My name is Kevin Foreman. I’m the President of Bsbcon, a business consulting firm that specializes in business plan writing. Today I should be convincing you to move forward with your business plan and to retain our services, but instead I’m going to say the opposite.
In this article I’ll explain what you should do before you move ahead with your business plan. I’m writing this article due to a video I recently viewed named, “Startups should NOT write a business plan” by www.slidebean.com
This video honestly made some great points, but in the end I can’t agree with their advice. Instead, I would call this video, “Startups require a business plan, and should do this first”. Without any further ado here are the steps to take before you have a professionally written business plan.
Perform Market Research
The first thing you need to do before you write your business plan is perform market research. Lots of entrepreneurs avoid performing market research because it can take time, money or humility. Imagine being confident enough to sink your life savings into a business concept only to find out there isn’t a market for it!
Most entrepreneurs are too eager to even consider their business concept being anything short of spectacular. Instead, take a breath and use this guide to perform market research on your startup before you write your business plan.
1. Define “the problem”
Many entrepreneurs have challenges in defining their market problem. A market problem is your target market’s stated or silent problems. This can be inefficiencies, inconvenient workflows or non-optimal solutions. The key to finding a market problem is to carefully listen for frustrations, or “if only” statements, that arise during discussions with your target audience.
Ensure your market problem is really worth solving. For instance, if one out of twenty interviewees brings it up you will need to conduct a second round of market research. This time focus your questions around the identified problem, but without asking it directly. Your interviewees should willingly bring up the problem. Once you’re confident, you’ll define precisely what the market problem is.
2. Define “the solution”
Step 1 has worked out; you proved there’s a legitimate market problem to be fixed. Now define exactly what your solution is, and ensure its prototype (if it’s a product), or process (if it’s a service) is ready to be tested.
3. Collect secondary market research studies
Explore what published information is available in respect to four areas: your target audience, the market problem, the most similar solutions, and advanced technology as a solution.
Target Audience: This data will help later on in formulating a conclusion.
Market Problem: Are there credible studies that confirm the market problem is legitimately perceived as a problem? In the instance you can’t find publications cementing it as a problem, do not worry. You may have early mover advantage, or your market problem is not troublesome enough to monetize, which of course spells failure.
Similar Solutions: Search the web to see if your solution is already being used. If it is you will need to differentiate your product or service accordingly. Find out if anyone has ever developed a prototype or service similar to yours, and if it was deemed unsuccessful make sure to understand why.
Advanced Technology: What if the timing is perfect for your solution, and six months down the line advanced technology swoops in and changes the entire industry? You must exhaust your efforts in understanding how technology may revolutionize the market problem your business concept is founded upon.
4. Conduct primary market research
Conduct your very own market research on your target audience. Be as impartial as you can while conducting this study. Fortunately, there are a variety of ways to go about this including direct mail, telephone, online, focus groups, or observation surveys.
5. Process the data
Processing of data represents the application of logic to the understanding of data collected about the subject. In its simplest form analysis may involve determination of consistent patterns and summarising its effect on the market problem.
6. Formulate a conclusion
The final stage of the market research process is to interpret the information, and draw a conclusion on it’s effectiveness, and overall how it was received. In the end the study’s concrete findings are what matters most.
Your Next Steps
Now, if your conclusion is unsupportive of your original thesis then wonderful! Do you know how much money, time and energy you just saved yourself? Now be patient, and a new opportunity may arise that is meant to be.
If the conclusion of your market research supports your original thesis then we are so excited for you. You are on a roll, and should be proud that you’ve laid a solid foundation for your startup! You have two options from here:
- You can go straight into developing a standard or comprehensive business plan
- You can develop a lean business plan to continue evolving your concept
Both are great options, but for the purpose of this article we’re suggesting option b.
Develop Your Concept With a Lean Plan
The more I write the more I consider this article to be a “how to guide for impressing a business plan writer”. Here is why: most startups neglect market research for reasons we have previously stated. Now, the next best step is to refine that business concept you have just proven.
In only a matter of weeks, or months your business concept can be so refined that investors will be jumping out of their figurative chairs when they see your completed business plan!
Lean planning works like this: plan-do-check-adjust (PDCA). Complete this process as many times as it takes to have a refined version of your product or service. This may take anywhere from a few weeks to a few months, or even longer.
To Conclude Do This Before You Write Your Business Plan
I hope this article gave you some insight on the importance of market research and lean planning prior to having a professionally written business plan. It is easy to get caught up in emotion when you are starting a company, but just remember these steps.
Take a few weeks to prove the market viability of your startup, and refine your prototype or service then let’s develop a business that will get you funded.
