In these first steps of the process of writing our Business Plan, we should already have a ring binder with several printed pages.
We will also have a great cover with the name and logo of our future (or current) company and, with a bit of luck, some sheets added with ideas, doubts, notes, etc., in the different sections of the Business Plan.
Materials aside, the time has come to begin to delve into our Business Plan.
The first section that we will address is the Analysis of the Business Idea.
We know, or intuit, that writing this plan is going to be a long and hard job, so maybe it’s worth thinking a little deeper about what a brilliant idea we’ve had. We will soon see that there is an arduous path to go from idea to reality that, let’s be practical, may not be worth going through.
This is the purpose of this analysis: to try to decide if it is worth undertaking the in-depth study of our business idea. We will also see right away that the worst of all is that the answer obtained from this analysis is not a resounding YES or NO about the success or goodness of our project.
More exactly, we are likely to come to the conclusion that our idea was not as great as it seemed at first. In that case, maybe we’ll decide to let it go. This is how many ideas for new projects die: in the first moderately rigorous analysis.
However, there is the possibility that, with a good entrepreneurial spirit, we take a bath of humility and realize the enormous work that lies ahead to turn that idea that we have had into a real business.
Again, here we find utility in the “process” of writing the business plan. We still haven’t written a serious line and we can already distinguish the true entrepreneur who “decided” to make a business out of his idea from other people who believed that success and wealth were only one step away from their brilliant idea but, in Instead, they have “given up” at the first difficulty.
What Are We Going To Do Now?
What does this analysis of the business idea consist of? Well, let’s read: business idea analysis. We must now focus on these three points: on the idea, on the business, and above all on a first analysis.
This point is important because in business plans that are actually “sales brochures for unsuspecting investors” a fantastic description of the wonders of the project is usually made here. That’s ok.
But we are interested in something else: to convince (ourselves) that we are not fooling ourselves with our idea and that there really is a possible business in our idea. And paradoxically, the more “hits” we put in our project, the better.
Let’s face it: coming up with ideas isn’t that hard. So what makes us assume that having had an idea means we have a good business idea? An idea is not the same as a business idea. This difference is often forgotten.
And, lately, this confusion has been quite common in the Internet world. You wake up one day with an idea for a “website” and get excited about it. Perfect. You may even become “successful.” But from there to making a business out of it….
Our first objective will be to try to discern if we have an idea or a business idea. Having an idea is not bad. You can make a great hobby out of that idea, a profitable hobby, and it may even turn into a good business over time. But if we start with a real idea, more than better.
On the contrary, ideas should not be dismissed because we do not see how to turn them into businesses. That is the work that we will do in the Business Plan: plan a company or business from an idea.
The founders of Yahoo! started with a simple idea: to share their Internet address book and now they have a good business. The founder of Amazon.com started with a business idea and now, instead, he doesn’t quite know what he has.
At this moment, the important thing is to be able to describe what idea we have had and to be aware if there is a real business behind that idea or not.
Ok, now we have the idea. Now we are going to do business with her. If we have come to the conclusion that we have a business idea, now is the time to describe how that business is going to be generated.
If we have come to the conclusion that we have an idea but we don’t know how to make a business out of it, well, we still have time. We’ll have to spend more time thinking about it, after all, we haven’t spent any money on the project yet, and thinking isn’t so bad.
How to know if there is business? The idea is too simple: there will be a business if someone is willing to pay money to buy, use, rent, contract, etc. our product or service; and the more money you pay the better.
But, be careful, the detail is in the expression paying money, not in “using” or “consuming” our product or service. Too much have we been insisted by the gurus of the New Economy about offering free products and services to obtain “future” clients that we have come to forget this small detail.
A business is based on obtaining benefits, not on having many clients, income, users, transactions, billing, visitors, page views, etc. It is about income being greater than expenses, the sooner the better, and the higher the better.
Now let’s combine these two elements: the idea and the business. And let’s get to work: let’s analyze, think, reflect, imagine, etc. Why is that idea going to be a business, or better yet, why is it going to make a profit?
At this time we will not be able to be very rigorous either and we will have to move in the strange terrain of justifying our assumptions as rationally as possible but without going into excessive detail.
For that, we will then have the Marketing, Financial Plans, etc. But if at this level we cannot convince ourselves that our idea will be a business, it is better not to start working on continuing to develop the Business Plan. Nor is it a matter of giving up yet, but we will have to keep thinking about this issue.
Within this analysis we must also examine the reverse situation to our wishes and ask ourselves: Why is this idea NOT going to be a business, that is, what can make it fail?
In this way we will have a more complete analysis of our business idea, we will demonstrate greater professionalism in front of third parties, but above all, we will be better prepared for possible surprises (and if there is something certain in a business project, it is that there will be surprises, usually unpleasant ones).
Modifying Our Business Plan
Let us now take the Business Idea Analysis model copied from the Business Plan Writing Guide to see if it helps us to advance in our case. We see that the objective we pursue is: “to present a global image of the project, its main objectives and the success factors”.
Let’s erase the text of the Guide and write in our own words the ideas, phrases, and notes that come to mind. Then we’ll make it pretty.
For this, we will try to put in writing first a description of the business idea. In the Guide model, there are some points to be dealt with in this section, but they are not all that can be dealt with, nor are they mandatory or necessary for all projects.
It is convenient to use the criteria of each entrepreneur (after all, it is what we are going to do the rest of our days; use and trust our criteria).