|How to Write a Business Plan|
|Written by Brenda Keener|
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A business without a plan is like a ship without a rudder – ultimately it will run around aimlessly without clear direction. Writing a business plan for your startup or new business will also help focus your thoughts, and those of your team, towards the goals that your new enterprise needs to achieve.
The first step towards writing your plan, whether it be for an existing enterprise or a new startup, is to do your homework. What you need to identify first is the one critical thing that makes your product or service stand out from all the rest. This is called your key competitive advantage
You will need to identify the need that you fill, and see how people have been filling it before your product was available. This is an easier task if your product hasn’t yet hit the market, but is still challenging as you will have to prove its potential worth to your prospective investors.
Verify your assumptions by doing a comprehensive competitive analysis in Excel format that lists every possible solution, its pluses and minuses, and its cost. You will need to do a lot of research to complete this step, but don’t rush it as it is creating vital information that will determine the direction of your company.
Next, you will have to size your market. The total number of people already filling the identified need in one way or another is called the “Market TAM” or “Total Available Market”. This is usually identified both in units, and in dollars (or in other relevant currency). The segment of this that your product can address is called the
Market SAM& or Served Available Market&. This is usually determined by first segmenting your market – slicing it up into smaller areas that have one thing in common, and determining where you play.
Segmenting your market and choosing key segments to target is extremely important, as no one can be all things to all people. This is an often overlooked part of business plan development, and marketing in general. Markets can be segmented by demographics, geography, features needed, and specific application or any combination thereof.