Tweet

The Four Cornerstones of Every Business Plan

Guest post by: Akira Hirai

Article Overview: The thought of preparing a business plan for the first time can be very intimidating. There are many "moving parts," and it’s easy to get lost in the details. The task becomes much easier if you think of your plan in terms of four essential cornerstones that serve as the foundation of all business plans: Opportunity, Solution, Execution, and Outcomes.

The Four Cornerstones of Every Business Plan

The thought of preparing a business plan for the first time can be very intimidating.

There are many "moving parts," and it’s easy to get lost in the details. The task becomes much easier if you think of your plan in terms of four essential cornerstones that serve as the foundation of all business plans: Opportunity, Solution, Execution, and Outcomes.

Pretty much anything that goes into a business plan falls into one of these four categories:

1. Opportunity: Every successful business exploits an opportunity. Opportunities arise from "problems" that customers are willing to spend money to solve: they want to stay in touch with friends (Facebook and Twitter); they want to eat a tasty Italian meal (Olive Garden); they want to better manage their enterprise data (Oracle); they want to commute to work in a fun but fuel-efficient vehicle (MINI Cooper); they want to get and stay fit and trim (LA Fitness). The Opportunity portion of your business plan delves into the nature of the problem: who experiences the pain; the severity of the pain; the trends affecting the source of pain; how people are currently addressing the pain (both substitutes and competitors); and how much people are willing to spend to alleviate the pain. Broadly speaking, the Opportunity is a description and analysis of your potential market.
2. Solution: This is your brilliant idea. Exactly what are you introducing into the marketplace that takes advantage of the opportunity you've identified? How does it work, and how does it solve the problem? What are the features and benefits? How will you price it and position it in the market? Have you patented it? How does it stack up against competing solutions to the problem? A lot of first-time entrepreneurs think that a brilliant solution is the most important ingredient in building a successful business, but it's only one of many important elements.
3. Execution: Execution - the hard task of turning ideas into products that people will buy - is what separates successful entrepreneurs from dreamers. What is your plan for completing the development of your product and getting it ready to market? How will you generate awareness and close sales? How do you manufacture and distribute it? What kind of facilities will you need? What kind of management team will your company require? What does the product cost to manufacture? How will you make money? How will you overcome the regulatory hurdles? What types of business partnerships will you need to forge? What could go wrong, and what can you do to mitigate the risks? How will you carve out a profitable niche and keep competitors at bay? What kinds of variable and fixed expenses will you incur to make this happen? How much investment capital will you need to pull this off?
4. Outcomes: This is your vision of the future outcomes if things go according to plan. How much of your product will you sell each year over the next five years? How will the inevitable changes in markets, consumer behaviors, and competitive offerings affect outcomes? How much cash and profit will your company generate? What will your balance sheet look like in five years? Can you get there without running out of cash? If your company becomes successful, what are the viable ways for your investors to cash out?

Use these cornerstones to organize your thoughts.

When you sit down to start working on a business plan, grab four blank sheets of paper and write the words Opportunity, Solution, Execution, and Outcomes across the top.

Now, start brainstorming. Get as many ideas down as possible. Don't worry about structuring things into a business plan yet. If one of your sheets looks empty compared to the others, then you have more work to do.

When you're done, put these sheets of paper away for a few days. When you're ready, go back and look for a powerful, compelling story line that links the four sheets together. Next, go through each sheet and cross off the items that don't support the story line.

A business plan, regardless of your target audience, is essentially a narrative that ties these four cornerstones together. Thus, by going through this simple process, you’ve half way to having a well-conceived first draft of your business plan!

Related Articles
  Cornerstones
  Cornerstone of Business Growth
  PROGRAM MANAGEMENT PLANNING
  Does Spirituality enhance the work environment?
  The 4 Cornerstones of A Successful Home-Based Business
  How Being Stuck Can Cost You Time, Money and Quality of Life!
  Don’t Make Mistakes When Searching For Franchise Finance Lenders When You Buy A Franchise In Canada
  FIVE GREAT LESSONS FOR ENTREPRENEURS for Standout Pitches TO ACCESS ANGEL INVESTORS
  Art Of Selling
  Influencing vs Negotiating
  Lesson #1: Ensure Efficiency
  Bolster Self-Determination- 4 Cornerstones to Strengthen Self-Discipline
  Adding Personality to Your Business is No Small Feat
  10 Public Relation No-No’s
  Why is a work at home business plan important?
  The Plan was a Success but the Business Died
  So Your Business Strategy is a Success but the Business Died?
  What is a Business Plan?
  Financing Independent Movies Via Tax Credits For Indie Film financing
  No Guarantees

Article Tags: business plan, entrepreneurship, getting started, market research, preparing a business plan



Related Forum Posts
Business Innovation - Hi Simon If you can finish off the Business Plan and think about your strategic direction or how you are going to use your product to convince people it's a great idea, it will set the foundation for your programming project. You see, when you are looking for funding you will need a Business Plan and Strategic Plan that will convince companies to invest into your new idea. Has anyone achieved this idea before using another industry besides health and fitness that you know of? You should also design some mockups as a "preview" for your programming project. This will also help reduce your programming costs as everyone will know exactly what you want if you have detailed mockups already completed including any functionality you require. Starting mockups for websites and software applications on paper is the best way if you're not a guru in graphic editing software.
Re: NEW VIDEO - How to improve your business plan - Ask Evan - Thanks Evan, great intro into how the VC's see business plan. I will take a look, but hope that this video as number 1 in a series. It is unfortunate that these types of errors, the most basic of errors as you point out here are common to too many business plans, having reviewed a few hundred myself from both a development and funding perspective. As a mentor and workshop facilitator for Business Plan development for a number of start-up IT and multimedia companies, your presentation help support and show how the VC's see and evaluate a plan Shameful, that too many don't take the time to learn how to properly prepare, present and defend their plans. Over the years, I have enjoyed Business Plan competitions, and help re-work some of the winning proposals
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
2007 Goals - 1. Web site complete, fully operational 2. Revenue stream from both individual and corporate 3. Business Plan complete 4. Full marketing strategy complete and implemented
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Quick Tips on Buying a Business

The Death of the Sales Magazine

The Right Job - Part Five 'Compensation'

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.