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Creating a Plan5:26 with Pasan Premaratne
The last two sections, and coincidentally the ones that everyone ones to talk about first, are revenue and costs. Once we have that information we can summarize that information and present it in various different forms.
We're almost done. 0:00 Now I've covered all the working parts of my business model. 0:02 So let's look at how that translates into money. 0:04 As I mentioned in the previous videos, I can easily obtain our costs by looking at 0:07 the key resources, activities and partnerships. 0:12 And since I've already completed that, this should be fairly easy. 0:16 My start-up costs are going to be the hardware, initial software and 0:19 any other setup costs. 0:23 If I want to be official and 0:25 create a company early on, I'm going to have those legal costs as well. 0:27 I will also have ongoing costs for subscriptions that I pay for. 0:31 As well as occasional costs, like attending conferences, or 0:34 my educational activities and even paying an accountant during tax time. 0:37 Listing out all these costs helps me understand my base expenses and 0:42 the kind of revenue that I need to bring in. 0:46 The last part of my business model is my revenue. 0:49 Now that I understand my value proposition better, 0:52 I have a better picture of how to maximize my revenue streams. 0:55 Going into this my thought was, well yeah, I'll charge a client, you know, revenue. 0:59 Obviously I'll just, you know, get the money from them the one time. 1:03 But now the plan is, 1:07 for each client I start with a fixed price point that's product feature dependent. 1:08 Since I'm targeting a market that doesn't really know how to maintain their site or 1:14 resolve their problems when they occur, I can charge a recurring fixed payment for 1:18 maintenance, hosting and any other services. 1:22 Finally, I can gain additional revenue from each customer by up-selling. 1:25 Well, that about covers it. 1:31 Let's put this information down in a better format that suits our 1:33 purposes more. 1:37 To use this as an internal reference, I'm going to keep it as a mind map, 1:38 which is this diagram I've been drawing all along. 1:42 If this is something you'd like to do, 1:45 there's a lot of great free mind mapping software out there. 1:47 If I want to use this for business considerations, 1:51 I can put together a more formal document that goes somewhat like this. 1:53 I'll start with a summary. 1:58 In this section, I'm going to list the profile of my company, general overview, 2:00 you know, name, purpose, legal status, and so on. 2:03 I can also include what I have already achieved, 2:08 any clients that I have worked with, and so on. 2:10 Most business plans then follow with an industry or market analysis. 2:12 Here's where you list your market size, your competitors and trends. 2:17 This information is very important, 2:22 because it shows that you understand your playing field. 2:23 For this example, it's kind of hard to get that information. 2:27 But if this were anything other than a freelance business, 2:30 you should be spending a bit of time gathering all this information. 2:33 Not only does it arm you when going into business, 2:36 you'll also gain an understanding of what already works, 2:40 what are existing sales avenues, and revenue models. 2:43 It's important to know what companies before you have tried. 2:46 Sometimes, this section is broken down to industry and competitor analysis. 2:50 It's up to you. 2:55 I tend to put them together, 2:56 since your competitors are part of your industry anyway. 2:58 Next up, is the customer analysis. 3:01 This section indicates that you have done all your research about your customer. 3:04 I did that, so I'm just going to list it out. 3:09 I'm gonna list out my target customers, their demographic information, and 3:11 the needs of a typical customer. 3:15 All the information I went over when I explored my customer segments. 3:18 The next big section is our marketing plan. 3:23 This is where we describe our brand, how we get our customers to 3:26 know about our product and service, and how we distribute it to them. 3:29 The information for this section comes straight from two sections of 3:34 the business model, our channels and our customer relationships. 3:37 Like we just talked about, my channels are very traditional. 3:42 So I'm going to rely on a few ads, word-of-mouth, and a lot of networking. 3:46 Evaluation, purchase, and distribution happen directly with 3:50 the customer since the relationship is a one-to-one. 3:54 I'm going over all this briefly, because I detailed it earlier. 3:57 But you should be writing out each of these points in as much detail as 4:01 possible when putting together your formal plans. 4:04 Next up is our operations plan. 4:08 This section goes over the key operational processes that 4:10 the company needs to undertake to ensure success. 4:14 In simpler terms, that's our list of key activities. 4:17 It sounds too complicated to call the activities of my freelance business 4:20 an operations plan. 4:24 So I'm just going to say key activities in my plan. 4:25 Remember, a business plan doesn't have to adhere super strictly to any format, for 4:28 such simple uses. 4:33 Now, we can also break this information down into primary and 4:34 secondary activities, if we need. 4:37 Lastly, we're going to include our financial plan. 4:40 This includes the revenue model that we discussed. 4:43 As well as the associated cost structures. 4:45 Business plans seem like they're designed for more complicated ventures. 4:49 But as you can see, we can modify it to suit our needs. 4:52 The goal in this exercise wasn't the format for the final product, but 4:55 to show you that running through the business model is the more important part. 5:00 Once you know how all the working parts fit together, 5:04 it's simple to put that down on paper in multiple formats. 5:07 My personal favorite is the mind map. 5:11 It helps me keep an eye on the big picture and it's really simple to implement. 5:13 I hope that the exercise helped you understand how to 5:18 create your own business plans, regardless of what you're getting into. 5:20 Good luck with creating your own. 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