plan questions.
Here we’ve put together an all-in-one roadmap to those planning questions.
Why Having a Business Plan Is Critical
Before we jump into questions a solid business plan should answer, let’s explain why you need business plans anyway.
- Your business plan is your company’s foundation and backbone. It’s your business model and should inform every aspect of your company’s operations.
- It’s your vision statement. Your business plan lays out your short and long-term objectives and guides you from one milestone to the next. It keeps you focused on what’s relevant, especially when establishing your presence in your industry.
- It proves you mean serious business, pun intended. This is important not only if you’re looking for investors or funding but also when hiring the right people. A good business plan gives you credibility and inspires confidence in your ability to implement business success.
- It helps you understand the competition. Crafting your business plan involves studying and understanding other players in the marketplace. This will put you in a better position within the competitive landscape.
- Whether you own small businesses or large corporations, business planning questions and business plans identify your target market. It points your market analysis in the right direction to cater to your target customer.
- It clarifies your financial needs. It lays out the complex numbers. How much capital do you need? How much does everything cost? When can you expect a return on your investment?
- It determines your brand’s position in the market. A successful plan shows what niche your company can occupy and how.
What Are the Four Basic Business Questions?
What are the four basic business questions your business plan should answer? They are:
- What do you do?
- What gap in the market do you fill?
- How will you make a profit?
- Who is your target customer?
Keep scrolling and see how we dive deeper into each of these inquiries. If you can answer these four, your growing company has the competitive advantage to attract potential customers.
1. Business Plan Questions: What Do You Do?
“What does your business do?”
This is a simple enough question, right? Anyone who wants to start a company has a product or service they want to sell.
But if you want to own a successful business, you need to go further than that. It’s not enough to just know what you want to provide; you need details.
For example, say you want to own a restaurant. What kind of restaurant? What food do you serve, what is your service style, and why?
The “why” behind what your business does is crucial. It has to motivate you when presenting to financing partners. It has to keep you going when you’re struggling to attract clients. It has to push you to have a competitive advantage over your neighbors.
Do you need some help getting the juices flowing? Grab a pen and paper and start writing all details about your business and what it does.
2. What Gap in the Market Are You Filling?
What is your niche? How does your brand-new company differ from your competitors? In short, what gap in the market do you fill?
However great your idea is, someone else probably thought of it too. In this fast-paced world, it takes time to develop a new way of delivering a unique product or service.
Successful business plans and models create new ways to solve old problems. You need to find which part of the market other folks overlook and figure out how to fill it. Do that, and you’ll increase your chances of getting more money and funding.
No matter your industry, you’ll face competition that’s been in the game longer than you. They’ll already have a loyal following. You need to offer something different, so customers take notice.
So how do you find your niche? Do tons of research — this time, on the competition. See what others do and identify how to set yourself apart from the crowd.
This could be by presenting your product/service differently or adding something small but special. Or mastering new technology and online marketing tools. Whatever you choose, create a distinct identity for your business and emphasize it from the get-go.
In your plan, describe what makes you different and how you will assert this advantage.
3. Business Plan Questions: How Will You Earn Money?
Money, finance, costs. These (sometimes scary) words are a big part of any effective business plan. That’s why one of the most crucial business plan questions you must answer is: how will you earn money?
And your answer needs to go further than “By selling this product/service, of course.” How your business makes money involves multiple approaches.
How are you going to sell your products/services? Where are you going to sell them? How much do your products and services cost? What unexpected expenses might you have to pay for? Do you need additional funding to cover these costs? How will you pay your workers?
Your business plan should answer all of these questions.
That way, you’ll know if your business is sustainable in terms of your financial projections. Plus, you’ll see how and where you can adjust to achieve your goals in a realistic period. Next, you’ll better understand the necessary financial risks to get your business off the ground.
Lastly, you’ll understand what funding you need to secure and what research you need to do to get there. That way, working out the maximum profitability of your venue or business won’t be such a mystery.
4. Who Is Your Target Customer?
Last on our list of the four essential business planning questions: who is your target customer?
We can talk about sales, financial projections, bright ideas, and marketing all day. But there’s only a point if you know who you’re selling to.
Apart from understanding your goal client’s purchasing decisions, you need to know as much as possible about their demographic. You need to identify their age, gender status, geographic location, education, employment status, marital status, etc.
First, identify your initial demographic. Start-up businesses and businesses that have been in the game for years have different audiences. In general, you want to begin with a specific demographic.
Get as detailed as you can. This way, you set your company up for success with folks who are the most interested in what you’re selling. As time passes, you can expand that radius to reach more people.
The best way to conduct this market analysis is through (you guessed it) research. For example, look at your competitors and see who shops at their establishment or buys their services.
Additional Questions To Ask When Starting a Business Plan
With those four business planning questions, you’ve got the start of a solid business plan. Of course, you can’t just leave it at that. Successful businesses know they must go above and beyond the bare minimum.
With that in mind, we’ve come up with more critical things to focus on if you want to succeed. Here are our top additional questions to ask when starting a business plan.
Business Planning Questions: What Is Your Marketing Strategy?
However tremendous or unique your business model, if you don’t know how to market it effectively, it will fail. Even if you add your business to Google Maps, you won’t rank high on local searches without solid marketing.
That’s why we recommend creating a firm marketing strategy outline addressing your goals and challenges. Base your strategy on your product or service, your niche, your budget, and what your competitors do.
Why do we emphasize competitor research so much? Because it shows you what works and what doesn’t.
Of course, you want to avoid copying whatever they do. (Honest business practices are the best practices.) But you should use them as inspiration for your objectives.
What Do You Need To Turn Your Dreams Into Action?
How do you turn your dreams into reality? In short, how do you go from brainstorming to doing? Say you’re a restaurateur. It’s one thing to figure out how to open a restaurant versus how to win a Michelin star.
Answering this fundamental question for a business plan should give your potential investors a clear picture of the bottom line. That way, they can decide if your business is feasible.
You need initial capital and resources to start. You should identify your starting line and understand that it varies from industry to industry. (For example, the profit that successful bars make is different than what a hotel makes.) Then, provide the details of what you need to spend from this starting line when you craft your business plan.
How much revolving capital will you need for the initial run of your business? Do you need to hire people or purchase/rent equipment? What’s the price of the equipment?
How many costs can you cover out of pocket, and which require additional support? How long will it take before you can circulate your initial capital?
Include all these questions and answers in your business outline, and you’ll succeed.
What Are Your Short and Long-term Goals?
Last but not least, for our business plan questions, let’s talk about your goals. No matter your services or products, you need a timeline for short and long-term goals.
Short-term goals are ideally achieved within a startup’s first two years.
Long-term goals go beyond the first two years after your business is finally experiencing its initial ROI. (Return on Investment.) Make you have realistic goals and timelines. Here are critical business goals you may want to manage:
- Reduce business overhead
- Increase productivity
- Reach a specific number of followers on social media through organic growth.
- Reach a specific number of social media followers through paid advertising
- Develop a new product or services
- Launch your new product
- Open another store
Business Plan Questions Checklist Help You Turn Your Idea Into Reality
We hope this business plan questions checklist and article help you manage your company successfully.
With this, you can craft an impressive plan for potential investors and guide your business from point to point. Remember: your first business plan will evolve as you adapt to new opportunities, challenges, and trends.
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