A business plan has got to be one of the single most important documents you’ll create when starting up a business. Not only does it force you to evaluate your business’ strengths and weaknesses in great detail, giving you a stronger sense of how you’ll make it a success, it is also single-handedly the most important document you’ll need in order to secure the investment to help get your business off the ground in the first instance.
Whether you’re approaching angel investors, your local bank or one of the increasingly popular ways of finding investment online – crowdfunding, you’ll need a clear and well thought out business plan in order to impress those you’re pitching to enough to convince them to invest in your business.
While it’s an extensive document, don’t rush it as you may end up leaving out important details that can make or break the purpose of the business plan. So here are our three key points to remember when putting together your own plan.
1. First impressions count – make sure your executive summary is pin-sharp
This section forms the first part of a business plan so treat it like a first impression/pitch for the rest of your document. If it is not adequately presented, it could also be the last part your potential investor reads so don’t underestimate its importance.
This is your opportunity to outline your business proposal so include a business description, a description of the product(s) or service(s) you are offering and details about the investment you are seeking.
Make sure it is accurate and detailed but concise – you want to entice your investor to continue reading.
2. Don’t inflate financial projections
Investors will understand that these figures are estimates but you still need to ensure they are realistic and based on sound calculations. Inflating figures will not work as any good investor will drill into the details so you need to be able to defend your numbers confidently under intense scrutiny.
Key projections to include in your proposal include employee wages and overhead costs, revenue and sales, the percentage of return you expect from your product/service and your break-even point (the point where profit equals loss). This figure is one investors will definitely be looking out for as a consideration for their return on investment.
3. Know your customers
Knowing the ins and outs of your target market is key to any successful business. Be clear about those finer details of who your customers are: their age range, interests, spending habits etc and outline how you will target them effectively. Demonstrating this awareness in your business plan will also give investors the confidence that you have a solid marketing strategy.
If you have competitors, don’t be afraid to bring them up proactively. Hiding them or pretending they don’t exist will catch up with you eventually and will weaken the confidence you previously demonstrated about your extensive knowledge of the market and your business’ place within it. Use this knowledge to your advantage by explaining what you plan to do to ensure those customers will buy from you over your rivals.
Remember to cover all the above in each of the main sections of your business plan: the executive summary, business outline, marketing plan and strategy, operations and logistics information, financial plan and SWOT (strengths, weaknesses, opportunities, threats) analysis. The SWOT analysis is optional but may prove to be a valuable addition by demonstrating an extensive awareness and understanding you have of your business.
If you need a little more guidance to ensure that you don’t miss any important elements out, you may find a guided business plan helpful.
Behind every long and successful business lies careful planning with a business plan as the ultimate strategy for its success. As well as laying out your mission with focus from the start, it could also hold the key to unlocking the funding to put you on the path to success.
This article is published with permission.