The One-Hour Business Plan

The Simple and Practical Way to Start Anything New

John McAdam

• Publisher: Wiley
• Year: 2013
• ISBN:
  9781118747155
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

A guide to writing a successful business plan—in just one hour

A strong business plan greatly increases a business chance of success, especially in an economic environment in which more than 50 percent of businesses fail within three years. Your business plan can serve as a foundation for your successful business. The One-Hour Business Plan, written by seasoned entrepreneur and business instructor John McAdam, helps you lay that foundation. With the help of this book, aspiring entrepreneurs can write a viable business plan in just one hour.

• Offers step-by-step guidance on the process of writing a business plan, with field-tested instructional techniques that are simple, strong, and easy to implement
• Written by John McAdam, a "been there, done that" hired CEO and serial entrepreneur with decades of real-world experience, who helps ordinary people become entrepreneurs and helps entrepreneurs become successful

The One-Hour Business Plan outlines a process and a framework for creating a business plan that sets you up for success. Give your business the best odds for success, in just one hour of your time.

Price is what you pay. Value is what you get.

—Warren Buffett, American investment entrepreneur and philanthropist

Module 1

What Are You Offering?

Create a Value Proposition That Makes a Stronger Business Model

Investopedia defines a value proposition as “a business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.” (See Figure 1.1.)

Figure 1.1 The One-Hour Business Plan™ Foundation—Five Essential Business Plan Cornerstones

The word consumer in the definition is inherently interchangeable with business to accommodate both business and consumer purchases. The second sentence in the definition defines the foundation and the reason consumers or businesses purchase specific goods and services—to add value or solve problems better than other available offerings. If the statement convinces the purchaser that value is added or a problem is solved, then the purchase benefits both buyer and seller and a transaction should naturally occur. Well done, Investopedia!

In summary, the value proposition defines what the organization does and its purpose for being—to add value and benefit the purchaser. Unfortunately, articulating a value proposition is a challenge for most of us. You might think that larger organizations articulate their value propositions better than smaller organizations. Not in my experience. As a test, if you want to embarrass the CEO of a large organization, take a tape recorder to random employees and managers in the organization and ask, “What does this organization do?” Play the recorded answers back for the CEO and watch the facial expressions unfold. Fun stuff if the CEO has a sense of humor; otherwise, not so much. In fairness to the CEO, it is challenging to consistently communicate a business value proposition that is easily understood and replicable to all levels of an organization. If the employees don't know, imagine how the customers of the organization feel at times.

Do you think it is harder or easier for the start-up entrepreneur to answer the question, “What does your organization do?” I find it fascinating that both CEO and entrepreneur tend to struggle similarly while answering this question. When the value proposition is unclear in a businessperson's mind, this person tends to over-explain it in feature-oriented details and in ways that make it difficult for the listener to understand the value being exchanged or to even pay attention. A lengthy or unclear value proposition reminds me of sports fans who listen to their spouse talk about shopping while the playoff game is on television in the background (I have heard). It is difficult to focus and lay the foundation for a natural business transaction without an effective value proposition.

The value proposition of the business model is the starting point for the business plan. It provides a basic framework to clarify the answer to the question, “What do you do?” Because you want the customer to buy what you are selling, imagine that you are the customer making the buying decision. What do you need to know to decide whether to buy the offering? To build the foundation for the value proposition, we answer some fundamental questions, and then add brevity and clarity to record the value proposition for the first phase of the One-Hour Business Plan foundation.

The Need

What is the need being filled? What void does your product or service fill that is not currently being satisfied adequately for customers?

Wherever a man turns, he can find someone who needs him.

—Albert Schweitzer, German, then French, theologian, philosopher, and medical missionary; Nobel Peace Prize 1952

An entrepreneur is born when an unmet need is identified, a solution is created, successful marketing processes are established, and customers pay for the solution (and the check clears). The customer valuing the solution substantiates the need, the value proposition, and the business model. Veteran entrepreneurs understand that paying customers mean everything to the new venture. They seek quicker and more cost-effective ways to get the value proposition in front of the customer target market for feedback, evaluation, and purchasing decisions.

The caveat for the entrepreneur is to avoid perceiving a need that the customer does not value. You must avoid the “a solution looking for a problem” syndrome. In other words, the entrepreneur believes there is an obvious need, while the customer does not care enough about the problem to value the offered solution. To avoid this syndrome, the existence of a need matching a valuable customer solution must be created, tested, and refined before significant time and resources are deployed to offer it to more target customers. Otherwise you will waste time, energy, and money.

In terms of business planning, establishing the need starts laying the foundation for creating the value proposition. The entrepreneur can answer some fundamental questions to document the need. What is not happening in the target market today that should be happening? What potential customers have you spoken with about these needs and your solution? What was the feedback? Where is the void in the solutions being offered by competitors and competitive substitutes? (More on competition later.) Ask yourself questions like these to achieve this first cornerstone and begin the foundation for the value proposition.

The need for solutions exists in a variety of forms. There might be better solutions available, not only in the benefits provided by the product or service itself, but also in how the solution is marketed, packaged, priced, serviced, geographically focused, and so on. For example, the world might not have needed a cola beverage, or even another cola beverage, but an improved cola beverage was created. How? Perhaps there was a need for a larger variety of beverage offerings in food service institutions. A consumer was thirsty while away from home and a water fountain was not available; a store or food service establishment was not open. How were these needs identified and established?

Mental Exercise: The Need

Think about how customers in your target industry interact. What events, behaviors, and conditions lead up to the need for your product or service? Ultimately, what need does your product or service fill? Verbalize the need out loud. Does it sound meaningful for potential customers? Restate the need, this time making it both clearer and more precise.

The Solution

Business must be the solution, not the problem.

—Dennis Weaver, American actor in the television series Gunsmoke

We American entrepreneurs have a tendency to spend a disproportionate amount of time working on the solution before we fully understand the problem or explain it clearly as a need. The need must be clearly and concisely identified before you start working on the solution; otherwise, you start to solve the wrong problem. Therefore, if you have not clarified the need in the marketplace by now, go back to the prior section and explain the customer need before continuing.

The solution should be the easy part of building the value proposition. The solution is something we create for others and find innovative ways to call the creation our own.

With the need of the customer in mind, our next step is to articulate the importance of the solution to the customer. Be forewarned and mindful that during the solution development process we all have a tendency to follow the path of least resistance.

The solution our target customers want might not be the one that we have the most fun creating, or be the easiest, or the most cost-effective for us to deliver. Our work experiences might unnecessarily limit our creative thinking toward a solution. For example, a software programmer experienced in developing software for mobile phone applications who has identified a need in computer games might not have software development experience in the gaming market to come up with a solution.

Here, the engineer might have a tendency to use the mobile programming solutions for mobile applications he already knows well, which might not be the best programming solutions for the gaming customer. New solutions might be needed in a different programming language for unique gaming hardware. Just be mindful of our human tendency to revert back to what we feel comfortable with and what we know and understand. Our eye should be on the prize—the customer. Better still, we must be looking through the customer's eyes. Stand directly behind your prospective customer and stay there. What do you see?

A quality entrepreneurial solution begins objectively, with the customer's needs in mind. Remember the need section? We are thinking about how our target customers interact and the problems they encounter, which creates opportunities for solutions. What is the solution for the need that solves a fundamental problem for your target customer? Sticking with the cola beverage example, various product needs were filled over time by packaging the beverage in various sizes of containers as well as for soda fountains. Vending machines were built and dedicated to delivering the beverage even when stores or food service institutions were closed. New solutions evolved.

Mental Exercise: The Solution

Think about your solution now and verbalize it out loud. Repeat it for brevity and clarity in a way that people outside the industry can understand.

Features versus Benefits

Features

Normal people…believe that if it ain't broke, don't fix it. Engineers believe that if it ain't broke, it doesn't have enough features yet.

—Scott Adams, American creator of the Dilbert comic strip

The features of the offering are important for the customer to understand. They are tangible descriptions of the product or service that can be seen and touched. The business owner and its employees are the most familiar with its features, because they work with those features each day when delivering and servicing the offering. The features describe the offering objectively. Some customers study features in an effort to compare one offering to another. Therefore, the distinguishing and original attributes of the features are the most important to describe as they enable an offering to stand out in a crowded marketplace.

Examples of features commonly seen in commercial advertising include:

• Larger screen size
• Open 24 hours
• 100 speed-dial settings
• Custom purchase programs
• Bulk packaging

These features are factual statements about the product or service offered. How does the customer respond to these features? Customers are more interested in what the offer does for them than they are in what the offering does. As consumers, we often ask ourselves, “What do I get from this?” To highlight what the offering does for the customer, the benefits need to be explained.

Benefits

He who lives only to benefit himself confers on the world a benefit wh...

Table of contents

• Cover
• Title Page
• Copyright
• Setting the Tone
• Introduction
• Module 1: What Are You Offering?: Create a Value Proposition That Makes a Stronger Business Model
• Module 2: Who Are You Offering To? The Customer Target Market: The Only Sustainable Source of Business Funding for the Long Term
• Module 3: Who Are Your Competitors? Competitive Positioning: Viewing Your Offering Through Your Customers' Eyes
• Module 4: What's Next? Next Steps: What Milestones and Action Plans Do for Your Business
• Module 5: How Much Money Will You Make? The New Offering to Cash Mini-Budget: A Simple Way to Predict How Much Money You Will Likely Make
• Conclusion: Pulling It All Together: Using Your One-Hour Business Plan to Earn Customers Today
• Final Thoughts
• Acknowledgments
• Index