You want to open a second branch for your business and you’ve worked out it will cost about 400 million toman. You download a business plan template, find it runs to forty pages full of sections like industry analysis and five-year financial forecasts, and give up on it.
That template was written for a bank or an investor. To make your own decision, you only need one page.
Who are you writing the business plan for?
If you’re going to use the plan to get a loan or bring in a partner or investor, it has to be formal and complete, because someone else is going to put money in based on it. But if you’re the only one deciding, a single page that answers a few specific questions is enough.
Which questions should that one page answer?
- What exactly are you selling, and who are you selling it to?
- Why would this customer buy from you rather than from a competitor who’s already there?
- Where will the customer find you, and where will your first sale come from?
- How much do you spend each month, and from when will your income be bigger than your costs?
- Where will the money come from until that day?
Mark every answer as a fact or an assumption
Next to each answer, write whether you know it or are only guessing. That your first branch gets 300 customers a month is a fact. That the second branch will get the same is an assumption.
Any assumption that would cost you money if it turned out wrong, test it with a cheap experiment before you spend anything. Before renting the shop, for example, ask your current customers how many of them live near the new area, or set up a temporary stall there for two weeks and see how many people buy from you.
Start with the riskiest assumption
Not every assumption matters equally. Test first the one that would lose you the most money if it’s wrong. For a second branch that’s usually the number of customers, because you have to pay the rent and salaries whether customers come or not.
Take the money section seriously too. Most plans write revenue optimistically and put costs lower than they really are. Work out once how many months you could last with the money you have if the new branch brought in 30 percent less than you forecast.
Don’t leave the plan in a drawer
Once you’ve decided, compare this page with reality every month and see which assumptions held up and which turned out wrong. If you’d like to see your whole business on one page as well, the business model canvas is made for exactly that.
And if you’re not sure which assumption in your business is the riskiest, in a free diagnostic session we will find it together.