Creating your business plan doesn’t come until Step 6 in Wicked Start’s 10-Step Roadmap for starting your new business. There’s a good reason for that. We believe there are five key steps to take before you spend the time to create your plan, and these critical steps will help you to ultimately be in a better position to develop a successful plan. That’s especially important if you’re going to use that plan to ask for money from outside sources.
Here’s an example of why the first five steps are so important. A Wicked Start user I’ll call Joe has been in a professional services career and now wants to open a retail establishment. He’s seen a store similar to his concept before, and thinks he can do a better job than the existing one. He made a plan and wants to go out to raise about $200,000 in capital, but he’s been having trouble.
When he expressed his frustration with the situation to me, I said, “Well, you’ve got a great professional background, and you’ve got a strong plan, but no one wants to give you money because you have no experience running this type of retail business, and neither do any of your advisors.”
The first step in Wicked Start’s Roadmap is about building a case for your idea. Joe has seen a similar store, but maybe he didn’t take the time to spell out the viability of this offering. The second step is about learning the industry, finding mentors, and actually getting experience.
After our conversation, Joe joined a similar business in another part of his town as a junior-level employee. This will help Joe see the operation from the inside, and will also show investors he’s so serious about his startup idea that he is willing to be the low person on the totem pole to learn the business. He’s also looking for mentors in this industry who can advise him in his new business.
The next thing I suggested to Joe was to develop a detailed design comps, wireframes, or pictures of stores he wants to use as models for his store to show to potential customers. He can use these to get at least one focus group together to make sure these images and the offerings of his retail establishment resonate with his target customers. This is consistent with Wicked Start’s third step, which is developing a prototype of what you’ll be selling.
It’s after this hard work is done that Joe can think about establishing the structure of his business; finding the appropriate name, logo and website; setting up a bank account; and completing some of the other financial and legal nitty gritty that is required for new businesses to operate.
Once all this is done, it’s time to start writing the business plan. The plan will be stronger with this background, experience and focus group feedback. Including mentors or advisors with retail background will help him sell this concept as well. And thinking through some of the details of setting up your new business shows real commitment.
When Joe goes for funding, he’ll have a much stronger case with the addition of his experience and customer input, and with industry connections he’ll find more potential investors. In addition to asking friends and family to invest, potential investors who would make “ideal” clients for his business would the best way to go for Joe.